Talk About Mergers Early And Often

Prepare staff for the possibility of a merger to ease fears when it happens.


When $89 million Allegis Credit Union and $340 million Honor Credit Union merged last summer, the continuing institution knew the people side of the equation was critical to its success. For the new Honor Credit Union, easing employee fears and integrating cultures was one of the most challenging aspects of the transition. Despite the fact both institutions served civil servants of the state of Michigan — Allegis through its state employee base and Honor through its Berrien County educators base — there was minimal overlapping in employee roles and staffing positions at one credit union generally complemented the other.

Here, Kathy Burdick, vice president of human resources at Honor Credit Union ($456.8M, St. Joseph, MI), shares lessons the credit union learned during the merger as well as tactics it used to integrate two staffs into one.

How did you announce the merger to staff at both organizations?

Kathy Burdick: The timing of the merger announcement was important to us. The CEOs of Allegis and Honor held team meetings at the same time on the same day to communicate the merger news.

What were the reactions from the staff?

KB: The staff at Honor Credit Union was not at all surprised by the announcement. We talk about mergers in general all the time and had been doing that for nearly two years before any merger occurred. By saying things like “it’s always a possibility, we’re always looking,” the employees were prepared for the news. Their reaction was more along the lines of “it’s about time.”

The Allegis team, however, was more shocked by the news. They were not as prepared and initially took the announcement as a sign of failure. Questions and comments from that side included: “Why are we doing this?” “We’re doing well as an organization.” “We’re in good financial standing.” “Why would we do this?” Allegis had to do a lot of damage control after the initial announcement. This was a merger of equals; no one was failing. We needed to emphasize that and reassure the Allegis employees.

How did you handle negative reactions?

KB: We visited back and forth between the two organizations a lot. We introduced people to one another and emphasized that we were equals. We had the Allegis team visit us in the Honor corporate office, and we sent staff members to Allegis so they could get to know one another. We set up a buddy system so employees had one person who did the same or similar job that they could call with questions. We also held a meeting for everyone on both sides to get to know one another. Two of the major concerns that initially caused negative reactions were whether we’d have a place for everyone in the new organization and whether their benefits would change. We built an org chart to ease everyone’s minds. I also met with staff members individually about their benefits. [When comparing the benefits] we gave them the better benefit if an item differed between the two organizations — such as having three weeks vacation versus two weeks. 

Did you retain most of the employees?

KB: We retained every employee. There were approximately 39 employees at Allegis compared with slightly more than 100 at Honor. Some positions overlapped, so we tried to place those individuals in positions that were similar to what they had. It was easier [for HR] because we got to use every person. The finance area was the most difficult because of duplication. Both the vice president of human resources and the CEO at Allegis retired soon after the merger. Many employees felt a sense of abandonment, which was another issue we had to address.

Did the credit union do anything to keep morale up during the transition?

KB: Yes, absolutely. We gave out small gifts frequently and held a number of small group employee meetings in addition to the buddy program and larger introductions. When we held larger meetings, we served breakfast and built in time to talk and mingle. Several of us used that time to introduce folks that held similar jobs or were shy to start building a more cohesive team.

How did Honor bring Allegis employees into the new organization’s culture?

KB: One of our biggest lessons learned was on the cultural side. We thought our cultures were very much the same but found they were quite different after we merged. Honor has a sales culture, which we implemented four years ago. Our initial transition to a sales culture was difficult and led to quite a bit of turnover. We’ve seen similar turnover trends with the merger as new employees adjust to the culture. We’ve held training sessions to go over the “Honor Way” and are still conducting them. Although it’s been well over a year now, the cultural integration is an ongoing work in progress.

Were there positive changes from integrating the Allegis employees?

KB: Oh yes. The merger opened doors for a lot of people to move up as the continuing credit union has had a lot of growth. In credit unions, it’s not unusual for managers to stay with the organization so it can be difficult for employees to move up. We had a lot of feedback from staff members who were excited about having more opportunities. We’ve also been able to improve procedures and processes by learning from each other.

What did you do to prepare staff to deal with members’ emotions regarding the change?

KB: We did scripting for everyone and talked about it in advance. Before sending announcements to the members we held sessions to discuss the merger, why it was beneficial, and what questions members might have. We made sure managers were available after the member-facing announcement so if someone didn’t know what to say or how to answer a specific member question, they had backup. We also used an informational booklet from a firm that does a lot of merger and acquisition training that talks about the emotions that go along with any major change.

Are there any other lessons you can share?

KB: As I mentioned, the cultural aspect of the change was one of our biggest lessons learned. We are doing a cultural assessment right now for Honor Credit Union. In the future, we will use the same outside resource that is doing our cultural assessment to evaluate any potential merger candidates. This way, we’ll have an independent review of both organizations’ cultures before a merger takes place and can prepare to address any potential areas of concern.

Another lesson learned early on in the merger was the need for video conferencing. Initially, we communicated a lot via conference call and found it was difficult to gauge people’s reactions without being able to see them. We have a video solution in place now and use it often. It makes communications more effective and would have been beneficial to have in place earlier.

Communication regarding benefits is something else I would have done sooner. It took me approximately two weeks before I was able to meet individually with staff, and that was a major area of concern for them. In retrospect, I would have gotten out the benefits information right away to the managers and let them share the information to ease people’s fears that they would lose their benefits.  

The biggest lesson learned is to talk about mergers before it actually happens. Don’t surprise anyone. Even if you’re not ready to merge right now, start mentioning it so when the day comes, no one is shocked.