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Minding the Merger

Minding the Merger

Time was both ally and enemy when professional services firms Ernst & Young and the besieged and battered Andersen agreed to merge. Beverley Head examines the frantic first phase of integration

Just 60 days separated the signing of a memorandum of understanding between professional service firms Ernst & Young and Andersen and the eventual merger of their Australian operations. That frantic pace galvanised integration teams, glued together composite teams and created an urgent energy, but it also led to less-than-optimal communications, particularly about some of the IT changes, and demanded a superhuman effort from the IT and administrative teams.

Nevertheless, on Monday, May 27, 3000 EY staff and 1500 Andersen staff did come together across Australia. When they logged on to their computers that morning they were greeted by an information system that reflected the newly-merged entity, and an e-mail from the chief executive Brian Schwartz.

Admittedly some of the changes were hard to fathom for the 1500 ex-Andersen staff, and IT teams roamed the floors helping people navigate the new system. The change process will continue over several more months, but in the 60 days before integration, the IT team succeeded in getting a whole new front end up and running.

IT, however, cannot exist in splendid isolation, and the changes the CIO wrought stood alongside those being simultaneously initiated by other line managers, including programs covering corporate branding, human relations, marketing and business development.

A conversation with the CIO and four other key changemeisters at Ernst & Young revealed what this first and frantic phase of the integration process involved.

James Millar, chief operating officer, deputy CEO: We decided very early we would not make this a merger where you have two sides coming together and spending the next two years working out their turf. From the day we started, that turf was worked out.

CIO: Why was that so important?

JM: Professional services run on the confidence of people. We run on people's brains. Therefore any destabilisation, for as long as that lasts you will not get them applied to what they do best. I'd been through the Ernst Whinney-Arthur Young merger and that was a drawn out terrible affair. I'd watched the PwC one, and I make no comment on it but it's still going I believe. The KPMG-Hungerford one - they didn't set the goal around the people. Unless we get the people in a very short timeframe incented to go forward, we won't get there.

Robyn Worthington, change management specialist: I think the biggest challenge was to help everyone, whatever part of the firm they came from, to feel part of something new and exciting. Even for the EY people this was something more than they had before.

Liz Griffin, senior manager of organisational change, people: With mergers and acquisitions, people often think it's only going to happen on one side. In fact it's all people going through a change. Recognise that you're going to have that chaotic time, but manage through it and have a people focus.

JM: We even got rid of the duplicated people very quickly so you don't have them sitting around knowing there weren't two jobs for one person. Then you have everyone else focused on performance. [Ernst & Young sacked 150 people in July, mostly ex-Andersen].

CIO: What about managing the two quite different cultures?

LG: Research shows it's often five to seven years before you embed everything in the culture.

JM: There are some stark differences, but they have a core that is very similar. The other important part is that if there is an issue we default to the Ernst & Young culture.

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