People Mergers

Corporate culture changes when two CUs combine

September 20, 2010
KEYWORDS employees , merger
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What’s the big deal about mergers?

Your credit union has checklists for: to-do items; systems the merging credit union uses; its phone system, products and services, rates, number of members, select employee group locations; and so on. Your credit union has even figured out postmerger staffing needs. No layoffs are necessary, so you know this will be an easy merger.

Management has decided to mix staff from the two credit unions, and to post and interview for management positions. Due diligence covers products, services, lending portfolios, financials, training, and employee benefits. The merger team is thorough and all is going well.

The magical day arrives. Your credit union announces the merger to the press and local TV stations, and a marketing campaign explains the merger. You all celebrate with a grand opening ceremony. Now you’re done, right?

Not exactly. One of the most overlooked consequences of a merger is the impact on employees. The corporate culture changes.

My credit union has gone through two mergers in three years. And we’re still learning, as each merger is different.

Our first merger was with a similar-size credit union with corporate offices literally five doors away from ours. In this merger, we doubled the number of employees.

The second merger was with a much smaller credit union into our now large credit union. Lessons we learned from both mergers were similar:

Realize mergers don’t happen overnight. You can have all the checklists and project planning in place, but you can’t expect employees to adjust to the changes right away.

It’s now nearly three years after our merger of equals and we recently discovered some branches were still performing a process the “old” way. Apparently some employees were reluctant to change.

Allow time for buy-in. Employees’ jobs may not be the same after mergers. Some aren’t willing or able to adjust. How do you encourage a sense of belonging to the new organization?

One of our merged credit unions had a receptionist—a job that no longer exists. Recognize not everyone will be in the right job postmerger.

When this happens ask, “What do we need to do to coach these employees so they succeed?”

Define expectations. When, in 2006, our two co-CEOs announced that we were considering merging the two credit unions, they set the tone for a year of due diligence. It wasn’t a matter of which credit union had the better benefit package or which one had the better product offerings.

Many committees—involving many employees from each credit union—reviewed all benefits and products to determine which would be best for members and employees. No one was in a back room somewhere tallying an equal split from each credit union.

Once the credit union’s new name was determined, the CEOs joked that if a person said either of the “old” credit union names they had to pay a dollar. The CEOs also told us early on that there wouldn’t be layoffs—although they explained some employees might have different jobs after the merger.

The bottom line from a human resources perspective: Mergers are all about communication. Frequently let employees know what’s going on. It’s better for them to get information from management first, rather than from members or the local news.

Coach managers and staff on your expectations. Don’t accept “That’s the way we used to do it.” And admit that after the hoopla is over, employee and member post-merger adjustment has just begun.

We’re still adjusting several years later.

JENNIFER MORSE is vice president of human resources at Empower Federal Credit Union, Syracuse, N.Y., and chair of the CUNA HR/TD Council. Contact her at 315-214-6510.

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