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Employee transfers

Unified theory

If you have to absorb a big group of workers in a merger or contract transfer, what can you do to create a single OSH culture?

Employee transfers, mergers or contracts
Illustration credit: © Gary Neill

As any fan of sci-fi films knows, the first thing invading aliens always say when they slither, swoop, or step down from their landing craft on to planet Earth is “we come in peace”. As we also know, this rarely proves to be the case. No sooner have they withdrawn their spindly green arms from the friendly handshakes with the (usually) American president than they’re running amok with laser weapons, annihilating the planet’s occupants in their real quest, which is to commandeer our water, or our brains, or something.

This sort of thing only happens on the silver screen, but there is an analogy in the world of work that goes on up to 48,000 times a year in the UK alone. Business takeovers, transfers and mergers affect up to two million workers annually, and they are becoming more frequent as companies try to save costs or grow faster than they could organically. But, unlike the hapless humans being exploited by the aliens for their bodily or planetary resources, workers in these situations do have legal protection.

The Transfer of Undertakings (Protection of Employment) (TUPE) Regulations 2006 apply in the UK when a business, or part of it, is sold to a new owner, merges with another business, outsources activities, or takes on a contract for services from another provider. TUPE states that most terms and conditions cannot be harmonised – the new employer cannot simply impose its employment terms for existing staff on the incoming workers. This protection can make extra work for human resources and payroll functions, which have to administer two sets of pay rates, holiday and sick-leave arrangements.

But intangible elements of the employment relationship, such as organisational and safety culture, are even harder to address. Consequently, they tend not to be considered much or even at all in preparations for mergers or contract transfers.

The effort to maintain safety culture is largely discretionary, so it can easily go out the window

A different planet

Companies usually decide to take over or merge with other businesses to develop their market share or brand. For obvious reasons, mergers and acquisitions usually take place between companies in the same line of business. There is often an underlying assumption that there is a “fit” between the parties involved and that they are culturally compatible.

But assuming that two different workforces, each used to doing things a particular way and with its own set of beliefs and values, will automatically gel, is optimistic. In their 2013 book, A Comprehensive Guide to Mergers & Acquisitions, Yaakov Weber, Shlomo Tarba and Christina Öberg claim that the primary cause of failure in mergers – and the rate is as high as 50% – is the lack of consideration of the human element in planning and implementing them.

“Safety culture really doesn’t get looked at hard enough during due diligence,” says Paul Bizzell, operations director at safety consultancy RyderMarsh OCAID. “In a hostile takeover, it won’t be considered at all. Companies looking to buy or merge with another operator should think about safety before signing the contract, not after.”

According to Chris Lloyd, group MD at asset and risk management consultancy CAS, due diligence is “90% about finance, 5% about checking out the management, and 5% about finding skeletons in the closet – safety falls into that last category”. But Mark Tyler, health and safety lawyer and director of Salutaris Legal, says that, in the tight timescales for due diligence, something has to give.

“You simply can’t involve everyone and everything in the business,” he says. “You have to leave some stones unturned, and health and safety is just one risk among many. If it is looked at upfront, it will be because health and safety elements are deal-breakers, such as in the high-hazard industries. But usually they won’t stop the deal in the way that a discovery that the books had been cooked would, for example.”

Risk management consultant Nick Bell recalls a maintenance contract that was tendered and then won by a national provider “because they were offering best value”.

The contract award came at a cost. Bell says: “They had no idea how to manage culture change – they simply allowed everyone to bob along as they were. Around 18 months after they got the contract, I did an environmental audit and it was an eye-opener.  The storage yard was shambolic, they hadn’t carried out as much as a toolbox talk with the workers, and they weren’t doing anything to get safety messages into people’s heads and change attitudes towards them as an employer, which were less than favourable.”

Proceed with caution

Messages about good health and safety being advantageous for business do not always go unheeded when it comes to evaluating a company for a merger or contract, says Richard Byrne, health and safety director for the contract merchanting division at Travis Perkins.

