Things change – often rapidly. High performing teams adjust to changes on a continual basis. Dead in the water teams – like Credit Suisse – stick with what crippled them in the first place.
Credit Suisse has its balance of consequences wrong. It’s punishing people for doing what it wants them to do. That can’t work. They need to take into account the unintended consequences of the way they are dealing with this and reset their balance of consequences. Consequences have consequences.
What we know
Credit Suisse failed. Had the Swiss government not forced it to merge with UBS it would have disappeared. It’s currently a shadow of its former self.
UBS has made it abundantly clear that they accepted the merger only for Credit Suisse’s asset management capabilities and intends to “reduce the size of the firm’s investment bank.”
The deal is set, but has not yet closed.
Credit Suisse’s investment bankers are out looking for other jobs.
Credit Suisse is enforcing its “Gardening Leave” policy that forces people to leave at least a 90-day gap between leaving Credit Suisse and starting anywhere else.
Credit Suisse is enforcing its bonus claw back policy that reduces past bonuses for people that leave.
So what
A lot of what made sense yesterday, before Credit Suisse failed, no longer makes sense. The Gardening Leave and claw back policies were designed to increase retention of top performers.
But, there’s nothing there to retain them to do. The most likely scenario is that the UBS deal will close and UBS will actively reduce the numbers of people in the investment bank. The alternate scenario is that the UBS deal will not close. In that case Credit Suisse will itself close, and all the investment bank people will be looking for jobs.
Those people are going to be looking for jobs one way or another. The best course of action is to enable their transitions, not impede them.
Instead, Credit Suisse’s actions have negative unintended consequences for almost everyone involved.
- They keeps switching costs high. Some companies hiring Credit Suisse investment bankers will offset some of their clawed back bonuses. All leavers lose 90-days of productivity.
- They’re not good for the people leaving.
- They’re not good for the people thinking about leaving. They feel worse about Credit Suisse.
- They’re not good for the people staying. They know how Credit Suisse is treating their departing colleagues.
- They’re not good for Credit Suisse’s reputation. The publicity is awful. Potential lawsuits could be painful.
- They’re not good for UBS. They are now linked to Credit Suisse and its actions whether they like it or not.
Now what for UBS and Credit Suisse
Accept the new reality. Change the policies. Let those leaving leave.
Implications for you
As Orwell taught us, while all animals are equal, some are more equal than others. In any merger, there are going to be people that you want to stay for the long term, people that you want to stay for a period of time, and people you want to go away.
All almost anyone wants is to be treated with respect.
Treat the ones you want to stay for the long term with respect by telling them you want them to stay. Tell them early and often. Tell them with your words and your actions in terms of giving them clarity on their new roles and compensation – including any retention bonuses.
Treat the ones you want to stay for a period of time by telling them exactly what you want and inviting them to stay for that period. Tell them with your words and your actions in terms of giving them clarity on their interim role and compensation – including any bonuses for completing what is effectively interim assignments.
Treat the ones you want to go away with respect by telling them what to expect. You don’t owe anyone lifetime employment. You do owe them your best efforts to enable lifetime employability. Tell them with your words and your actions in terms of giving them clarity on timing, their transition and compensation – including any severance, job search assistance, continuation of benefits and the like.
Click here for a list of my Forbes articles (of which this is #829) and a summary of my book, The Merger & Acquisition Leader’s Playbook
