Supermarket giant checks out

Safeway’s HR director, Rebecca Ivers, talks exclusively to Personnel Today about the supermarket chain’s much-publicised merger with rival Morrisons, and the challenges it presented for the HR department

On 8 March 2004, one of the most familiar names on the UK high street changed forever.

The country’s fourth largest supermarket, Safeway, was finally merged with northern rival Morrisons, bringing an end to 14 months of bidding, counter-bidding and official Government investigations.

The merger will effectively see the Safeway brand disappear as it is integrated into its new owner’s estate, creating a 550-store group with more than 145,000 employees.

The move marks the end of a saga which started in January 2003 when Morrisons made its first bid for the company. Supermarket rivals including Asda and Tesco soon got involved as did the UK competition watchdog which eventually cleared the way for the £3bn takeover.

The sheer size of the merger – at the time of the bid Safeway was four times the size of Morrisons – coupled with the lengthy bidding and regulatory process presented huge challenges for the HR team at Safeway.

Rebecca Ivers, the HR director at Safeway, was responsible for more than 85,000 staff who were naturally very worried about their future.

“People were scared because it happened out of the blue,” she explained. “There were rumours that stores would be closed and jobs would be lost. It then got worse because all the other big players and the Government became involved and it made the future of the business even more uncertain,” said Ivers, who ironically, and by coincidence, joined the firm from Morrisons.

“It [Safeway] was completely in limbo because nobody knew who would buy it or what the DTI would say. We had to live with that and deal with it.

“It was terrible for staff because people didn’t know if they would have a job or what the timescale would be. That’s why we needed to develop support networks,” she said.

HR quickly devised a plan to manage the transition period and identified the critical factors to ensure the company remained successful until the business situation was resolved.

“Maintaining leadership was crucial and we recognised our leadership was failing. We had to retain our people because without them there was no business, and realised that the role of leadership had changed and that demands on managers would increase tenfold in the next 14 months,” said Ivers.

The retailer had to re-evaluate the way it thought about management and leadership because of its unique situation.

Ivers decided to develop a training programme that placed a new leadership model at its core.

“It was focused on helping people understand the context of what was happening in the organisation and dealing with the huge change. We had to push this out because our leaders where crying out for help and the staff were so demoralised.”

The programme was designed to help clarify uncertainty, give staff an understanding of the organisation and make people aware of possible changes.

Leaders were also taught to observe behaviour and identify the likely emotions individuals would display during particular phases of change.

The programme also provided training on how to build mental toughness among colleagues and methods of coping with stress along with establishing support networks.

The training emphasised the importance of being able to lead others, network effectively and the significance of talking to staff.

The course was initially delivered via one- and two-day workshops held at two week intervals. Almost 1,200 people went through the programme in just 10 months.

Leadership was seen as so important to the continuity of Safeway that it actually changed its bonus scheme to reward strong leadership. Leadership behaviour was rated every quarter, and those that scored highly received a bonus, while those with poor scores were given further coaching.

“Leadership development has been hugely important to us. We even changed the bonus structure to make sure it was effective. It was crucial because we needed it to push the rest of our framework for managing transition,” explained Ivers.

Liz Campbell, a director at consultants Lane4, worked with Safeway to help provide the training and said individual determination was crucial.

She said: “Mental toughness was a key part of the programme. We had to try and introduce some key attributes such as self-belief, motivation and the ability to bounce back from setbacks.”

There were also problems around confidence in the organisation so there were sessions designed to build confidence and promote individual successes.

As part of the programme, Safeway also developed a toolkit for managers on how to deal with uncertainty and high-pressure situations.

It’s testament to the success of the scheme that labour turnover remained static despite the uncertainty while the firm lost just three head office managers.

Since the scheme was launched customer service has actually improved and business performance has been in line with City expectations, Safeway says.

The scenario highlighted the huge challenges faced by HR during high-profile mergers, and the role it can play in the success of an entire project.

“As HR director it was difficult because people always assume you know more than them. Unfortunately, the uncertainty was the same for everybody.

“We’ve always been seen as a business partner, but this really brought the department to the forefront as we had to set the agenda and the pace.”

By Ross Wigham

Retail union welcomes ‘forward-looking’ deal

Retail trade union Usdaw welcomed the completion of the £3bn deal and stressed the takeover had good prospects for workers.

The union represents 35,000 staff across the new group and said the Morrisons’ deal was progressive and forward looking.

However, Usdaw’s Joanne McGuinness, responsible for members at the firm, urged Morrisons to make a swift decision on the 52 stores the Government insists must be sold under the terms of the merger approval (including the loss of 48 Safeway stores).

Morrisons’ action plan

Following the takeover, Morrisons has developed a plan to integrate Safeway into its own business:

  • Trading, marketing, distribution, management, head office functions, employee and stakeholder communications and corporate culture will now all be harmonised
  • The company is currently in consultation over what will happen with specific roles and duplication of effort (including HR)
  • Morrisons will also be converting the Safeway estate and will begin refitting stores in August with a completion target set for early 2007
  • The new company will employ around 145,000 staff and will have an annual turnover of £14bn

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