“A company I worked for years ago was disposing of a part of its business. In this case, the buyer actually asked for warranties that we had done all our health and safety work, backed up by audits. If we couldn’t provide them, they said, they would reduce the offer price. As it happened, we were fully health and safety-compliant but they certainly would have negotiated the price had we not been. That proved to the board at the time that safety does pay.”

Across the universe

As well as asking for warranties, what else should those looking to merge with or acquire another business or contract do to ensure health and safety is on the agenda, particularly with a view to developing a shared safety culture?

The key is early engagement with the people you are taking on. Gaetano Cristiano, head of quality, health, safety and environment at waste management firm Urbaser UK, is well-practised in tendering for new contracts and managing them once awarded.

“Changing the perceptions and attitudes towards the health and safety of workers who have been transferred to us as part of a new contract is challenging,” he says, “but it can be done. You have to listen to people: do one-to-ones at all levels – management and workers. Find out what they liked and disliked about the previous regime, get as much feedback as you can, then check it out and follow it up. Most of all, mean what you say.”

Bell agrees: “When you take over another company or contract you can, and should, look at previous policies and procedures, but it’s better to hold meetings and workshops with employees and get their feedback. It’s about adults talking to adults – seeing workers as sources of information rather than a problem to be managed.”

But if you believe you have sound safety standards and a positive culture in your own organisation, the listening process should not drag on, says Neil Budworth, health, safety and risk manager at Loughborough University and former IOSH president.

“The bottom line is that managing organisations does mean requiring people to do things in a certain way. You can’t always negotiate with everyone – especially if they are spread across lots of different sites. The important thing is to get to a point of certainty as quickly as possible, whether that is an imposed process, an existing one, or something new. It does mean, though, you may have to put your foot down at some point.”

To develop a sound and sustainable safety culture, Lloyd recommends first determining what the prevailing culture is, then identifying the one you want, and finally working out the steps to realise it. “An organisation’s culture affects everything so, if you don’t understand it from the off, you have no chance of changing it,” he says.

One way to assess the state of your own safety culture would be to use one of the commercial “safety climate” questionnaires or devise your own. Questions about employee perceptions of safety could include whether they feel their managers or peers would expect them to report OSH concerns, what they believe the response would be if they did and whether they receive regular communication. Incidentally, if their answers do not reflect the safety team’s effort in sending bulletins, scheduling toolbox talks and so on, that tells you something about the perceived effectiveness of the material.

Once you have the baseline to check your own perceptions of the state of your original workforce’s culture, you can survey the workers who have transferred. The difference between the two sets of results will inform a gap analysis to indicate what you need to work on with the transferees.

The new owners weren’t doing anything to get safety messages into people’s heads and change attitudes towards them as an employer, which were less than favourable

Take me to your leader

As in any change-management process, good leadership and effective communication are crucial. Budworth says: “People need commitment from the top. If they see it’s not there, they’ll decide either to dig in, or go elsewhere. The absence of a message is just as powerful as the presence of one.”

Bell agrees: “The typical view of management and the hierarchy is that they are there to give instructions, and the workers’ job is to follow them. If that is what people believe, that is a stumbling block. Managers need to understand that it is their job to release the talent of staff and draw on their expertise and insight.”

Byrne says leadership commitment was critical to the success of a recent acquisition in which he was involved. “We acquired a great independent builders’ merchant, and one of the first things we did from a safety perspective was get their branch managers together at a workshop so we could just talk about safety: what they did, what we did, what was good and what we could both do to improve and learn from each other. The MD spent the whole day with us and talked about why health and safety was so important to him personally. It was a lightbulb moment for their staff – the understandable worries they had at being ‘acquired’ started to go, and that is the start of positive cultural change.”

