I am extremely honoured to receive the CPRS Award of Excellence
in Public Relations, but I am only here because of the hard work of
TD Bank Financial Group’s Marketing, Corporate and Public Affairs,
Government Relations and Investor Relations teams.
They develop and implement our communications strategy. Some of
them are with us today, and perhaps you would join me in recognizing
them.
As the title of my speech indicates, I shall try to give you some
insight today into the role of communication in our quest to Build a
Better Bank. In particular I want to talk about the integration of
Canada Trust into TD.
Personally I think a merger is one of the most challenging tests
of a company’s capacity to plan and to execute -- and the bigger
the merger the more there is at stake. There is a great deal of
activity in a short space of time. Many decisions have to be taken
at the very outset before all the really useful and penetrating due
diligence has been completed.
The learning curve is incredibly steep. You never have enough
hours in the day to do everything that needs to be done. You have to
have a very clear sense of what you are trying to accomplish and you
have to set firm priorities.
To complicate matters, you do all of this knowing that neither
your customers nor your employees asked for the merger in the first
place. Change is the order of the day, but nobody relishes it. As
Mark Twain observed, "I’m all for progress, it’s change I
don’t like".
Then let me begin today by talking a little about the context for
our particular merger, and then describing our communications
strategy and the lessons we learned along the way.
Context for the merger
First, the context. Our acquisition of Canada Trust was the first
major Canadian financial services integration since the ill fated
bank merger announcements of 1998. Those failed attempts re-ignited
the Canadian public’s skepticism about mergers in general and bank
mergers in particular. It would be an understatement to say that
banks would not shine in a Canadian popularity contest. Accordingly,
when the employees and customers of Canada Trust learned that they
were about to be taken over by -- a bank -- their emotions ran from
shock to fear.
To make matters even more challenging, when we announced the
acquisition, Air Canada had already begun to merge with Canadian
Airlines. If the Canadian public needed reinforcement of its merger
phobia, it only needed to read the daily reporting of Air Canada’s
challenges.
To add to our customers’ apprehension, the merger of Fleet
Boston in the United States was reported under the headlines:
"Fleet Bank customers report big problems resulting from
merger" and " Bigger isn’t better for Fleet’s
customers".
A national columnist added his own pressure to our merger when he
generously offered to print the stories of dissatisfied Canada Trust
and TD customers.
We, of course, knew that despite our best efforts, there were
bound to be dissatisfied customers. Any mistake that would have
happened in the normal course of business before the merger would be
highlighted as evidence of the merger’s shortcomings.
By the way, it is an unwritten rule of mergers that if you are
going to make a mistake, you will invariably make it with customers
who have the time, the inclination and the connections to let the
media know about it. In sum, this was not an encouraging
environment, but it did at least increase our resolve not only to
do the right things but to be seen to be doing the right
things. We were determined to avoid ‘death by anecdote’.
As communicators you will appreciate how much easier that is to
say than to deliver.
I am told that public relations would be a great field were it
not for the clients. I am also told that if your only tool is a
hammer, you see every problem as a nail. As public relations
professionals you would naturally tend to look at business decisions
from a communications perspective. As a banker, my instinct is to
focus on making the deal work for our shareholders. Fortunately,
through my own experience and the uninhibited counsel of various
public relations professionals over the years, my horizons have
broadened.
As a banker, I may feel good about squeezing every duplicate cost
out of the system, but as the Chairman of a publicly traded
financial services company, I need our customers and employees to be
satisfied --otherwise the merger is a waste of everyone’s time and
effort.
Naturally our competitors were using the merger to try to lure
customers away.
In this environment we did not need our branch employees forming
an alliance with customers against us. We did not want them saying
to their customers, "I agree with you Mrs. Smith, I don’t
like what TD is doing either."
In a publicly traded service business, shareholders, customers
and employees are joined by invisible bungee cords. Move the opinion
of one and the rest follow smack behind.
It was particularly important that employees felt that they and
their customers were being reasonably treated. Thus a focus on
employees and customers was at the core of our communications
strategy.
What was our strategy? It closely reflected our business strategy
-- which was to use the merger to differentiate TD in our market.
From the outset our first priority was the satisfaction of our
customers and our employees. We wanted to bring something different
to our merged customers’ banking experience so that they would
want to deal with TD and would refer others to us.
We had two enormous advantages. Canada Trust had something TD
coveted – a customer service reputation that had given it
incredible customer loyalty. TD had an innate capacity to accept
change and embrace new ideas and, perhaps more importantly, new
people. Together we could leverage our strengths to build "a
better bank".
