It’s hard to give an exact business title for Brian McLaren. Currently, he is the Regional Head of HR for ABN AMRO in Asia, but the coming months will see plenty of changes in the former-Dutch bank, not least of which will be a change of name and owner. For all intents and purposes, if not yet in name, McLaren runs HR in Asia for that group – the Royal Bank of Scotland (RBS).
It’s a common identity issue for the staff impacted by recently-announced sales of parts of RBS’ Asian businesses. As one of the most visible victims of the global financial crisis, it has had to considerably revise its expansion strategies for this region. And that has represented a huge HR challenge for McLaren and his team.
Buying and selling
RBS only had a limited presence in Asia before 2007. With some 2000 staff across five countries, it had plans to expand slowly, taking advantage of the massive growth occurring in the Asian financial sector at that time.
But when an opportunity to make serious inroads presented itself, the Edinburgh-based bank was certainly keen to take advantage. As part of a consortium of three European banks, it purchased the full, global assets of ABN AMRO, a Dutch bank with operations in more than 60 countries. As one of the then leading banks in Europe, the deal represented the biggest banking takeover in history.
For its part in the coalition, RBS took over the majority of ABN AMRO’s Asian assets and businesses. Only the asset management and private client divisions were kept off the bank’s new asset list, those small pieces instead going to consortium partner Fortis.
Far from the plan for 3000 staff in Asia, RBS now boasted more than 23,000 in 15 different countries. McLaren made the trip from Europe to lead the HR integration.
“We were faced with some challenges on the business integration,” he said. These related largely to developing a single HR model across the breadth of the newly-enlarged region. “With 15 jurisdictions, there are more differences than you can imagine.” But with a clear plan in place, McLaren recalls being confident of eventual success. “At that point, life was good,” he says. “Until mid-September last year, that was the plan.”
Mid-September, 2008, brought the collapse of Lehman Brothers, and the near-complete unraveling of the world’s financial system. While all eyes were centered on the US and Wall Street, UK banks were also caught up in the storm; possibly none more so than RBS.
Already reeling from exposures to falling markets, the credit crunch hit RBS hard. Its share price fell 39% in one day, wiping £10 billion off the total value of the business. The UK Government eventually stepped in, injecting £20 billion into it and other struggling banks – and taking a 70% ownership stake in return.
“It certainly hit RBS very badly,” McLaren says. “The first crisis was just the stability of the organisation.” But once that was secured, longer term plans had to be created – and these included a significant rationalisation of RBS’ Asian assets.
That divestment is unfolding as this report is written. RBS is selling businesses in 10 countries, most of which came from its ABN AMRO acquisition. The Australia-New Zealand Banking Group (ANZ) has agreed to take on the Hong Kong, Singapore, Taiwan, and Indonesia retail and commercial businesses, as well as all of RBS’ operations in Vietnam and the Philippines. Meanwhile, the Karachi-based Muslim Commercial Bank (MCB) will take on the group’s Pakistan assets.
RBS is still negotiating to sell its retail and commercial assets in India, Malaysia and China. Once completed, it will be left with its global banking, transaction services and wealth management businesses, operating out of six hubs in the Asia Pacific region: Hong Kong, Singapore, Japan, Australia, India and China.
Explaining change
So how do you explain all of those changes to staff across different business units and countries? “With great difficulty,” McLaren admits.
“Bear in mind that the majority of employees in Asia were ABN AMRO employees,” he says. “They’ve joined this organisation which has now had to rely on Government support.”
He says in many countries, the company had just celebrated “Blue Day”, the day all ABN AMRO branches, teller machines, and branding were transferred to the blue-coloured RBS brand, before the crisis hit. Having stabilised the organisation, a new strategic plan has now put some of those businesses back on the auction block.
McLaren says both management and the HR team adopted a strategy of telling everything they can. “We’ve been as visible as possible,” he said. “As soon as the intent-for-sale was announced there was a tour of every affected country.
“Good or bad news – we tell people as quickly as possible.”
Of course, regulatory issues mean that is not always as soon as leaders know a deal is in the works. “We have to be very selective as to how we message things out at the moment.”
While the London Stock Exchange, where RBS is listed, demands confidentiality up until the point a merger or acquisition is finalised, that isn’t necessarily the case in some of the countries where RBS was working to sell its businesses. In Pakistan, for example, potential bidders need to declare their interests publicly. Staff therefore knew what was happening, but could not get any official confirmation from the business.
