Best Practice

Personnel Today’s monthly series reveals how managers tackle business problems and enhance performance. In this issue, Richard McGreevy, learning distribution manager of CGU(now Norwich Union), explains how and why issues of training and development apply during a merger situation

Suddenly the old rules no longer apply. Your office environment and colleagues may well change, as might the procedures and technology you’re used to – assuming you still have a job.

On the ground, it feels like chaos. But if it actually is chaos, then this contradicts the very reasons for the merger, which are usually about productivity and competitiveness. There’s a conflict here, one that needs to be managed carefully.

There was certainly the potential for conflict with the 1998 merger between General Accident (GA) and Commercial Union (CU). Two leaders in UK insurance of roughly equal size needed to form one efficient and profitable organisation where everyone was motivated and clear about their role.

But GA’s traditional, fairly formal culture was very different to CU’s empowered, team-centred approach. The technology platforms used by the two companies were incompatible. Plus there was the unavoidable fact that significant downsizing would be taking place.

Add to this the disastrous history of large mergers in the previous decade. On average, productivity halved following a merger and over half of big deals showed poor returns over a three-year period.

Critical to averting disaster was a managed learning process. I say learning, not training, for two reasons. From the outset we promoted an ethos at CGU where people learned what suited them and the business, not just what the trainer thought was important.

Secondly training implies finding out about specific procedures, whereas learning suggests broader qualities of competence and being able to do your job effectively. Again, it’s about an active rather than passive workforce with responsibility for its own development.

Not that empowerment was uppermost in the minds of the 12,000 people who became employees of the UK arm of CGU in July 1998. Simply being able to do the job was of primary concern.

“Soft skills” training took a temporary back seat, while people learnt how the new procedures and IT systems impacted on their working lives.

Of course, there’s more to productivity than technical ability. Morale is a vital factor, but it takes a battering during a major upheaval.

Honest, effective communication is crucial here. People need to be reassured that redundancies are the result of fair selection processes rather than a “jobs for the boys” style carve-up.

We distributed regular hard copy and electronic news detailing the progress of the merger. We even undertook staff surveys exploring the merger’s impact, under the heading Best Place to Work. The results were freely available, even during the early days when “best place to work” seemed a long way away.

A major obstacle to a successful merger is the common assumption that it’s not a merger at all, but a takeover by the other party.

One way of countering this was to establish and promote a distinct CGU brand both externally and within the business. The message was that this was a new company, with a new way of doing things. People were encouraged to live up to the CGU brand values in everything they did (for example, by taking ownership of incoming calls rather than passing the buck). In this way, branding helped distinguish us from our past, as well as the competition. It also gave us a tighter commercial focus.

Which brings me back to our definition of learning. Learning to do your job effectively is partly about assimilating a company culture, which is not something best passed on in the classroom.

It’s difficult to keep tabs on this wider force when everyone is wondering how the new machines work, but, if the merger is to ultimately gel, it’s something managers can’t afford to forget.

By late 1998, people had realised that CGU was a different company with new ideals, values and practices. And however you analysed it, the amalgamation had been unusually successful. We’d bucked the trend for big mergers by actually meeting all our targets. Indeed, the entire CGU group made savings of around a quarter of a billion pounds.

Feedback from staff was also broadly positive. Despite the early dip in morale mentioned earlier, a few months later those that were left in the company were comfortable in their roles.

Of course, I’m not arguing this is all due to well-managed training. But we constantly asked team members and their managers whether learning units changed behaviour, and the indications are that they did. And there’s also the subtle but essential work on branding and internal communications. Without it, I believe morale and productivity would not be as high as they are.

And how have we consolidated our gains in order to protect us from takeover? Ironically, by merging again, this time with the Norwich Union.