Now that Noosa Council has effectively taken over Tourism Noosa (both the money and its key role), here comes the hard part.
It needs to merge the key functions of the tourism organisation into the Council’s somewhat shattered current structure while at the same time, so things don’t go totally pear-shaped in Tourism Noosa, retaining those of its staff it wants to keep.
I have been reminded of how in 2000 I project managed the communications for the acquisition of Colonial by CBA for $9.4 billion, at the time the biggest merger in Australian history. (It was called a merger, but was really a takeover.)
Back then, I read whatever I could lay my hands on about mergers and acquisitions. There was a common theme in all the war stories, case studies and learned journals: acquisitions and mergers were horribly difficult to manage and they often failed to achieve the desired results. In fact, the story of mergers and acquisitions globally is that they end up trashing much of the value of that which has been taken over.
And, looking back, this is how it worked out for the Commonwealth Bank. When the CBA sold part of Colonial to corporate private equity pirate KKR in 2018, that 55% stake, which had cost it $8.2 billion, had shrunk in value to $1.8 billion – a loss of $6.4 billion.
Back in 2000, the culture wars that broke out inside each of those merged entities had to be lived through to be believed. The people who had been taken over, whose positions were now subordinate to the victors at every level, were mostly aggrieved and often unwilling to defer and collaborate. Colonial, which had been a high performing organisation, as a subsidiary was soon reduced to troubled a also-ran.
In 2006, I published this article ‘How to Host a Merger’ in Today’s Manager, the journal of the Singapore Institute of Management. In it I wrote about what I had learned from my experience in the takeover war zone.
It’s still a relevant read 15 years later, it offers some useful tips and – given the circumstances Noosa Council currently faces making the most of its new acquisition – it gives us something with which we can compare how the Council goes in the struggle that lies ahead.
~ How to Host a Merger ~
by Ingrid Jackson
Published in Today’s Manager,
Singapore Institute of Management, Nov/Dec 2006
When in March 2000 the Commonwealth Bank of Australia and Colonial Limited announced that they intended to come together, they were foreshadowing the largest merger in Australian corporate history.
Whatever the measure of success, studies suggest that many mergers fail to deliver the expected, and hoped for, outcomes. In this case it was clear from the start that bringing together two large, complex financial institutions posed a formidable management task. It was also clear there would need to be a strategic and well executed communications program. Mergers are complicated and communications must address all the inherent challenges to be effective.
The communications fundamentals during a merger revolve around stakeholder buy-in. But the communications requirement is much broader than this – stakeholder analysis, issue identification, key messages, strategic and action planning, coordinating external and internal communications, project management and responding tactically to often rapidly changing circumstances.
The Commonwealth Bank/Colonial merger epitomised the communications requirements for four distinct merger phases – pre-merger, the merger announcement, post-merger and integration.
The phases had different objectives, constraints, stakeholders and issues. The communications strategy had to take a different approach for each phase – in effect there had to be four successive yet related communications programs.
Phase 1: Pre-merger – Lining up the ducks
The prelude to the merger consisted of a series of formal milestones. First the Victorian Supreme Court convened meetings of Colonial shareholders before approving the release of the official Colonial Scheme Booklet. Subsequently approvals were required from the Federal Treasurer, the Australian Competition and Consumer Commission, Colonial shareholders and the Victorian Supreme Court.
Manage stakeholder issues
All this was played out over three months under an unrelenting media spotlight. Stakeholder activity ran hot. The merger had political, economic, community, financial services sector and employment implications for thousands of stakeholders. Employees feared for their jobs. Regional communities and politicians sought assurances that bank branches and employment would be maintained. The ACCC was concerned to maintain competitiveness. Colonial shareholders pondered benefits and costs. Customers wondered about banking products and service quality.
Managing stakeholder interests was vital. Communicators undertook detailed issues analysis to plan stakeholder buy-in and generated an initial burst of communications activity targeting media, politicians, regulators, community groups and industry bodies.
Maintain tight control
Several bank departments were normally responsible for relationships with investors, regulators, government, industry, media, customers and employees. During the merger things had to be done differently. There had to be tight control of the agenda, adherence to legalities, confidentiality, and simultaneous and swift communication to all external and internal stakeholders.
The Managing Director gave the Corporate Communications Unit the responsibility of driving and coordinating all pre-merger communications. No exceptions.
Communicate progress
Communications can build a positive context for the merger. Pre-merger the bank’s communications clustered around the formal approval milestones. The aim was to keep the media, the public and employees updated, while reinforcing merger benefits.
Plan for contingencies
Each step of the way demands comprehensive internal and external communications. But approvals by the Treasurer, ACCC, Colonial shareholders and the Victorian Supreme Court were not guaranteed. So alternative communications were drafted and approved in readiness for each positive or a negative outcome. Either way, the result could be communicated at the press of a button.
Get the legal nod
Because of the sensitive and legalistic nature of merger negotiations, all pre-merger communications have to be approved by the bank’s lawyers – an extra step in an already tight timeframe. Communications had to be planned, drafted and signed off well in advance.
Reassure employees
The looming merger means uncertainty for employees of both banks. For each milestone, employee bulletins were coordinated with external communications so staff received information before reading it in the media. All communications clearly explained each approval phase and the steps yet to come.
Keep an eye on the media
The media, with many sources beyond the official, communicate rapidly and with credibility. The banks had to be on the front foot with their communications to stakeholders. Media content was closely monitored. Response to unexpected media comment had to be quick.
Phase 2: Announcement – Beating the drum
As soon as Victorian Supreme Court assent was obtained, the merger could be announced. Communications were then firmly in the hands of the Commonwealth Bank.
