First Union Corp. is not exactly calling for a group hug-yet.

But the acquisition binge that brought thousands of new employees into the Charlotte, N.C., superregional banking company has officials focusing on the "emotional side" of merger integration.

Through a series of meetings, written surveys, educational materials, and rank-and-file roundtables with chairman Edward E. Crutchfield, First Union is putting significant time and effort into bringing together what is now a 60,000-member "family."

Integration issues are key to any merger. But typically the focuses are systems conversions, cost cutting, management restructuring, and customer retention. First Union is an example of the growing, concurrent concern about human capital. Its scale poses a major challenge that is being confronted with some New Age thinking.

"We are a product of a merged culture, a growing family" of people who probably have "not heard a consistent message over time," said Don R. Johnson, First Union executive vice president, corporate human resources.

He acknowledged that melding diverse organizations into a happy, highly motivated, smooth-running team becomes more difficult as the company grows.

"It has become critically important, considering the size we are and how geographically spread out we are, that we be particularly diligent on this," he said.

"It has taken a long time for the industry to realize that we're not managing widgets any more," said Scott Birnbaum, vice president and global head of the financial services group at Mercer Management Consulting. "This isn't mushy stuff. This is the real stuff that people who are going though massive change have to deal with."

Companies must not only set a strategic direction but also win the "head, heart, and soul" of employees, Mr. Birnbaum added. "This is really transformational."

Donald MacLean, industry manager, financial services, at Root Learning Inc., a consulting firm that specializes in employee education and relations, said it is all tied to the bottom line.

"One of the big discoveries financial institutions have made over the last year or so is they can no more cut their way to dramatically better profitability," he said. "You've got to come back to the employee. You need them to be a partner. The health and welfare of employees ties directly to profits."

From Mr. Crutchfield on down, First Union's management is working to overcome the inevitable personal concerns while communicating an overall vision, strategy, and commitment to quality, said Mr. Johnson.

To that end, a survey went out recently to all 60,000 First Union people. It addressed these areas: whether employees feel rewarded and empowered, how they view their workplace environments, and whether they say First Union is open to nontraditional ways of doing things.

First Union had never before asked for across-the-board feedback on such issues.

The survey, which was due back to managers July 3, also for the first time asked employees to give confidential demographic information that would be used to assess diversity issues.

Mr. Crutchfield, meanwhile, has been meeting often with small groups of employees in various markets, with a particular focus on the former CoreStates Financial Corp. and its Middle Atlantic region.

A compact-disc educational program for new employees is near completion, and other merger-related integration programs are taking shape.

This fall a leadership conference for about 600 top First Union managers will be devoted to "the emotional side of running things," said Mr. Johnson. Trust, pride, and relationships will be the themes of the conference.

Jeffrey A. Goldberg, director of Personnel Sciences Center, a consulting firm in New York, said First Union is on the right track.

After completing an acquisition, "the parent company should anticipate some degree of suspicion or hostility," Mr. Goldberg said. "The fact that these people have a job and are getting paid is not enough. You want to communicate the mission and bring people into the fold so they feel like they are part of the organization, not stepchildren."

First Union's mobilization follows a rapid series of acquisitions, most recently the June addition of Money Store, the consumer finance company.

In April, Philadelphia-based CoreStates came into the fold, as did the Wheat First Butcher Singer investment banking house in February.

Late last year First Union bought Richmond, Va.-based Signet Banking Corp. And all of this activity came after the company's 1996 purchase of New Jersey's First Fidelity Bancorp.

R. Harold Schroeder, an analyst at Keefe, Bruyette & Woods Inc., said First Union is smart to want to unify its disparate constituencies.

Some tactics "may seem a little silly," he said. "But it is very important to regroup and get everybody thinking, 'We're all First Union now.' If you do too many acquisitions and don't focus on the employees and forge a common cultural climate, you run the risk of fracturing the organization."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.