How To Integrate Two Employee Teams After A Merger

One Montana credit union relies on transparency and open communication to assimilate new employees gained through a merger.

 
 

When asked about the changes Park Side Financial Credit Union ($190.9M, Whitefish, MT) has made in the past several years — among them a federal to state charter conversion, a logo and branding change, a core data systems conversion, and a merger with Gateway Community Federal Credit Union — president and CEO Jeremy Presta laughs, because, what else can one do when looking back at an eventful two years?

“We’re gluttons for punishment,” he jokes.

The credit union made the conversion from a federal to a state charter with an eye toward expanding its field of membership. Based in Flathead County, an underserved community in northwestern Montana, the charter conversion allowed it to expand into an additional 11 counties in the western part of the state, among them, Missoula County.

So in 2012, when Missoula-based Gateway — at the time approximately $50 million in assets— approached Park Side with an offer to merge, Presta and the credit union seriously considered. Gateway had healthy balance sheet management and income; it also presented an opportunity to expand into the second most populous city in the state. Plus, it was Presta’s first credit union. 

CU QUICK FACTS

Park Side Financial Credit Union
Data as of 12.31.15

HQ: Whitefish, MT
ASSETS: $190.9M
MEMBERS: 22,283
BRANCHES: 7
12-MO SHARE GROWTH: 40.5%
12-MO LOAN GROWTH: 51.5%
ROA: 0.07%

“It was where I opened my first account,” he says. “I had an account with Gateway up until a handful of years ago.”

The nuts and bolts of the merger process were straightforward. More than 80% of members approved the merger, and the NCUA and the Montana Division of Banking and Financial Institutions gave their blessing as well. Park Side waited until it completed its core data systems and charter conversion before finalizing the merger on July 1, 2014.

With any merger, managing employee expectations is an involved but important process. Here’s how Park Side prepared and integrated its workforce.

Preparing Employees For A Merger

At every yearly strategic planning session, senior executives at Park Side discuss mergers, and that communication trickles down to other staff members. Including Gateway, Park Side has merged just twice in the past 10 years. Presta says the credit union does not actively pursue merger opportunities, but it listens to proposals and educates staff on what a merger could accomplish for the institution, such as diversified membership and economies of scale.

When Park Side announced the merger with Gateway to employees at an all-staff meeting at headquarters, it wasn’t a surprise. In fact, pleasantly, many employees already traveled to Missoula for shopping and sporting events, Presta says.

In Missoula, Gateway’s now-retired president and CEO Jim Jacobson met with his employees and announced the merger. Gateway had merged with institutions in the past, so the process wasn’t unfamiliar. Still, the senior leadership at the credit union asked employees to follow up with them individually if there were questions, comments, or concerns.

“The members honestly didn’t have a lot of questions and neither did the employees,” Presta says. “We just made sure we communicated through the approval process and the combining of the two credit unions.”

After the announcement, Presta, a few members of his senior management, and Park Side’s CPA firm drove to Missoula to introduce themselves to Gateway’s employees, lay out a plan for the merger, and discuss how to handle member accounts.

Park Side guaranteed all Gateway employees a job. Those who stayed retained their job titles, remained in their branches, and received a retention bonus. Those who left received a severance bonus. One Gateway employee who was close to retirement chose the severance but stayed on until December to help the Gateway team convert to Park Side’s data processing system. All told, Park Side absorbed 17 employees, from tellers and loan officers to branch managers and senior management.

Bridging The Distance

The distance from Whitefish to Missoula is slightly more than 130 miles. Because Park Side leaders have been able to visit the employees of the three branches it inherited, the credit union has been able to better integrate the two institutions.

“We’ll get up at 5 or 6 in the morning and be in Missoula in time for an 8 o’clock or 9 o’clock morning meeting,” Presta says. “We’ll spend all day down there and still be home in time for dinner.”

3 Lessons In Integrating Employee Teams

  • Create Transparency: "You needed to be as open and honest as possible and make sure your employees know as much as possible. Like anybody, they don’t want to be blindsided."
  • Understand You Can't Be All Things To All People: "You’re never going to be able to cover everything. And you kind of have to be okay with that. You’re going to leave rocks unturned, you can’t anticipate every question, comment, or concern you’re going to get." 
  • Give Your Employees A Cooling Off Period: "I definitely think giving our employees a bit of a cooling off period before making big changes with data processing and training [is important]. We’re not changing everything at once. If we did too much change at once everyone’s head might implode, including mine." 

Gateway preserved much of its structure until it was able to convert its data processing system to Park Side’s system. For example, for five months after the official merger date, Park Side’s Flathead branches and Missoula branches sent separate month-end financials to its CPA, who combined the two.

Despite this back-office separation, Park Side worked diligently to integrate new employees to the institution’s established processes. As soon as the merger became official, the credit union combined HR functions, put new employees on the payroll, and outlined their new benefits. Additionally, senior management, marketing, or HR employees from the Flathead branches visit Missoula for two weeks or more every month.

“We try to get down there as much as possible so they get used to us,” Presta says.

This gives Missoula employees face time with credit union leadership and allows them to learn more about Park Side’s policies and procedures.

In addition, Missoula employees underwent an onboarding process that was similar to what a new hire would face. Unlike new hires, the Missoula employees skipped introductory credit union-centric lessons.

To better orient the staff to Park Side, Missoula employees shadowed different departments at the Flathead branches and completed formal training on the data processing system and HR policies and procedures. In the future, Missoula employees will start CML (Creating Member Loyalty) training, which will detail expectations and highlight tenants of Park Side’s sales and service training.

We as credit unions all think we can serve our members better than anybody else can serve them. And everybody is right.

Jeremy Presta, CEO, Park Side Financial Credit Union

Other initiatives to align staff members from different credit unions include bringing in speakers to talk about cooperation, communication, and culture; combining management teams to complete community projects; and sharing employees in different markets to help with coverage.

“The goal is to get all employees to visit and work in the other market at least once so we can put names with faces and see how the other half lives,” Presta says.

Beyond the distance and systems gap between the two organizations, Presta says the largest challenge has been the culture shift. Bringing employees from Flathead and Missoula together more often will help, he says, but he will continue to remain conscious of the culture fit and new employee buy-in.

“I don’t care when two credit union CEOs say their cultures are similar,” Presta says. “We as credit unions all think we can serve our members better than anybody else. And everybody is right. I’ve been at Park Side for 13 years, and I’m still trying to get everyone’s buy-in. And in 30 more years I’ll probably still be trying to get everyone’s buy-in.”

So the credit union takes it day by day. It tries to be honest with employees and make sure they know as much as possible. Presta knows he can’t answer every employee question, comment, or concern, but as long as he and Park Side are doing everything they can to respond, that’s okay.

“Transparency, transparency, transparency,” he says.

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May 11, 2015


Comments

 
 
 
  • Jeremy does a wonderful job making sure every employee no matter what their position is, know that they are a part of the team and that we know the direction Park Side is heading.
    Lorie