The decision to adopt Canada Trust’s business model of customer
service was based on a very real desire to occupy a different and
available niche in the banking market. It was also based on sound
economics. Canada Trust’s customer service model came with a
pricing structure that made every service package profitable. In
this model branch employees treat every customer as a valued
customer.
There were three distinct stakeholder groups that needed to hear
our ‘better bank’ message.
The first group was comprised of our customers and employees. We
had to convince them that the merger was fair and reasonable for
employees, and at minimum neutral for customers.
The second stakeholder group included the media and government in
their roles as consumer champions. Both have a megaphone and know
how to use it.
They have enormous potential to wag the dog. The government
wanted the merger to go well, since it was the first test of a
significant financial services merger.
Politicians have to follow the will of the people and we knew
they would go in the direction of the populist wind.
Our shareholders and the financial analysts who follow our stock
constituted the third stakeholder group. They make the ultimate
assessment of success or failure. We knew they would be vulnerable
to signs of dissent or negativity from the media andor from
government. Any concern on their part could lead to critical reports
and a negative impact on our share price.
Communications Strategy
As Ed Clark said in the video, our overriding communications
strategy was that there would be no surprises. We would set and
manage expectations with all key stakeholders throughout
integration. We agreed that the torture of not knowing is
worse than the agony of knowing.
We set the tone in our first press release. It clearly spelled
out the expected number of branch mergers and job losses. At the
same time as we published these cold facts we made 10 commitments to
every employee affected by the merger. The commitments put the facts
in perspective and addressed the issues that matter most to every
employee – their job, their benefits, how we would treat them if
their position became redundant.
We guaranteed their salary for 18 months and committed to
communicating with them in a timely and respectful fashion.
Because we knew that employees could make or break the merger, we
made sure they had the tools and the information they would need to
be able to deal with customers’ concerns in a positive and helpful
way.
They had to believe they were working for a good cause and
understand that the outcome we wanted wouldn’t happen overnight.
Ed Clark, Chairman and CEO of the new TD Canada Trust, set out
across Canada to engage employees in "Building a Better
Bank".
This gave them a rationale for the merger and made the enormously
hard work involved worthwhile. We called this our "Hearts and
Minds" campaign and it was very effective.
Our ‘no surprises’ strategy also extended to the media,
financial analysts and government. Since our priorities were our
employees and customers, our media strategy was largely
opportunistic and responsive rather than proactive. Ed Clark gave
regular updates to media and analysts at our quarterly financial
reporting sessions and he spoke about the merger to various
financial conferences. He gave media interviews across the country
on his tour to speak to employees. This gave him an opportunity to
talk about the progress of the merger and to deliver the message
that we were focused on our customers.
Our government relations strategy twinned regional executives
with local politicians so that the latter were always informed –
never surprised - about what we were doing and its impact on their
constituents.
A second strategy was to align customer and employee
expectations. Customer research had told us that customers, like
employees, wanted to be kept informed and given fair warning of
anything that would change for them. We took this information
seriously and used full-page advertising in national and major city
daily newspapers to explain what we were doing. We made it clear
that if we made mistakes, as we inevitably would, that we would
correct them "quickly, completely and cheerfully".
The advertisements served a dual purpose. Although addressed to
our customers, they delivered important messages about us to our
other stakeholders as well. They were a point of pride for employees
and they signaled to Ottawa that we were not going to embarrass the
Finance Minister by making promises we could not keep.
Our third strategy was to leverage Canada Trust’s reputation as
a customer-focused organization. We had invited Ed Clark to lead the
merger to embed the Canada Trust service model throughout our retail
branches and our electronic bank. We also needed the financial
community to trust that, as head of TD Canada Trust, he would
deliver the cost synergies and revenue growth we promised at the
initial announcement.
Did these strategies work? They did. Nine months after the
completion of our final wave of branch conversions to TD Canada
Trust, I would count communication as one of the key factors in the
success of the merger. That doesn’t mean it was all smooth
sailing. The interesting part is always what went wrong and the
lessons learned. For that reason, let me move to some of our
findings over the last two years.
The first lesson is that the leaders must be trusted by all
stakeholders. You only win that trust by doing what you said you
would do. I mentioned earlier that we made 10 commitments to
employees when we made the merger announcement. We tested every
decision against those commitments. People keep track and you have
to deliver. But life is not always a straight line. Unexpected
events occur that change the outcome of decisions and sometimes mean
undertakings simply cannot be fulfilled. It would have been all too
easy for me, wearing my banker’s hat, and focused on other aspects
of the merger, to ignore the importance of some of the commitments
we made. I could easily have argued that surely people understand
that mergers don’t always work out the way you expect at the
outset. I could have refused to believe that issues become distorted
through the rumour mill if they are not addressed. Thanks to our
tenacious communications team that did not happen.
