Charles R. Rinehart, chief executive of H.F. Ahmanson & Co., moved Thursday to allay fears that his proposed takeover of Great Western Financial Corp. would lead to massive layoffs at that company.

Mr. Rinehart said he sent a letter Thursday to his counterpart at Great Western, John F. Maher, detailing how the work forces at each company would be handled if the deal took place.

The letter was an attempt to soften comments he had made earlier in the week to his own employees promising no Ahmanson staffer would be fired as a result of the merger. That memo-widely interpreted to mean that all layoffs would occur at Great Western-prompted a swift and angry response from Mr. Maher.

"I don't know if John latched on to this whole employee issue as something they can use to their benefit, or if it was just an honest misunderstanding," said Mr. Rinehart. "But if their assumption is that we have to fire a whole bunch of (Great Western) people to make this work, then they're wrong."

So far, observers said, Mr. Rinehart has made most of the right moves in his quest to acquire longtime rival Great Western. He has compiled a seasoned team of legal and investment advisers, neutralized Great Western's anti-takeover defense with a lawsuit, and even placed advertisements in California newspapers this week explaining his actions to the public.

But Mr. Rinehart's staff memo about layoffs could well complicate discussions, said Thomas O'Donnell, an analyst at Smith Barney & Co.

It may cause Great Western to harden its resistance toward Ahmanson's bid and redouble its effort to find another suitor, forcing Ahmanson to come up with a higher bid.

If all the planned reduction in staff were to take the form of layoffs at Great Western, the cuts could reach at least one-quarter of Great Western's 12,000-person work force.

Mr. Rinehart, however, said in the interview that the staff cuts could be accomplished largely through attrition, if both companies adopt a hiring freeze now.

"It's too bad that if John had a question that he didn't come back and ask us about it," said Mr. Rinehart. "We encourage him to give us a chance to sit down and talk in more detail than the letter that we sent them."

Mr. Rinehart added that he has guaranteed his employees that they would keep their jobs and their current salaries but that their posts could be changed or even reduced in status in some cases.

"We know that, down the track, we will have more vacancies anyway, so this makes business sense," Mr. Rinehart said. He added that Ahmanson executives had talked about a number of Great Western senior executives that they would like to keep in the new company.

Great Western employees were riveted to the takeover drama Thursday, an employee there said. There's a lot of "whispering at the coffee machine. It's like a game, watching and waiting, and seeing who's on top," the employee said. "It's exciting."

Staffers have generally accepted that Great Western will be sold, either to Ahmanson, the country's largest thrift holding company, or someone else.

The real question for many now is how much severance pay they'll get. The betting is that severance pay would be richer in the hostile takeover than in a sale to a white knight, such as Seattle-based Washington Mutual Inc.

Great Western is currently studying what kind of severance packages it might offer. One possibility, observers said, is that Great Western would try to discourage Ahmanson by adopting expensive severance packages.

Certainly, the anger that erupted in the head office at Great Western this week makes such a scenario possible.

According to people present at the time, Mr. Maher went ballistic when he heard about Mr. Rinehart's comments promising no job cuts at Ahmanson in the event of a merger.

Mr. Maher "was as infuriated as I've ever seen him at what he saw as the unbusinesslike and unethical nature of Ahmanson's stance," said a source familiar with the Great Western CEO. "Believe me, I wouldn't want my kids within hearing distance of what he had to say."

In an internal memo to Great Western employees Wednesday afternoon, Mr. Maher wrote that he found Mr. Rinehart's statements, "on a personal level, highly repugnant to my sense of the value that business people must bring to their conduct in the marketplace."

Typically in a merger, the acquirer examines the employees of both companies before making any staffing decisions and selects the best qualified from each institution.

Snigdha Prakash and Aaron Elstein contributed to this article.

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