1.

Evaluate the bank's approach to implementing the merger.

Jack Duncan Ramsey believes that the merger would be quite different and would require a more complex process to implement. Working in the capacity of a senior vice president of human resources at North-eastern Bank & Trust Company (NBTC), Mr Ramsey has instincts that there might be complications in the merger process and thus develops a well defined approach to merge with First Bank & Trust Company (FBTC).

In the planning meeting, there were different views and concerns of different top officers. To properly evaluate the banks approach to implementing the merger, the ideas and thoughts of the people in the planning meeting is worth summarizing as in the table below: Person Larry McDonald Designation Chairman and CEO Senior vice president of human resources Pat Stevenson Senior vice president of operations President Views/concerns Merger is a natural fit since the two banks have locations with similar social, cultural and political heritages. This needs to be the smoothest mergers ever. Need to come up with a plan to complete and implement the merger. Stick to NBTC corporate philosophy, that is, customers will be treated well if employees are treated well. Cant guarantee jobs considering economics of scale and consolidate many positions, but do everything possible to absorb and maintain good people. Anticipation of concerns about protecting employees of FBTC. Rumours and anxieties on post merger job securities for FBTC employees. Few changes in personnel on line side. Potential problems due to major changes in the staff side. Managing people shall be the hardest task, especially the communication part. Successful merger is 10 percent planning and 90 percent communication. Consolidate computer systems Speed up FBTC employees on using NBTC equipment and technology Economics of scale should be forefront of thinking and planning. Combined business plan to get FBTC management committed to NBTC goals. Capitalize in geographical proximity and similar cultures.

Jack Duncan Ramsey

Thomas Buddy Kent

It is clear from the planning meeting summary that the top officials are really concerned about the merger. Specially, while Ramsey believes that there will be concerns in managing people and addressing job securities, the CEO McDonald states that the company cant guarantee jobs except for good people. The approach of the merger has to be in the old corporate philosophy as well, i.e. the customers will be treated well if employees are treated well. So, it is certain from these two facts that there will be consolidation of positions and focus will be on economics of scales, but those left in the organization would be treated well.

Besides the planning meeting, the three steering committees were formed that were dedicated for the merger process. They were:

1. The business planning committee a. Consisted of Presidents, top managers from operations, HR and line functions of both NBTC and FBTC b. Function to compare bank products, pricing decisions, decide handling transition period and phase in the merger. c. Developed one year profit plan and three year business plan d. New strategy formation: Your Southern New England Bank e. Consolidations that would save between $16 to $18 million a year f. Post-merger organizational structure for each major division of FBTC

2. The operations committee a. Consisted of managers from every major unit in the operations group of each bank and managers from support functions b. Developed detailed work plans to operationally merge the banks, such as conversion of loans, deposits, check processing and other operational activities.

3. The human resource steering committee. a. Headed by Jack Ramsey, consisted of HR staff from both banks b. Develop strategy for implementing human resource policies, practices and procedures

The banks approach of having a planning meeting and then the formation of the three steering committees and the detailed work plan of those committees is good enough for the merger process. Since the two banks were at different level of success and were focused in different sectors, having such a detailed planning is crucial. The NBTC bank thus seemed to have a well planned approach for the merger process which Jack Ramsey had anticipated to be different from the earlier smaller mergers the company have had on the grounds of the possibility of people reduction and job consolidation.

2.

Are there human resource issues other than those listed by the Human Resource Steering Committee that emerge when two companies merge?

When two companies merger, there may arise different scenarios and work related issues. Listing them exhaustively will be nearly impossible. However, depending on the nature of their work domain of the two companies and the nature of the culture and the environment of the two organizations, the concerned people could enlist few human resource related issues. For NBTC, the list consisted of the following issues:

Staff reductions and transfers Maintaining employee productivity during the merger transition period. Communication flow to employees to minimise unwarranted rumours Socialising employees to Northeastern's culture and philosophy Designing appropriate training programmes Balancing EEO/Affirmative Action goals

Considering the nature of the two banks getting merged, the list neglects few major issues related to human recourses that might arise in the future. First, and the most important, when the company plans to consolidate many positions and anticipate many layoffs, the would-be-laid-off employees must be give proper communications and consultations beforehand. The list neglects identifying the tentative layoff employees and providing consultations to them on the company merger, the philosophy of the company policies and the alternates they might consider.

Second, the pre and post merger organization chart (Exhibit 2.5) shows that many positions are getting consolidated. The roles and responsibilities along with the job description and job specifications of each level of the new hierarchy need to be well defined. People working in the capacity of a manager might have a different role now, and he/she should know his responsibilities beforehand to avoid conflicts and confusions.

Third, not only the employees of FBTC, but also the employees of NBTC shall be working with new faces post merger. Thus the employees from both factions need to be well socialized. The training program must include employees from both factions. The ice-breaking activity need to be conducted organization wide.

Polarization is another HR issue that might need to be dealt with. The employees who were working together pre merge have high chances of forming comfort dyads which is not good from an organization perspective. Once the merger takes place, the employees of both the factions need to be in the same horizon for a better future work environment and HR need to deal with this issue as well.

Establishing information centre might be another task HR needs to do since the merger process might bring many rumours in the air. To keep the false facts getting circulated to the minimum, these information centres might be helpful so that the employees can clarify their doubts easily and promptly.

3.

Do you agree with Ramseys comment that a successful merger is 10 percent planning and 90 percent communication? Why or why not?