“It was a huge frustration for a lot of the senior leaders,” McLaren says. “Clearly we knew more than we were able to say.”
That meant that once information was legally transferable, the way and speed with which that communication took place was highly important for employee engagement. McLaren says his team was ready with information packs as soon as each sale was announced – with clear, concise and practical information for all affected staff – as well as customers and other stakeholders.
Keeping staff engaged
Open, timely and honest communication aims to keep staff engaged and motivated during what is a difficult and extended transition period. While he can’t discount the influence of a tough outside job market on RBS’ retention statistics, McLaren says the communication between HR and staff has helped the organisation maintain staff numbers – both their heads and their hearts – in such exceptional circumstances.
That has been a particularly tricky task, given the rapid turnaround the company was forced to make. Many staff were required to accept very different bonus arrangements. But RBS’ moves to align incentives more closely to long-term performance were later backed up by world leaders looking into lessons from the global financial crisis. “The principles outlined recently by the G20 are already the norm at RBS, following our review of remuneration back in February,” McLaren says.
With or without bonuses, the majority of employees have carried on with passion and diligence, he says.
Managing ambiguity
Part of the difficulties in communicating every change lay in the long lead times required for mergers and acquisitions of this type to be finalised. In this way, RBS is having to continue to integrate some of its ABN AMRO businesses at the same time as it negotiates the onward sales of others.
McLaren says the number of jurisdictions involved means there are some very complicated and high-end tasks involved. “Singapore is probably straighter forward than somewhere like Indonesia – which is absolutely not straight forward (due to stringent labour laws).”
For staff, that can be not just a confusing process, but one with a very unclear future. McLaren says many staff will transfer to a new owner – but staff don’t yet know their role or who their employer will be. In the meantime, the bank needs its staff to work as hard as ever.
“We are still accountable to a regulator in every country,” McLaren notes. “We have up to 12 months to continue to run a bank – at a time when people don’t know if they have a job at the end of it, what that job may look like, and who they may be working for. If there are issues, we’re accountable.”
McLaren says workers within RBS can be divided into three groups of varying levels of long-term clarity. There are those working in “core” sectors of the RBS business, who will stay with the organisation after the sales are finalised. Others are working in clearly defined roles within businesses that will be onsold. These people can be confident of their jobs, but will need to wait until the sales are finalised to know their exact position and company.
Then there are those completing “non-core” work for RBS, often centered on the transitions themselves. While these staff are enjoying some unique and challenging job functions, their current roles have little job security beyond the next year.
“How do you get someone to stay with us who will get fantastic experience in the next 12 months; doing stuff they’ve never done; but who may have no clarity on their future,” McLaren asks. “A lot of people are wrestling with that right now.”
“I’ve never enjoyed the challenge quite so much”
While job security is an important factor, it’s not the only thing in the minds of RBS employees. McLaren says many are attracted to the organisation because of the unique and challenging work the transitions are demanding. In this way, the non-core positions within RBS have actually proven to be quite popular among both incoming and transferring staff.
Whether it is paving the way for new ownership, or dealing with the unique regulatory hurdles involved with the transfers, the organisation is finding many willing hands for these non-permanent positions. “Everything that has happened to the organisation is regrettable, but actually the work is very, very interesting,” McLaren says. “We have attracted a lot of people who are coming from organisations that have survived pretty well – because of the challenge of turnaround, disposal and rundown.”
That’s particularly true for the HR function itself.
“It is the most complicated thing I have ever worked on by a long way but I’ve never enjoyed the challenge quite so much,” says McLaren about his own role. “I’m leading a group of people who are proving themselves incredibly capable of stepping up to unknowns.”
That team has worked around the clock for much of the integration and divestment proceedings. McLaren recalls the challenge of developing strategies for three different potential buyers in three different country deals.
“There are different deals, different approaches and different time zones – as the three streams were coming together you really had to be on your toes.”
“Doing this with a recently-integrated HR function was harder still.”
Still, he says it’s something many HR leaders and departments would have experienced over the last year. “50% of people working in HR are doing things they weren’t doing a year ago and in most cases it’s new, interesting and very different work,” he says. “They’re also being very heavily relied on by the business.
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