MADISON, Wis. - If you were to ask a CEO of a bank or credit union experiencing a merger for the most challenging part of the process, invariably the answer would be the human dimension.
Financial institutions typically do an adequate job of the financial aspect of the merger, but meshing two cultures together is often bungled.
Mergers may seem to be about the bottom line, but they are really about people. They will succeed or fail depending on the success of the “human due diligence.”
A credit union has many constituencies–members, employees, executives, directors and community groups–all of which need to be brought on board and informed about the merger. Successful credit union mergers have taught that when no layoffs are imminent, the front-line staff will serve as spokespersons and promoters of upcoming merger to members and co-workers. When layoffs are in the cards, the same staff can and will sabotage merger efforts with a simple raised eyebrow or roll of the eyes.
There will be some employees, of course, who will not want to be part of new credit union, or will not fit into the new structure. These employees should be helped to find new positions in other organizations, the experts advise.
Other advice: Communication and feedback from your employees before, during and after the merger process is perhaps the most important activity that can be completed during the merger process. This can be furthered by employee meetings, focus groups as well as forums for staff feedback. Questions that one employee poses can be shared with others. They are questions that other employees probably share.
“Human Due Diligence,” by David Harding and Ted Rouse, Harvard Business Review, April 2007, suggests that organizations should answer five questions in conducting human due diligence concerning a merger or acquisition:
* Who is the cultural acquirer?
* What kind of organization do you want?
* Will the two cultures mesh?
* Who are the people you most want to retain?
* How will the rank-and-file employees react to the deal?
To understand a culture, the authors say, begin with interviews with key executives from the target organization. The executives can talk about how they see their organization’s mission, values and culture. Customers (and members), competitors and vendors can also provide valuable information.
The true work of doing the human due diligence of the target organization’s culture begins after the merger deal is on the table, say the authors. The acquiring organization can spend time at the target organization and view first hand the everyday business norms–meetings, communication and behavior.
“They can talk to the company’s heroes and decipher what they stand for. And they can review compensation, performance compensation, performance management, and other systems to get an idea of the values and behavior the company promotes.”
The authors also suggest using a “useful cultural assessment tool, the employee survey.” This allows employees to rate their company’s culture. “Along with a face-to-face interviews, these survey data can reveal where friction and clashes are likely to spring up.”
The authors conclude that this helps to “define the values of the new culture and specific expectations for behavior, and coming up with a plan to move both organizations to the new culture goes a long way toward understanding how each side works and what each assumes to be normal. The process also knits together the leadership team, turning its members into role models for the new culture.” (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
