Professional Documents
Culture Documents
Groundwork
North East
Scarborough, North Yorkshire
The trusts also faced some capacity issues. For example, it was not possible
for each to recruit a landscape designer, so a regional landscape design
Chief officer leads team had been set up. The trusts were considering doing something
on due diligence
similar for other teams. There was a recognition that more collaboration
process and
oversees formal and could better serve local people.
staff consultation
The catalyst for merger came from Groundwork UK, which was looking at
strengthening regional delivery and bringing more consistency to project
management and reporting systems across Groundwork trusts. The central
organisation was encouraging Groundwork trusts to choose one of two
1 July 2009
options: creation of a single regional trust (‘model A’), or creation of a new
Merger date
regional independent trust to work with all trusts in the area (‘model B’).
Post-merger phase
As ‘model A’ offered a chance to rationalise human resources and address
some of the capacity gaps already identified, while ‘model B’ would have
meant creation of yet another organisation, the North East trusts chose the
former.
Learning from Mergers - the case studies
Page 2 Groundwork North East
The boards of the individual trusts took the formal decision to merge in
February 2009. At this point, one trust decided not to go through with the
merger, and the director of the regional office resigned.
Despite one trust pulling out, a formal decision was taken to continue with
the merger. The next step was to bring in an external consultant to lead
the recruitment of a managing director for the new organisation. This post
was filled by April 2009, an internal appointment. Key tasks for the new
managing director included:
• leading the due diligence process
• overseeing a large formal staff consultation on the new organisational
structure
The due diligence process was carried out ‘in house’. Groundwork North
East produced a due diligence pack and asked each trust to work through
it. The pack included a list of what needed to be covered, agreed by
solicitors. A working group then spent a couple of days cross referencing
and checking to pick up any economic, technical and organisational
issues, which were again cross-checked by solicitors. Using solicitors in this
way, rather than getting them to do the whole process, saved the trust a
considerable amount of money.
The merger took place on 1 July 2009, although owing to an issue around
pensions that still needed to be resolved, one trust did not merge until later
in the month. During July, staff whose roles were at risk were interviewed
for new roles, and new terms and conditions of employment for all staff
were agreed. By 1 August 2009, staff were in their new posts.
Treating all of the merging trusts as ‘equals’ in the process was critical to
its success. Although trusts varied considerably in size – from 8 staff to 70
– and some were financially stronger than others, the merger discussions
focused on the positive aspects and skills that each would bring to the new
organisation. The process is legally a merger, not a takeover, and the new
organisation has ‘merger accounts’.
“You need everyone to feel Communicating the changes effectively to staff was seen as really important
that they are coming in as an to the success of the merger.
equal partner. This is really
important if want to make it A further success factor was that Groundwork West Durham and Darlington
a success.” understood what mergers involved - having been through similar
processes twice before. One of these, a takeover of a smaller charity,
Stakeholder
had been successful, while another more recent takeover had been much
more difficult, with a pension liability causing serious problems. Staff and
trustees therefore had a good idea about what types of issues might come
up, particularly around due diligence, before embarking on the process.
“Local authority partners take highlight individuals’ skills and achievements. Since the merger, some staff
us more seriously – view us have been able to move from back office to frontline delivery roles.
more professionally, we bring
more skills and expertise, and Programme delivery has been structured on a sub-regional basis
can flexibly deliver across the and sub-regional directors employed. This has provided clearer lines
region.” of communication with local authorities. Reflecting better partner
engagement, nearly all local authorities in the region are members of the
Stakeholder
trust.
Finally, keeping local offices, and using a sub-regional delivery model, has
helped maintain links with frontline organisations and communities. As well
as the sub-regional directors, there are sub-regional advisory boards that
have responsibility to maintain relationships with local communities. At the
same time, Groundwork North East can offer a wider range of services,
staff and skills to those it supports.
Challenges
During the merger process, the trusts worked through several challenges.
Some were related to the reorganisation. For example, all the trusts’
finance officers knew that they would all be competing for one job. This
limited the progress that could be made in setting up the finances for the
new organisation before the merger took place, and meant a lot of work
needed to be done afterwards.
One trust joined later than the others, because of a pension liability issue
that came to light during the due diligence process. The new Groundwork
North East board wanted to make sure they had a complete picture about
the extent of this liability before agreeing that this trust would also be part
of the merger. In the end, trustees took the view that going ahead with
the final part of the merger was in the best interest of Groundwork North
East, even though in effect the liability meant that this trust had a negative
balance sheet. Nevertheless, this increased the cost of merger considerably
– including the pension liability, it is estimated that the merger has cost the
trusts some £250k.
Although the merger took place in July 2009, not all the former trusts
have yet been formally dissolved. Trusts’ staff and finances have been
transferred, but accounts left open owing to outstanding debtors. In some
cases leases also still need to be transferred and it has been expedient to
delay dissolving the organisations formally. While this means that there are
still some legal loose end to tie up, this does not generate significant extra
cost for Groundwork North East.
Since the merger, the new organisation has got up and running very
quickly. Nevertheless, there have been some ongoing challenges, not least
in relation to IT. Groundwork North East has implemented a new project
management system, which Groundwork UK has advocated that all trusts
Learning from Mergers - the case studies
Page 5 Groundwork North East
start using. However, putting this in place while staff are also getting used
to the new organisation and ways of working has been really difficult.
In the longer term, the trust anticipates that the funding climate will become
tougher and has started scenario planning around possible reductions in
funding. Nevertheless, its success in the current year has set Groundwork
North East in a stronger financial position going forward.
Lessons Learned
• Working with boards in a way that underlines that they are equal partners is crucial. Groundwork North
East’s strategies included making sure there were equal numbers of representatives from each organisation
in decision making, and focusing on the skills and strengths that each brought to the table, for example by
drawing on the ‘best bits’ from across the trusts when setting out contracts for new staff. “If Boards don’t see
that there’s equality in the process … then you’ve lost them.”
• Good communication with staff throughout the process is key – and needs to be across whole organisations,
being mindful that some staff may not be office-based.
• Embedding cultural change is an ongoing process, and requires senior staff to think carefully about how they
present changes in working practices, to reinforce that organisations have merged on an equal basis – and
not taken each other over.
• Due diligence needs to be undertaken very carefully and thoroughly, but not necessarily by a solicitor.
Groundwork North East’s approach was to use lawyers to check that the process was sound, but to support
trusts to do the leg work themselves.