Alex Blyth is gripped by the absorbing tale of how Deloitte integrated 3,500 new staff in a near seamless transfer
Deloitte is the UK business of Deloitte Touche Tohmatsu, a global organisation with 120,000 staff in nearly 150 companies. They provide audit, tax, consulting and financial advisory services to more than half the world’s largest companies.
In 2002, the industry underwent significant change following the demise of one of the ‘big five’ accounting firms, Arthur Andersen. In late 2001, Arthur Andersen was associated with a series of accounting scandals at companies including Enron and WorldCom. As a result, there was substantial client unrest and within a matter of weeks the century-old firm had imploded.
While Deloitte in the UK was faced with the threat of a sharply changing regulatory environment, it was also presented with a golden opportunity to snap up Andersen’s clients, and it did so, beating KPMG to the line in a deal to hire almost all of the 3,500 Andersen staff in the UK, and so by association acquired all its clients.
Head of HR at Deloitte, Steve James and his 160-strong HR team, faced a monumental challenge. Between the deal being signed in April 2002 and 1 August of the same year he had to integrate 3,500 new staff into Deloitte’s existing 6,500 UK employees.
“The short timescale added pressure,” says James, “but the biggest challenge was to develop a coherent vision of how it would all look at the end of the day.”
Although employees on both sides had taken similar professional qualifications, their methods of working had evolved according to the cultures prevalent at Deloitte and Andersen. James began by addressing the most urgent difference in approach, the reason why the whole thing was happening: “We put more than a thousand Andersen staff through immediate audit training to ensure the intake adopted Deloitte’s methodologies,” he explains.
The differences were not just in terms of professional best practice. There were equally pronounced differences in areas such as pay, benefits, and working conditions. The HR team at Deloitte worked closely with the Andersen HR department to build a picture of those differences and then to agree on how to reconcile them.
“Andersen had been much more flexible than us on benefits,” James admits. “We could have imposed our way on the Andersen staff, but it would have alienated them and we would also have missed a great opportunity. So we immediately began introducing more flexible benefits across the board. What started out as a yawning gulf is now almost entirely harmonised,” he says.
The new Deloitte HR team set out with the objective of taking the best from both organisations and taking the opportunity to create a new organisation that would be better than Deloitte or Andersen had been.
Despite having been fortunate to have all the change management expertise in-house, James admits that he took a more difficult route. The integration process involved the HR team frequently working around the clock. This commitment paid off as the integration has been achieved with very little disruption.
“If we’d tried to shoehorn new staff in, we would have lost staff, lowered productivity and had major business issues,” says James. The reverse has been the case with Deloitte just posting a sales increase of 33 per cent.
The employee perspective
Paul Richards, a senior manager in the consulting division, has found the transition less difficult than he imagined.
“I’d been with Andersen for four years and so was worried about where I would fit into the new structure and what the new team would be like,” says Richards. “At the same time I was keen to avoid the redundancies that were going on at Andersen.”
He was amazed by the speed of the transition. “We left Andersen on 31 July and came in to Deloitte on 1 August. Right from the start we were in mixed teams and were able to see our former managers making decisions in the new organisation.”
He has been happy with the harmonisation of pay grades, benefits and so on, and believes this to be the case for most of his colleagues. And he was continually reassured throughout the process by regular communication with and from management.
He has just two criticisms: “The technology transfer could have been smoother and I’d have liked some training on how to use the intranet,” he says. But other than that, he now feels fully integrated.
“During a recent move to a new building it suddenly struck me that I’ve become a Deloitte man,” he adds.
Learning points for HR
James offers three pieces of advice for anyone faced with a similar challenge: “First, don’t be afraid to shift perspective and take the best from both organisations. Second, work closely with other teams involved to ensure that every department is moving towards the same strategic goals. For instance, liaise with the facilities department to ensure that something as simple, but potentially catastrophic, as moving people within the building is done correctly. Finally, communicate continually with staff. It is vital to always bear in mind the degree of upheaval that each individual is going through.”
Getting the job done
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