In the mid-noughties, Henley Management College was running at a loss and struggling to compete against better-funded business schools. Outgoing dean Chris Bones talks to Alex Blyth about how Henley’s successful merger with the University of Reading and return to full financial health is his proudest legacy.
Founded in 1945, Henley Management College was the UK’s very first business school. In the 60 years that followed, many of the world’s future and existing business leaders flocked to the college’s idyllic setting by the banks of the Thames, and its flagship MBA programme was one of the most widely respected in the world.
However, by 2004, when the new dean, Chris Bones, joined from Cadbury-Schweppes, the college was facing several significant problems. Bones explains: “The college had a strong brand and history, but it was competing against schools that were enjoying endowments or state support and so were able to invest for the future. At the same time, the college was trading at a loss.”
It was an untenable situation and one that Bones immediately set out to change. “It had become clear that unless we found a solution to the historic problem of competing against far better-funded schools, when the next recession arrived, we would emerge as a second-rate player,” he admits. “We weren’t prepared to see that happen, and so in early 2007 the management team decided to find a merger partner.”
Facing the challenge
After an extensive search, the college settled on the University of Reading as the best partner. “Getting the right partner for a merger is absolutely essential,” says Bones. “We needed one with a compatible culture, and the University of Reading has always had a good understanding of, and links with, enterprise. We also wanted one that didn’t already have an MBA, so while it was initially a surprise to many that we picked a university with no record of business education, in fact that was ideal.”
However, as anyone who has ever been involved in a merger can testify, getting the right partner is only the beginning of the battle. This was to be the second largest educational merger in UK history, and there was much that could go wrong. Redundancies are usually an issue with mergers, but in this case, Bones reports that everyone who wanted to remain with the newly merged organisation was able to do so.
In fact, the greatest danger with this merger was that it could be derailed by the many capable and high-profile individuals involved with the college. One of the problems with having such a strong brand and such engaged stakeholders is that those stakeholders can become troublesome if not managed correctly. Henley had to ensure the 5,000 students who were transferring their MBAs to a new institution were on board, together with the 50,000 alumni, and all the staff.
Early on in the process there were a couple of articles in the national press in which unnamed sources voiced concerns about the merger and what they saw as the imminent loss of independence by Henley. That first hint of bad publicity was enough to make the management teams at both organisations realise just how important it was to get the preparation for the merger on 1 August 2008 just right.
“We knew it was a great opportunity for both organisations,” says John Brady, HR director at the University of Reading. “But careful planning and implementation was essential. There were many similarities between the two organisations, but many challenges to overcome. For most of a year, it took up around 70% of my time and around 50% of my department’s time.”
Brady goes on to outline some of the main issues he and his team faced: “Henley had overseas elements, which was a first for us. We had to transfer all the personnel records from an old, creaking system at Henley to ours. We needed to harmonise on small issues, such as Henley staff losing their traditional free lunches and coffees. We also had to adapt to dealing directly with staff, rather than with union representatives.”
A united front
Fortunately, as a management college, Henley had a good grasp of the theory of how to make these large-scale, complex mergers work. Brady and his team set to work on an extensive process of consultation, education and knowledge sharing.
Bones says: “The single biggest method of overcoming these challenges was to get people from both organisations to work on problems jointly. This was slow at first. Geography often got in the way, even though Reading and Henley are only 12 miles apart. But persistence paid off, and gradually the two organisations began to come together as one.”
Indeed, Brady believes the key to the success of the project was that, right from the outset, the two HR departments worked very closely together. He explains: “It was crucial we presented a united front, not only to demonstrate that we were one team, but also to provide answers to any practical questions that arose. So everything we did was a joint initiative.”
The college also sent out 150,000 letters to its 50,000 former students. This generated queries from a staggering 2,000 of those alumni. The college then dealt with each one of those queries individually, building 35 alumni groups, which are still active now.
In 2009, Henley Business School at the University of Reading, as it is now known, lost 30% of its corporate revenue, but because of the merger, it had a more diverse income portfolio, and so managed to break even. “If we had not had the marketing skills, the network of contacts, and everything else we gained from the merger, we would have been in deep trouble,” says Bones.
As it is, Henley is now a successful part of the University of Reading. Brady says: “Like most universities, we’re facing some difficult conditions right now, but at the moment Henley is one of our strongest areas. The merger has been good for both institutions.”
Bones agrees. “I’m not saying that it’s all done and dusted now,” he says. “We probably got about 20% of what we did wrong, and that will need to be addressed in the months and years ahead. However, this merger has, without doubt, been good for Henley. We’ve now got a great new campus at Whiteknights to add to our historic centre at Greenlands. We maintained the high ranking for our MBA in the latest tables from the Economist Intelligence Unit. And, most importantly of all, we now have a secure financial future.”
Chris Bones: my legacy
Chris Bones will leave Henley Business School at the end of 2010. Looking back at his six years as dean, he says: “When I arrived I had three goals. First, I wanted to restore the brand. It was like Marks & Spencer – everyone was willing it to be as good as it once had been. We’re now the second most mentioned business school in the UK media, and only Cranfield and London score higher than us in brand league tables.
“Second, I wanted to rebuild the numbers on our open courses, especially our MBAs. We’ve certainly succeeded in this, tripling the size of our corporate business in just four years, raising our prices, and getting to the point where we’re breaking even.
“Finally, I wanted to put the school on a stable, long-term financial footing. That has been achieved through the merger with the University of Reading. The upshot of all this is that I think I’ve made this a job that other people will want to do.”