The announcement was very much in the public eye with heavy media attention. This required a comprehensive communications exercise including press releases, media briefings, TV and radio interviews with both CEOs, liaison with interest groups and information to parliamentarians.
The CEOs jointly briefed senior executives and sent separate letters to their respective employees. The Commonwealth Bank MD spoked on the staff satellite TV channel. Call centres were provided with Q&A scripts to deal with customer enquiries. An open letter to customers from the Commonwealth Bank MD appeared in the press.
Phase 3: Post-merger – Painting the vision
After the merger there was a week’s lag before the merger became legal. From the government, media and public point of view, the excitement was over. But for the customers and employees, the changes had only just begun. The suspense was over but plans had yet to be put in place for the newly joined companies. The significance of post-merger communication to customers and employees cannot be underestimated.
Define communications protocols
The moment of the merger is no time to let go of the reins – the results could be chaotic. Interim protocols were put into place to ensure coordinated and consistent information in the immediate post-merger period:
- The respective CEOs communicated to their own employees
- Organisation-wide and external communications coordinated centrally
- Employees in each entity were communicated with simultaneously
- Normal communication channels used wherever possible.
Announce the new structure
A merger means great uncertainty for employees. As the Commonwealth Bank had bought Colonial, the Commonwealth Bank MD now headed the newly merged entity. People wanted to know what would happen to the organisational structure, their jobs and their work. It was important to alleviate this uncertainty as quickly as possible.
Within days a new top team structure was announced. Two weeks later, next level down appointments were confirmed. It was impossible to reassure individual employees about their jobs, but a timeframe for announcing lower level structures and appointments was provided.
Change mindsets
When things are in flux, people can be alienated by inadvertent use of language. Thus the tone of communications had to be advised and monitored, because this did not necessarily come naturally:
- Inclusive (“us” and “our”, not “them” and “us”)
- Collaborative (“we together”, not “we will do this to you”)
- Framed in the present or future (“our joint strengths are . . .”)
- Collegial (“our integration” and “our staff”, not “our staff and their staff”, and definitely not “the new staff”)
- As one (“our customers”, not “our customers and their customers”)
Welcome new employees
All of Colonial, except the funds management arm, was to be merged with the Commonwealth Bank. Naturally Colonial employees had concerns.
In light of this, as soon as the merger was complete the MD wrote a letter to all staff, outlining merger benefits and next steps would be. A Welcome Pack and corporate video were produced, containing information about the newly merged bank. A series of employee bulletins followed to keep people informed.
Manage employee expectations
Because of the need for employee confidence and loyalty, employee communications are crucial during the post-merger phase.
Post-merger plans were yet to be fully fleshed out. Employee communications had to focus on the most salient employee concerns, even though details were not yet available:
- What are the vision and benefits for the organisation?
- What does it mean for me now and in the future?
- What does it mean for my customers, products, projects?
- What does it mean for my colleagues and business unit?
- What are the implementation milestones and timeframes?
As soon as possible a communication timeline was communicated: at least employees would know when they would be told. While the value of face-to-face communication was recognised and used for cascade briefings, managers could not be expected to have all the answers, so a confidential e-mailbox was launched for staff questions.
Two sets of employee communication channels
Before the merger, communication with employees was carried out by Commonwealth Bank and Colonial separately.
Once the merger was finalised, the Commonwealth Bank corporate communications unit was in the driver’s seat, faced with two sets of employee communication channels. The Commonwealth Bank had satellite TV, staff emails, MD letters, a magazine and an Intranet, plus diverse divisional communications channels. Colonial’s communications were streamlined, relying mostly on short emails with hyperlinks to a dynamic Intranet.
After the merger all normal communications channels were used wherever possible. Multiple versions of communications were needed for the parallel channels. Before CBA-TV was extended to all branches, videos of TV programs were distributed for viewing by Colonial people.
Phase 4: Integration – Forging the synergies
Once the new executive team was in place, decisions had to be made about integrating duplicated areas. Integration planning and implementation were carried out separately by each division.
The issues to be managed during the integration phase included branch amalgamations, rebranding of Colonial branches and products, honouring commitments to regional employment, and maintaining branches in country towns.
Hand back responsibility
The logistics of integration require localised communications to customers, employees and stakeholders, so responsibility for communications was devolved back to divisions.
The roles of Corporate Communications and other head office units reverted to ‘business as usual’ – bank-wide communications with employees, media, investors, regulators, government, community groups and industry bodies.
Maintain customer loyalty
Customers were concerned about what the merger meant for their accounts and their branch relationships. Initially there were no answers. As integration plans matured, letters, posters, newspaper ads, brochures, and the website were used to keep them informed.
Later a comprehensive communication plan was rolled to facilitate the branch amalgamation and product changes.
Engage offshore employees
Additional offshore businesses were added to the bank’s portfolio with the purchase of Colonial. A network of liaison points was established for offshore communications. An information pack and corporate video were produced and regular news updates disseminated.
Respond to employees
To ensure that communications continued to meet employee needs, a monthly telephone survey tapped staff morale, information needs and communications effectiveness. Survey results were communicated to executives and used as input to communications planning.
Demonstrate integrity
The bank upheld all its public commitments to employment, competitive pricing, community support, and keeping the last branch in country towns. Details were communicated in national newspapers, the bank’s website and branch posters. Publicity for milestone events included cheque presentations and radio interviews with the MD.
Celebrate merger success
Over the next couple of years, merger progress updates for analysts, shareholders, the media and employees were coordinated by Corporate Communications. Analyst briefings, media releases, shareholder letters, annual reports and employee bulletins all played a role keeping stakeholders aware of the successes of the merger throughout the integration period.
There was even occasional reference to the largest communication program in Australia’s corporate history.
