Where quirky meets corporate – St.George meets Westpac

According to Ross Miller, general manager HR of St.George, it was both an interest ing and exciting learning curve – with some key lessons learned at the end.

“The two cultures, while very different, actually complemented each other,” said Miller. “We were each able to hold on to our own brand, negotiate some of the employee ben efits that were unique to the banks and and protect their unique brands under one umbrella.”

Under the leadership of CEOs Gail Kelly of Westpac, and St.George’s Paul Fagan (at the time of merger announcement) and now Greg Bartlett – the HR team was an integral part in the $18 billion merger. And looking back over the past year there have been some valuable lessons for HR.

Communication in the “danger period”

It’s the “Olympics” of communication, according to Simon Covill, head of communica tions for St.George. If a change strategist will ever be put to the test it will be through man aging the communication of one of the biggest mergers in history.

According to Covill, putting the people before the numbers is the key to success of any merger.

“So many mergers and acquisitions always start with the numbers and finish with the people – it’s getting the people issues on the table really early on which is important.”

The challenges for the HR and communication team was maintaining staff engagement through what Covill describes as the critical period – the time between the announcement of the merger and the day it commences.

“That six-month gap between the announcement and the vote is the real danger period where you can lose the hearts and minds of employees,” says Covill.

The merger was announced in May 2007 and the primary communication focus in that initial period up until the share holder vote in mid-november, through to completion of the merger in December, was information sharing, maintaining focus and celebrating past present and future, he says.

Throughout the merger keeping employees engaged was done through a holistic communication process. A merger committee was set up early combining legal, HR and com munications. Fortnightly pulse check surveys via emails with 700 random staff was also very useful to sense what the mood was and how well informed people were.

“That really helped us to tweak our communication planning through that six-month merger,” says Covill.

Keeping management engaged – because they are a key communication channel to staff – by keeping them in the loop of what is going on is also critical to success, he says. Also, direct communication to staff, emails from the CEO and webcasts were useful.

Probably the most useful tool, according to Covill, was a dedicated intranet page where employees could come and ask questions and the merger committee pledged to get back to them with answers quickly.

“It’s not any one channel of communication. In most organisations you have people spread all over the place and you have varying levels of hunger for information, so face-to-face, direct info from the CEO and being able to go to a regularly updated source of truth which was the intranet [was key].”

According to Covill the communication strategies from each bank were not identical but complementary

“The St.George culture is very friendly, people- focused, even a bit quirky,” he says. “West pac is a bit more for mal and the language is more formal. St.George employees are used to a more laid- back, open style of communication.”

“So it was very important that we tailored communication to our own audiences. While a lot of the information came from Westpac it was impor tant that we tailored it into the style that St.George employees were used to. You’ve got to continue to com municate in the way peo ple are used to. If not, it can be a switch-off and raise some cynicism.”

Planning for the merger

HR was an integral part of the initial due diligence process, according to Miller. “Mapping the differences between the two cultures was key to the success of the merger. HR had to play an enormous role in the due diligence in the run-up to the announcement of the merger.”

Miller explains that one of the successes of the merger is really through making it clear to shareholders, employees and customers that the banks are pursuing a multi-brand strategy – with the aspiration of being Aus tralia’s leading financial services organisation.

“Both banks have different brands and cultures which each would like to retain part of to maximise opportunities, while at the same time leveraging off the best aspects of the other bank,” says Miller.

What was particularly interesting through out the merger was the drop in voluntary res ignation rates to below 9 per cent, which is significantly lower than industry average. That figure is more than 3 per cent points lower than it was before the banks’ merger.

“It’s very satisfying to be head of human resources of such a large company going through a merger and seeing a significant improvement in the voluntary resignation rate,” says Miller.

At the initial stages, one of the challenges was to analyse the components of the West pac group big enough for St.George to com moditise and leverage versus the things that were small and unique enough to the St.George culture for the bank to retain.

“This is why we made the decision to bargain in a new St.George enterprise agree ment [for] when our current one runs out in October this year,” says Miller. “We would see the St.George enterprise agree ment as being a foundation block for the employee value proposition for St.George employees. There are common benefits across the two groups, one of the things we did ahead of the merger was map the dif ferences between the two organsiations.”

Miller speaks of looking at the unique attributes to the St.George EVP – which he believes need to be retained – while looking at opportunities from the other side and of being part of a larger organisation.

“Now career opportunity is an obvious opportunity that we will be able to offer people,” says Miller, “going from a com pany of 9000 to a 37,000-strong company, with opportunities that are far greater.”

St.George was really well known for some its flexible work practices, too, and even quirky practices which the company has continued to offer to employees. He says that the banks are looking at research at how to extend that.

Some of their more quirky practices are grandparents’ leave, and “five from four”, where over a five-year period you work four.

The belief and support from senior man agement in the importance of retaining the unique St.George and Westpac cultures was enormously helpful to Miller and his team.

“Greg Bartlett is very passionate about retaining the St.George brand,” he said. “Furthermore Ilana Atlas, (former HR director of Westpac) and more recently Peter Hanlon collaborated greatly in working to retain specific cultures.”

“We have had to face all the challenges that every com pany had to face because it was the GFC, and we had to look at how we align some of our practices to the West pac group. We had some of the challenges associated with the whole market,” he says. “We’ve been very cautious about any activity that would distract our employees from their jobs”

“Obviously we’ve been able to offer our customers a much larger ATM network, and been able to talk about the benefits and draw on being part of the Westpac Group.”

The underlying people metrics showed how the work of the communications and HR team was being effective throughout the merger process.

“We improved employee engagement two percentage points throughout the merger,” said Miller. “As a HR practitioner I’m obviously very happy with the positive engagement results.”