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Monday, 21 February, 2000, 15:24 GMT
How staff deal with mega mergers
The last to know - staff found out about the merger in newspapers
By BBC News Online's John Venables, in Norwich

It remains to be seen what effect the merger between Norwich Union and CGU will have on the City, but the news has sent shockwaves through the workforce at the two companies.

Current estimates indicate up to 4,000 jobs could go. Staff first heard about the merger through leaked reports in the national press at the weekend.

Employees at CGU went through a merger with General Accident just two years ago. Of those who remained in the group, many are still trying to adjust to the changes.

Management should think about merging corporate cultures as well as corporate finances if they are to get the best out of people

Angela Baron, Institute of Personnel and Development.
"I've spoken to young people there today, and they are dismayed and shocked. Very little work will be being done in the office at the moment. People will be more intent on finding out what the implications are for them personally," said Graham Shuttleworth, chairman of the CGU section at the union MSF.

Reaction from staff outside Norwich Union's headquarters in Norwich was mixed. One worker who didn't want to be named said: "I'm scared. I haven't been here very long. I was made redundant from another company - and now this!"

Another was more philosophical: " In the business world it happens all the time. I don't think it can do any harm in the long term. I don't think anyone's got bad intent so it should be reasonable."

Jobs for life

The impact of the merger on Norwich Union staff may be harder than for finance sector workers in other cities.

Norfolk is a largely agricultural area, and Norwich Union has traditionally been the largest employer in the city. With two hundred years of history behind it, the company has a reputation for benevolent paternalism. Local ties are strong and people are reluctant to move to look for work.

Norwich clock
Norwich Union - 200 years of staff stability
"Until recently it was possible to join Norwich Union at sixteen and enjoy a full career without ever thinking of moving," says Ken Hurst, business editor of the Norwich Eastern Daily Press and former Norwich Union public relations director.

"Staff enjoyed a cotton wool existence, with job security, cheap mortgages and pensions, and had never worked for anyone else. Sudden job insecurity bites hard when you're aged 40 with few other options."

Culture shock

One problem is that when management plan a merger they think about assets, financial implications and strategy, yet they ignore the people involved.

CGU and Norwich Union have very different cultures, working practices and values, and that could make life difficult even for staff who escape redundancy.

"When two different companies merge, especially when staff have little warning, the effect is entirely negative. People are frightened and uncertain. They turn in on themselves and creativity and innovation are stifled," says Angela Baron, an advisor to the Institute of Personnel and Development.

Richard Harvey
Richard Harvey, chief executive of Norwich Union, is happy ... but what about his staff?
"Management should think just as much about successfully merging corporate cultures as they do about corporate finances if they are to get the best out of people.

"Lloyds and TSB did it well some years ago; there's no reason why other companies can't. That way they get the best from both cultures and also their staff."

There is anger in some quarters that news of the Norwich Union / CGU deal emerged through leaks and not proper management briefings.

"The fact that the news can come out in this way is a sad reflection. These things should be announced properly and with due consideration," says Mr Shuttleworth.

"We hope management will do all it can to track down the source of the leak and take appropriate action."

Management at Norwich Union too claim to be upset by the leak. They say it pre-empted plans to inform staff properly on Monday.

It's hoped most of the jobs will go through natural wastage and voluntary redundancy.
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See also:

21 Feb 00 |  Business
Paying the price of a merger
21 Feb 00 |  Business
Insurers braced for shake-up
17 Jan 00 |  Business
Do mergers ever work?
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