Shifting Your Strategy as the Result of a Credit Union Merger

For the past couple of decades, mergers have been occurring in many industries, and have possibly been more prevalent in credit unions. While CEOs diligently review the financial part of the merger, another critical part of the merger involves the people side of the equation. Human resources’ role can be one of the most important, aside from the financial review. 

There are two major pieces that HR handles during the merger: the strategy side – policies, practices and benefits, and the people side – emotions and culture.

The Strategy Side

The acquirer’s HR strategy can vary greatly from that of the company being merged. Some questions that should be addressed:

• Do you lead or lag the market in terms of compensation and benefits?
• What are your workplace policies?
• What are your pay policies, i.e., overtime, incentive plans and bonuses?
• What benefit plans do you offer?
• Is there a match on the 401(k) plan?

It’s important to create a spreadsheet to compare the two companies with reference to the above questions so any gaps can be identified. Typically, the acquiring company’s strategy will overrule but there can be some integration of the two, especially where there may be significant differences between the two companies.

When acquisitions occur, there are usually layoffs due to a duplication of manpower. This reality means coordinating separation and severance pay issues. Laws and regulations to be considered through this process include, but are not limited to, Employee Retirement Income Security Act (ERISA) and the Worker Adjustment and Retraining Notification Act (WARN) of 1988. Additionally, with increased combined headcount sometimes comes increased legal compliance. Many federal and state laws are based on headcount, such as the Family Medical Leave Act (FMLA). Federal and state law requirements need to be identified and brought forward to senior management to anticipate any additional costs and/or policy changes that may be implemented as a result.

The People Side
Mergers also bring about an array of emotions. Employees on both sides of the merger are most likely experiencing some of the following:

• Anxiety – Will I still have a job? What will the new compensation structure be like?
• Resistance – I’m happy where I am and with what I’m doing.
• Fear – What if I don’t like the new culture?
• Trust – How do I know I can believe what they tell us?

Effective Methods to Address Emotional Concerns
First and foremost, HR needs to ensure communication occurs frequently throughout the merger process. It’s a good idea to use multiple avenues of communication to ensure you reach everyone such as a company intranet, FAQs and all-hands meetings. Also, arming managers with information they can share with their staff is very helpful, along with question and answer sessions. Keeping the transaction as transparent as possible, with an appropriate level of disclosure, will ease the anxiety employees are experiencing. Failure to do so could allow the rumor mill to drive the communication process.

It’s important to know where each organization is emotionally before entering the merger. Conducting an employee opinion survey may be an effective method to give insight to the workplace climate and uncover any hurdles. In addition to the survey, developing a presence through on-site visits and interactions with employees may help create trust and reduce resistance.

Fortunately, mergers usually don’t occur overnight. HR should be involved in the process from the very beginning so they can complete their due diligence as thoroughly as the financial side of the transaction.

Related Services: HR Consulting Services, Strategic Planning Resources