Here is an example. We originally committed that any job losses
would be proportional to the size of TD and Canada Trust. In
practice, more Canada Trust than TD people left the bank, some by
choice, some because a strategic decision meant their expertise was
no longer required. When we missed our target we explained it to our
employees. We didn’t wait for them to ask.
As a result, we met the test of a fair and unbiased selection
process and we still managed to retain a very large number of the
Canada Trust leaders who could implement the Canada Trust customer
service model.
The second lesson is that communication is as much about
listening as it is about speaking. Much as we had intended to set
appropriate expectations for employees we didn’t always succeed.
We converted branches to TD Canada Trust in four waves over a
seven-month period. The first wave, and also the smallest, was in
our Atlantic region.
An enormous amount of work had gone into preparing our branch
employees. The conversion weekend itself went very smoothly.
But on Monday morning, when the first customers came in, branch
employees who had felt fully competent on Friday discovered they no
longer had the confidence to do their jobs properly. They were
simply not prepared for the emotional side of dealing with so much
change. We learned about their experiences by going out and
listening to them in person and by surveying their opinions on a
bi-weekly basis. As a result we changed the way we prepared
employees in the next conversion waves so that they would not be
paralyzed by their own emotional reactions.
The third lesson is that until you have addressed employees’
"me" issues they won’t hear anything else you try to
tell them. We learned that the earlier you make and communicate
human resource decisions, the better. The way you communicate is
also important. It speaks volumes about how the company respects
people’s dignity and empathizes with the generally unacknowledged
emotional aspects of a merger. The principle of "hard facts,
soft voice" really works.
The fourth lesson is that ever since the days of the Medicis, the
world’s first bankers, no merger has been the marriage of two
perfectly complementary organizations, no matter what the media
releases say. As Yogi Berra said in a rough approximation: "If
the world were perfect, it wouldn’t be." It never is.
Cultures will clash.
We found that while we were all theoretically speaking English or
French, it was as if some of us were using a Gaelic dialect while
others were speaking Anglo-Saxon. We often tripped over words that
meant different things to each group. Inter-branch banking at TD
meant the capacity to deposit a cheque or withdraw money at any
branch. At Canada Trust it meant being able to do practically any
transaction at any branch.
We didn’t fully understand the difference until former Canada
Trust customers tried to pay down their loans at what had been TD
branches – they simply couldn’t -- and they let us know in no
uncertain terms!
Ed Clark and I consciously worked at being objective about how to
address the cultural differences between our two employee groups.
Deliberately, Ed championed the TD employees while I represented the
Canada Trust people, and I think this worked very well.
A final lesson is that a merger is like a long parade. I had to
keep reminding myself that the people at the front of the parade are
having a different experience from the people waiting to join it.
Each group along the way has different communication needs. In our
case, the executive team had accepted integration and moved on long
before the branches were converted and the branch staff had fully
accepted the new world order.
Even once the branches were converted it was still only the
beginning of their part of the parade, not the end. They continued
to need all the nurturing and communication we had given them before
conversion. That takes time. It takes good leadership, but it is
worth all the attention you can give it. Still today, I am
personally visiting all our regions to talk to employees and hear
what they have learned and how we can improve. This is an extremely
valuable way for me to spend my time. I learn a lot!
Most mergers fail, but ours has been very successful. Perhaps the
most telling measure of success is our Customer Satisfaction Index.
It has climbed from 81.6% in August 1999 to 84.5% at end of May this
year. That’s a significant increase and says a lot about the
tremendous commitment of our employees.
If I look back at everything we have accomplished and ask myself
what the primary contributors to our success thus far have been,
communication would be very high on the list. You can be brilliant
financially, you can plan meticulously, but unless you are keeping
all your stakeholders informed about what you’re doing and why,
unless you’re soliciting your employees’ and customers’
feedback and responding to it, you’re going to handicap your
chances of success.
Communication was the glue that held all our business strategies
together. It helped our stakeholders understand what was happening
in a timely fashion and gave them a sense of some control in a
situation where essentially they were at the receiving end of an
enormous amount of change.
Thus in accepting this award, I would like once again to thank
the Canadian Public Relations Society for the great honour, but to
dedicate it to the TD Bank Financial Group’s communications teams
without whom we would not have made as much progress in our mission
to build a better bank.
Thank you.