Combining the quirky culture of St.George Bank with the corporate culture of Westpac was a challenging task for the merging banks. Sarah O’Carroll goes behind the scenes of the biggest merger in Australian history to determine some of the HR lessons one year on
St.George bank always prided itself on being a sort of family business – small, laid-
back and easygoing. Westpac, on the other hand, as the country’s largest bank,
brands itself as the leading financial services company, servicing more than 10 mil
lion customers through a corporate and efficient culture.
The idea of merging these two very different banks would immediately present some
cultural clash questions. Would it be possible to merge the two banks seamlessly? Would
St.George employees feel like they were being swallowed up by a corporate giant? And,
of course, the obvious questions of doubling up of roles – how could a merger of this size
take place while continuing business as usual?
According to Ross Miller, general manager HR of St.George, it was both an interest
ing and exciting learning curve – with some key lessons learned at the end.
“The two cultures, while very different, actually complemented each other,” said Miller.
“We were each able to hold on to our own brand, negotiate some of the employee ben
efits that were unique to the banks and and protect their unique brands under one
Under the leadership of CEOs Gail Kelly of Westpac, and St.George’s Paul Fagan (at
the time of merger announcement) and now Greg Bartlett – the HR team was an integral
part in the $18 billion merger. And looking back over the past year there have been some
valuable lessons for HR.
Communication in the “danger period”
It’s the “Olympics” of communication, according to Simon Covill, head of communica
tions for St.George. If a change strategist will ever be put to the test it will be through man
aging the communication of one of the biggest mergers in history.
According to Covill, putting the people before the numbers is the key to success of
“So many mergers and acquisitions always start with the
numbers and finish with the people – it’s getting the people
issues on the table really early on which is important.”
The challenges for the HR and communication team
was maintaining staff engagement through what Covill
describes as the critical period – the time between the
announcement of the merger and the day it commences.
“That six-month gap between the announcement and
the vote is the real danger period where you can lose the
hearts and minds of employees,” says Covill.
The merger was announced in May 2007 and the primary
communication focus in that initial period up until the share
holder vote in mid-november, through to completion of the
merger in December, was information sharing, maintaining
focus and celebrating past present and future, he says.
Throughout the merger keeping employees engaged was
done through a holistic communication process. A merger
committee was set up early combining legal, HR and com
munications. Fortnightly pulse check surveys via emails
with 700 random staff was also very useful to sense what
the mood was and how well informed people were.
“That really helped us to tweak our communication
planning through that six-month merger,” says Covill.
Keeping management engaged – because they are a key
communication channel to staff – by keeping them in the
loop of what is going on is also critical to success, he says.
Also, direct communication to staff, emails from the CEO
and webcasts were useful.
Probably the most useful tool, according to Covill, was
a dedicated intranet page where employees could come and
ask questions and the merger committee pledged to get
back to them with answers quickly.
“It’s not any one channel of communication. In most
organisations you have people spread all over the place
and you have varying levels of hunger for information, so
face-to-face, direct info from the CEO and being able to
go to a regularly updated source of truth which was the
intranet [was key].”
According to Covill the communication strategies from
each bank were not identical but complementary
“The St.George culture is
very friendly, people-
focused, even a bit
quirky,” he says. “West
pac is a bit more for
mal and the language
is more formal. St.George
employees are used to a more laid-
back, open style of communication.”
“So it was very important that
we tailored communication to our
own audiences. While a lot of the
information came from
Westpac it was impor
tant that we tailored
it into the style that
were used to. You’ve
got to continue to com
municate in the way peo
ple are used to. If not, it
can be a switch-off and
raise some cynicism.”
Planning for the merger
HR was an integral part of the
initial due diligence process,
according to Miller. “Mapping the
differences between the two cultures was key
to the success of the merger. HR had to play
an enormous role in the due diligence in the
run-up to the announcement of the merger.”
Miller explains that one of the successes
of the merger is really through making it clear
to shareholders, employees and customers
that the banks are pursuing a multi-brand
strategy – with the aspiration of being Aus
tralia’s leading financial services organisation.
“Both banks have different brands and
cultures which each would like to retain
part of to maximise opportunities, while at
the same time leveraging off the best aspects
of the other bank,” says Miller.
What was particularly interesting through
out the merger was the drop in voluntary res
ignation rates to below 9 per cent, which is
significantly lower than industry average.
That figure is more than 3 per cent points
lower than it was before the banks’ merger.
“It’s very satisfying to be head of human
resources of such a large company going
through a merger and seeing a significant
improvement in the voluntary resignation
rate,” says Miller.
At the initial stages, one of the challenges
was to analyse the components of the West
pac group big enough for St.George to com
moditise and leverage versus the things that
were small and unique enough to the
St.George culture for the bank to retain.
“This is why we made the decision to
bargain in a new St.George enterprise agree
ment [for] when our current one runs out
in October this year,” says Miller. “We
would see the St.George enterprise agree
ment as being a foundation block for the
employee value proposition for St.George
employees. There are common benefits
across the two groups, one of the things we
did ahead of the merger was map the dif
ferences between the two organsiations.”
Miller speaks of looking at the unique
attributes to the St.George EVP – which he
believes need to be retained – while looking
at opportunities from the other side and of
being part of a larger organisation.
“Now career opportunity is an obvious
opportunity that we will be able to offer
people,” says Miller, “going from a com
pany of 9000 to a 37,000-strong company,
with opportunities that are far greater.”
St.George was really well known for
some its flexible work practices, too, and
even quirky practices which the company
has continued to offer to employees. He
says that the banks are looking at research
at how to extend that.
Some of their more quirky practices are
grandparents’ leave, and “five from four”,
where over a five-year period you work four.
The belief and support from senior man
agement in the importance of retaining the
unique St.George and Westpac cultures was
enormously helpful to Miller and his team.
“Greg Bartlett is very passionate about
retaining the St.George brand,” he said.
“Furthermore Ilana Atlas, (former HR
director of Westpac) and more recently
Peter Hanlon collaborated greatly in working to retain specific cultures.”
“We have had to face all the challenges that every com
pany had to face because it was the GFC, and we had to
look at how we align some of our practices to the West
pac group. We had some of the challenges associated with
the whole market,” he says. “We’ve been very cautious
about any activity that would distract our employees from their jobs”
“Obviously we’ve been able to offer our customers a
much larger ATM network, and been able to talk about
the benefits and draw on being part of the Westpac
The underlying people metrics showed how the work
of the communications and HR team was being effective
throughout the merger process.
“We improved employee engagement two percentage
points throughout the merger,” said Miller. “As a HR
practitioner I’m obviously very happy with the positive