Though the bigger party in a merger or the transferor will always want to immerse the incoming body of employees in its own culture, Byrne’s point about mutual learning is an important one. If there are aspects of the smaller group’s procedures, the transferor can learn from and adopt, they will help to offset the natural tendency for the incomers to feel absorbed by the alien host. A joke popular among Chrysler staff after the US car maker’s ill-fated merger in 1998 with its German rival Daimler-Benz was how to pronounce the combined company’s name: DaimlerChrysler. The answer they said was Daimler; “the ‘Chrysler’ is silent”.

Cristiano says he cannot emphasise enough the importance of management buy-in and safety leadership. “It’s all about respect,” he says. “When we take over a new contract, I go out to speak to the front-line workers and listen to them. The health and safety message is cascaded down from the top, and the refuse collectors working on the street know they can go directly to the MD with any issues if they want to.”

It’s logical

Seasoned health and safety practitioners are well aware of the influence that leadership and communication have on shaping safety culture. But simply understanding this and ensuring that both receive adequate attention will not create a safety culture overnight – and particularly not when differences in working practices and worker attitudes are challenging.

Corporate culture was described in 1983 by Bro Uttal and Jaclyn Fierman in a Fortune magazine article, The Corporate Culture Vultures. They said it was the shared values (what is important) and common beliefs (how things work) that interact with the organisation’s structures and control systems to produce behavioural norms (the way we do things here). Moreover, it is a dynamic phenomenon – continuously under construction by the groups of people that make up the organisation. The reality is, it takes a long time to achieve and is difficult to maintain.

Mike Appleby, safety and health specialist with Bivonas Law, says: “The biggest mistake I’ve seen is where the management of the new company or contract underestimates the effort required to change the culture. Getting everyone working together and achieving culture change can take years. You can’t just do a new risk assessment and solve things overnight.”

A principal problem after a takeover or merger – less so with a contract transfer – is the level of stress and uncertainty among the workers – existing and incoming. Not only are people unsettled and worried about their jobs being lost to “efficiencies” but, as Budworth points out, lapses and incidents are more likely “because people are distracted by the bigger changes going on around them”.

Bizzell agrees: “An absolute danger sign is if all the messages about safety stop in the wider confusion – somebody needs to keep prodding. The effort to maintain safety culture is largely discretionary, so it can easily go out the window in these situations. You do have to be proactive and think about managing that drop-off in discretionary effort.”

Simplicity itself

Bell believes maintaining safety effort and developing the safety culture after the takeover or merger is possible, “as long as you boil it down to simple steps that people will understand, and then build it back up again into workable procedures”.

Lloyd goes further by suggesting that harmony can be achieved by ensuring that the four pillars of safety culture development are maintained. These are, he says, “the commitment of the business’s management to the safety strategy and behaviours it demands; taking a long-term view of its development rather than relying on short-term measures; looking at procedures that sometimes force people to work in ways that are contrary to the strategy; and having a process to deal with organisational pressures and their effect on what ‘good safety’ looks like”.

Weakness in any of these areas, says Lloyd, could cause safety and health standards to suffer or even the merger or acquisition to fail. However, if the people involved are consulted and kept informed, managers treat safety as a mainstream part of good governance and business leadership, and everyone understands that building and maintaining a shared safety culture takes time and involves effort by all, the organisation is more likely to survive and prosper.

It should also stop part of your newly expanded workforce feeling that they have been been abducted by aliens.

 

Comments

  • Interesting take, but

    Permalink Submitted by Dominic Cooper on 15 June 2016 - 01:22 pm

    Interesting take, but organisations are far better off concentrating on aligning/merging safety management systems and focusing on safety behaviour (leadership and workers), than they are trying to change attitudes/perceptions. Attitudes/perceptions change automatically (after habituation) following the system/behaviour changes. This focus on attitudes is the biggest mistake companies make when attempting culture change.

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  • Good article and I agree that

    Permalink Submitted by Stuart Rees on 16 June 2016 - 09:11 am

    Good article and I agree that the employee/safety is usually left to one side on these new ventures. The book mentioned above should be a good read.

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