Week 2 Task 5

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People Selection Post-Merger
ID: 50V101215000124367
Deciding who will stay and who will go after a merger is a key management decision. Ensuring the
selection process is open and fair, will help people to understand the decisions that are taken.
Aug 05, 2004
2004-2010, 50 Lessons Ltd.
Organizational Behavior
Peter Ellwood
Rexam Group
How do you handle a merger in an efficient way? There is now a long track record of
companies that have come together. The great thing is to make sure that you’ve got a very
clear plan when you merge. You can’t have two IT systems, two training centers or two
treasuries. You’ve got to determine which things have got to be put together quickly, and
what can wait a little while.
We did the Lloyds TSB merger, and when you put together two very large companies and
you have a payroll of 90,000, you know that, by simply reducing duplication, you can take
maybe 10,000 people out of the combined organization: which is what we did.
If you want to prepare your own people to go through the trauma of a merger, you’ve got to
be able to say: ”Look, the only thing that will make this work is to create a company that,
when we’re finished with it, will be supremely better than what we had before; it will be
much better than the total sum of the parts. We’ll create much more shareholder value than
before. As a result of that, we will have fewer people. The overriding deal is that the best
person gets the job, whether it’s the Chief Executive or whether it’s the person who makes
the tea. If we accept that and we think we’re good enough, we will get jobs. If we’re not
good enough, if there is somebody better than us, we should not expect to keep our jobs.”
If you say: “That is an absolute blueprint of how we’re going to work; it applies to
everybody,” then people say: “Okay, that’s tough but fair. You have to accept that there will
be some pushback when you want to take some people out, and you’ve just got to say:
“No; we’ve done the plan and this is what is going to happen” – and it will happen.
When we did the Lloyd’s TSB merger we interviewed about 1,000 people in the space of
six weeks to decide which person would take which job. It wasn’t necessarily going to be a
Lloyd’s person because it was twice as big as TSB; nor was it necessarily going to be a
TSB person. We chose the best person and all those people were interviewed. As a result,
even though a lot of people had to be made redundant, the people in the company said:
”Well, they may not have got everything right, but at least it’s fair. We understand the
process, it’s very open and we know these things have to happen when two companies
come together.”
But you’ve got to be very resilient in pushing those things through because someone will
say: “You can’t possibly get rid of this guy, he’s been here for 30 years and he’s brilliant.”
Well, he may not be brilliant. He may have been there for 30 years, but that’s no reason to
keep him.
© University of Phoenix 2010
People Selection Post-Merger
Page 1

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