Though it is difficult, and impractical in some cases, to exactly quantify the actual percentage of effort to planning and communication, it is utmost important that a good communication be established in every aspect of life, be it business or be it something else. In the same way, a successful merger must have a proper communication from the very beginning to the very end. A well communicated merger process will not only enhance the smooth flow of the process, but also reduce potential conflicts and rising of opposition voices in the future.

Ramsey gives high importance to communication compared to the planning. This shows that Ramsey is aware of the importance of the communication during the merger process. People might have their own opinions on the ongoing merging process and they usually create nuisance in spreading rumours. Once these rumours get strength, it is difficult in part of the management people to give clarifications and make people believe that the actual fact is different. Merger and uncertainty goes hand on hand among the employees. It is the proper communication which helps to keep away these uncertainties and rumours from the merger process. If people fear of losing jobs in the aftermath of the merger, the proper communication will guide them the facts. If the lay-off does happen, people will know in advance that they need to look for alternatives. A sudden burst of sad news to hundreds of people might complicate the merger process at some point in the future if there is no timely communication.

In addition, it is the sole discretion of the top management people on what to communicate and what not to. Liberal communication might be harmful as well. Only right things need to be communicated to right people at right time. This will avoid unwanted attention of unwanted people in the merger process.

As far as merge of NBTC and FBTC is concerned, the news of high layoff created panic among the entire FBTC staffs while only a portion were getting laid off. The result was that there were numbers of phone calls to the assistant of Ramsey, Ed Flanders. The sudden news made the entire staffs highly worried and they wanted to know what needed to be done to be able to keep their jobs. This makes it clear that the Bank did not properly communicate earlier regarding the percentage of layoff being suggested by the Business Planning Committee and was thus, not able to handle the situation in time. Had the bank communicated about the news in time to the concerned groups of people department by department, this awkward situation could have been avoided. The panic like situation was created due to the lack of proper communication and Ramsey simply acknowledged the situation stating he knew that this merger would be different.

4.

Develop a plan of action for handling the projected labour surplus. What factors need to be considered?

Handling the labour surplus is not an easy job. There is an emotional attachment in the layoff decision to both the employer and the employee. Sudden layoff news might bring waves of frustrations right from the employee being laid off to the entire workforce of the organization thus affecting the work environment negatively. However, life should go on and hiring and firing is part of an organizational life cycle. But given the layoff is carried out gracefully, the not so good process could be positively accomplished. For that well planned action for handling the projected labour surplus is necessary. The few factors that must be considered are:

Timely communication There should be strategic communication about the new company policies and the need of the layoffs thereof. The communication should specifically mention the proper reason on part of the company not being able to hold the selected portion of the workforce.

Identification of relatively low performers According to the CEO, the company cant guarantee jobs and that the company would on the other hand do everything possible to retain the good people. Thus layoff should target relatively low performers so that both objectives stated by the CEO get addressed. Performance based layoff could also be a better reason that could be given to the laid off employees.

Alternatives for the laid-off employees Employees are the asset of the organization and they need to be well valued. Thought the company is not able to hold few people, the responsibility of the organization does not end after publishing the layoff list and informing the laid off employees. They need to be guided with alternatives if possible. The few alternatives could be providing referrals, keeping them in the reserve pool with the possibilities of reemployment with priority in the future.

Sticking to company policy It is always wise decision to stick to the company policy when in doubt. The company must have a strong policy that addresses the special case of layoff when the situation demands. Since the employment term include adherence to the company policy, there is no doubt that the company can use the policy as the basis to lay off surplus labour.

Mitigate aftermaths A layoff as heavy as 20% of the workforce would no doubt generate a strong storm of criticism. Those who are still in the organization after the comprehensive layoff might also feel unsecured on their jobs. This might create unwanted performance degradation and job dissatisfaction. People might be more concentrated towards the ongoing merger that the daily scheduled business works. Thus, once the layoff employees have been well identified, it must be clarified to those who arent in the list that they should feel secured on their jobs. The rumours that might still get circulated need to be well addressed and proper written organization-wise mails should clearly state these facts.

5.

How should the Human Resource Steering Committee handle the needed staff reduction in the Trust Centre?

The business planning committee mentions in a memo to the human resource steering committee that specifically, in the Trust Centre, they must cut the staffs from 27 to 19. Now, the HR steering committee needs to identify the 8 people that constitute almost 30 percent of the workforce in the Trust Centre. These 8 staffs need to be relatively low performers out of 27 employees. The performance index of the entire 27 people needs to be brought to the common ground for this. Since the displacement shall take place from 6 to 12 months, the future to-be-laid-off employees should be well taken care of on their performance and behaviour after sending the layoff notice. They need to be well monitored in fear of arousing opposition voices and they need to be counselled so that there is a mutual understanding environment. This will make the merger process without any hassle and also people get well enough time to make up their minds and seek for alternatives if any. They should be assured that if need be, its them who the company

will give first priority in re-employment. They might in the mean time be asked to brush up and update their domain and technology knowledge.

NBTC has witnessed many mergers earlier in its history. But this is the first time there is going to be reduction in the staff along with the merger. Also, FBTC enjoys higher turnover than NBTC. Thus reducing FBTC employees and retaining NBTC employees need to be well justified. For this the company should prepare a well exemplified justification as well. In addition, the staff reduction process need to be very transparent and it should be assured to be bias free. Trust Centre staffs need to be made sure that the layoff is justifiable on legal, ethical and moral ground. Handling the needed staff reduction this way shall keep the unwanted disturbances in the future to the minimum.