In the many organisations that I’ve worked with, I’ve only ever heard the phrase TUPE spoken negatively, with the view that the organisation is about to get an embittered group of new colleagues, who will resist the move, fight change and fail to fit in. Says Jane Sparrow, author, Culture Builders.
Certainly there are tales of woe around the whole area, from both perspectives, that make the process uncomfortable. But for every failure, there are multitudes of successful integrations, ones where people are blended into a new company and go on to have long and happy careers.
From these successes, we can learn how good leaders and HR teams go about overcoming the challenge of putting two completely different cultures together, the area I believe is hardest, and key for success. During a merger or takeover process, technology and people are the main areas of focus. In my experience, the first two dominate, and give the biggest headaches. However, the last one, people, is the one that requires the most careful handling, and it is managers that have to do this on a practical, day-to-day basis. During a TUPE process, they are faced with a group of people who are worried about their future, and likely have a negative view on what will happen to them, this being distinct from negativity generally. Here, HR can help in both directly steering the managers towards successful integration, and equipping them with the tools, early on, to overcome many of the small blockers that arise.
Firstly, it’s a case of understanding exactly what TUPE process you are facing. Broadly, there are two to consider, the on-boarding of employees as part of an outsourcing process, and the merger of organisations, as part of a buy-out or similar. I make this distinction now, as the situations are complete polar opposites. Outsourcing is a process driven by cost and efficiency, looking to improve both by shifting responsibility for non-core activity to someone else. A number of organisations specialise in this, and regularly TUPE over client staff into their organisation as part of the process – even though they may remain on site to fulfil their role. From the perspective of one of the largest players in the industry, this is, in reality, also about extracting knowledge; “it’s all about the value in people’s heads’, as one senior leader told me. The high attrition rate of TUPEd people means the focus is on knowledge transfer, moving it quickly into existing people within the outsourcing company.
In this case, culture initially takes a back seat. As it was put to me: “The last thing we want is, thousands of micro-cultures building up”! However, once the initial drop-off has abated, the effort then becomes more focused on getting those who choose to remain, or are deemed more valuable/have potential, into the culture. They are treated as new employees, and offered alternative roles as soon as possible, moving them from TUPE situations. Clearly, outsourcing is a well-developed process, and two things stand out; the speed at which the process happens, and the effective approach of treating people as new employees; moving them into other roles quickly. Why are these important? This brings me on to the other type of TUPE situation, merger and acquisition.
Pfizer was, for the best part of two decades, a company renowned for acquisitions. It built itself up to the number one pharmaceutical company in the world through huge investment in other companies. And it learnt that if there’s one thing the company does well, it’s bringing in TUPE employees in a fair and considered fashion. Recently, it purchased Wyeth Pharmaceuticals, which added a significant number of employees to the balance sheet. Day One of the merger was celebrated across the world, and the Wyeth brand quickly replaced by the Pfizer one. Systems were integrated, and teams established that blurred the old company lines. In essence the big things were completed quickly, with little left to give lingering doubt that the merger had happened. Alongside acquiring drugs, Pfizer also acquired a talented, experienced group of people that it was keen to retain, and the TUPE process reflected this.
A successful example? Certainly in terms of speed, focus and treatment of those involved. But what Pfizer couldn’t tackle at the outset, and what came back to the surface, were the myriad of small things, and individual responses to specific changes. There was also the lasting legacy of being a TUPE person (unlike the outsourcing model, people did not change conditions upon changing jobs). As one employee said: “I’ll still always be ‘Wyeth Legacy’ regardless of what I do.” Here, managers need a great deal of help, because once the project team steps back, having successfully plumbed in the two companies, there is still a massive jumble of small integration challenges to sort out, that mostly hinge around cultural differences. For Pfizer, one issue that emerged was bins! People in the legacy offices were wedded to individual desk ones, Pfizer had a firm and comprehensive recycling policy that required central bins. Those managing this negotiation had no experience or steer on how to handle what was a far more complex issue than waste. There’s a danger that, even changes for the better, are seen as negative ones by people who are on TUPE or similar merger programmes. A large services provider to the petroleum industry found this when buying up a US-based rival. Many areas encountered difficulties with the merger, compounded by the strong, ingrained culture they were inheriting. The average length of service was, incredibly, 20 years, with some people having been there for 45 years! The software teams of the two companies, on paper, should have merged seamlessly, but there was a high degree of resistance from the US team to adopting a newer, more effective, software development process. To crack this, the COO pushed forward two things that would overcome the situation. Firstly, he made it his mission to create a single organisation as soon as possible, echoing Pfizer’s approach). Secondly, and in his eyes critically, he formed a joint service improvement team that was tasked with re-thinking delivery and approaches in a number of areas. This work encompassed most of the team, and led to them co-owning improved approaches that neither ‘side’ had any stronger claim to than the others.
This is a great example of forward planning, it’s no coincidence that the COO had a background in outsourcing and merging teams. But for the average manager, this is a whole new area, and managers are not adept and looking at how to bridge the gap. Often, the cultural levers are small practical elements of the daily work that can be addressed positively. In other instances, they are all-encompassing beliefs about leaders, organisations and work ethics that need time and hard work to move. But regardless of size, managers need help in recognising them, understanding how to deal with them and being good at communicating during AND after the merger.
Communication leads me back to Pfizer, which ran a very comprehensive central and country-by-country internal engagement process during the Wyeth merger. What they didn’t utilise at the time were managers, which led to an almost overwhelming dependency on the central teams to respond to questions, supply information and act as the experts. They learnt from this and in future changes more effort was put in to make managers own the process.
My conclusions around TUPE and what HR needs to be doing can be broken down into three areas. Firstly, don’t wait until day one to equip managers, start as soon as possible. This could be as simple as establishing cross-company project teams, as per the example above, or a more comprehensive programme that exposes them to best practice and places solid tools in their hands. So often I see companies conducting training and providing toolkits the same week as managers and leaders start the process of incorporating TUPE covered people. Far, far too late, particularly if there is a need to pull together two cultures and deliver quickly.
Secondly, work on the fact that it’s not the big stuff that will cause the problems – it’s the little things, the small nuances of the two companies that will give long-term organisational stomach-aches. Focus manager development around negotiating these and fixing them at source, and give them robust information to communicate and discuss the larger areas. Managers can quickly pour oil on troubled waters if they have the skills and the knowledge – they are, day-to-today, dealing with the issues that arise, and can advise employees, challenge inappropriate behaviour and help TUPE colleagues transition quickly to the new situation.
Finally, TUPE never goes away. Trivial items (pens in old company branding is a classic) can give disproportionate responses for those that weren’t overjoyed by the merger – managers need to be aware of this and be given the remit to tackle it when it occurs. Also, labelling people, as Pfizer found out, isn’t helpful and the more that managers can do to talk about new, shared structures and approaches, rather than the ‘before you came’ ones, the better.
TUPE is tough on HR – alongside this need to support managers, the myriad of other needs feeding into communication, supporting town halls, inducting the new colleagues. And of top of all of that, there’s the work to ensure those joining the company, trust what’s being said and understand the vision and mission of the organisation.
