Smooth transition of power is vital | South China Morning Post
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  • Mar 6, 2015
  • Updated: 11:07am

Smooth transition of power is vital

PUBLISHED : Friday, 11 January, 2008, 12:00am
UPDATED : Friday, 11 January, 2008, 12:00am

When the financiers and dealmakers move on to their next big project after finalising a corporate takeover, the complex process of integrating the two companies into one entity is really just beginning.

Much of the work in ensuring a smooth transition inevitably falls to the human resources team of the 'receiving' company. They become the nerve centre to co-ordinate strategy, communications, training and trouble-shooting and - having overseen two successful takeovers in the past couple of years - Ellen So, head of human resources for AXA China Region Insurance, has become an authority on the subject.

Ms So learned the ropes following the buyout of MLC Hong Kong from National Australia Bank in 2006. After this takeover, AXA completed the HK$2.4 billion acquisition of Winterthur Life (Hong Kong) in December that year and Ms So, along with her colleagues, swung into action.

The crucial first step was to determine a detailed structure for the new organisation. For this, a 40-person steering committee was formed, with 10 work-stream leaders and representatives from every key department in the two companies.

From the initial meeting of the four-month analysis and design phase, they had one primary objective - to keep all critical staff while maintaining the same levels of service and combined revenue.

Beyond that, though, the committee also had to create an organisational structure equipped for expansion, strengthen areas, such as sales and operations, and make sure employee morale was sustained throughout.

'We set aggressive targets to make formal announcements in May, with the objective of having one integrated company by the end of 2007,' Ms So said. 'The key message was that we did not want to lay off staff and, at management discretion, would guarantee positions for staff at senior officer grade or below.'

The preparatory phase involved a lot of fact-finding and comparison. This was to understand the job functions of the 200 or so Winterthur staff to match them with new vacancies and avoid duplication with the existing 550-strong AXA team. But it was also necessary to harmonise terms and conditions, benefits, policies and procedures.

'It was very factual. We put the two sets of terms and conditions side by side and compared which was better. It was obvious the majority of our benefits were better than theirs,' Ms So said.

She mentioned the company's share plan, counselling service for domestic or personal problems, and disability insurance. In other areas, such as annual leave and medical cover, where the comparative benefits were less favourable, the AXA terms were applied.

'We guaranteed there would be no change in salary, no probation period and that years of seniority would be recognised,' Ms So said. 'Because it was the middle of the year, we also confirmed the 13th month, annual and discretionary bonuses, which were Winterthur conditions, until the end of the year.' It was then up to individuals to apply for specific positions through their department head or the HR department.

Incoming staff were not required to take the same tests as external recruits. Instead, the selection process focused on interviews, recent performance appraisals and feedback from previous supervisors. Discussions also covered future career paths.

Once the steering committee had approved the proposals, all new contract offers were sent out on the same day, with two weeks allowed for acceptance. Ms So considered it a sign of the effectiveness of the process that 90 per cent of Winterthur employees received offers and about 150 joined. Allowing for natural attrition and usual staff turnover, these numbers are considered high.

She emphasised, though, that a genuinely smooth transition required close attention to communication, training and the emotional needs of incoming staff, long after the official transfer date.

For this reason, the company appointed external consultants to provide additional expertise. The consultants conducted workshops to teach managers three skills - how to lead change, coach subordinates and facilitate meetings during the transition period.

'There are differences in culture and the way we do business so in receiving employees you need to give them a sense of belonging and make them feel part of the organisation,' Ms So said.

She said that this could only happen if you communicated openly and sought to address everyone's concerns. Therefore, month by month, there had been a series of senior management briefings, CEO roadshows and focus groups for people to raise issues and learn about departmental roles and responsibilities.

Receiving managers were given clear guidelines on setting objectives and designing individual development plans for the rest of

the year. These were based on

AXA's standard training calendar and the practice of defining the

skills and attainments required for each grade.

Ms So said it was important not to underestimate the emotions bound to surface during any such transition.

'You should spend more time with people being integrated to understand their needs, assimilate and build trust. With more discussion, dialogue and communication you are then on the road to success.'

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