Checklist for Mergers

CU360
July 8, 2009 | COMMENTS

Mergers are difficult to get right in the best of times. The challenges are compounded enormously when financial institutions are under stress, as in the current economy. That's why it's more important now than ever to follow certain basic rules to avoid significant loss of both members and key employees, according to Kevin Blair, CEO of Newground, St. Louis, Mo., a financial services consulting company.

Blair's firm has found that merger strategies should have a "retail delivery integration plan that leverages the synergies of the two organizations while minimizing collateral damage." He says an integration strategy should involve these five elements:

1. Assess brand equity. The assumption that "our brand is better than your brand" often clouds judgment when two organizations come together, Blair notes. Changing the name on the building may hurt you more than you think. Each institution has an existing brand image that may not align after the two come together. Prior to the merger, thoroughly analyzing each credit union's existing brand equity and how they fit together (or not) is the first step to a successful marriage of the two institutions, Blair explains.

2. Align retail strategies. Each credit union in a merger has an existing membership, brand promise and identity, culture, and unique market position. Combining the two credit unions only complicates the effort to create a new brand identity for the consolidated credit union. A clear retail delivery strategy must be developed that integrates and leverages the strengths of both organizations. Creating an aligned strategy probably is the single greatest challenge credit unions will face following an announced merger. Blair's advice? "Lock the surviving retail executive leadership team into a room with a third-party facilitator and don't come out until a strategy is hammered out," he says.

3. Integrate retail delivery. Once you've clearly defined the new brand promise and retail strategy, translating that into a positive experience for members is the next big challenge. Successful mergers require swift implementation across all distribution channels. These rapid, large-scale rollouts require watertight project management execution to maximize your investment.

4. Transform culture. Preparing front-line staff to address the challenges of today's market and member needs is difficult enough without the additional task of asking them to explain all the issues that occur when their credit union's name disappears. Blair advises developing custom programs to prepare employees to address frequently asked questions, and to leverage the opportunity both to create loyalty and sell services. These programs shouldn't focus solely on the front line but on the entire organization. How your front line embraces and explains the merger will have a greater impact on its success than any other single factor.

5. Be visible. Senior management must be visible. Nothing is more powerful than leadership that's accessible, and that demonstrates confidence and direction. Time spent with both employees and members is invaluable in understanding the challenges your credit union faces. It also provides insight into what's working and what isn't as it relates to the overall strategy.