Robin LaChapelle, executive vice president, human resources, Capital One
Photographer: Dean Alexander
When Capital One Bank purchased mid-Atlantic banking mainstay Chevy Chase Bank, it acquired 3,600 associates, $11 billion in assets and a legacy of exceptional customer service. The purchase cemented Capital One’s position as a leading U.S. bank and bolstered its reputation as a company ready and able to grow.
From the outset, Capital One’s executive team understood that Chevy Chase associates could make or break the acquisition. “Chevy Chase Bank was fanatical about customer relationships. Its associates were tremendously dedicated to the customer, and we needed to maintain that. We had to make sure they were ready to help their customers understand and embrace Capital One’s brand and offerings,” says Robin LaChapelle, executive vice president of human resources at Capital One.
Associates also had to be ready to operate in a new business environment. “We were moving from a regional banking model to becoming a large top-10 bank, and that meant a lot of regulatory and other changes,” says Bill Flatley, senior vice president for enterprise change management at Capital One.
Partnership with Towers Watson
Capital One executives recognized the complexities of post-acquisition integration and sought assistance from Towers Watson. “We knew from past projects that Towers Watson understands our strategic direction, our position in the marketplace, the performance drivers in each of our key business groups, and our goals for our brand and marketplace performance,” LaChapelle says.
Towers Watson’s deep merger and acquisition experience was equally important. “Even though we’d already been through a number of acquisitions — and Capital One is one of the few banks that have a formal internal change management function — every integration is different. Towers Watson’s M&A consultants had seen all the variations, and we knew we’d benefit from their experience and perspective,” says Flatley.
Towers Watson consultant Brad Messinger (left) with Capital One's Robin LaChapelle, executive vice president, and Bill Flatley, vice president, enterprise change management
Targeting employee readiness
Once the partnership was formed, Towers Watson and the Capital One integration team immediately turned their attention to evaluating how prepared associates were for the change at hand.
“In M&A situations, integration activities must be carefully aligned with business performance, customer expectations, and the new skills and knowledge all employees will need to be successful,” says Kathleen McClave, account director at Towers Watson. “By focusing on associate readiness from the outset, Capital One leaders ensured that associates were ready to deliver the desired customer experience; use new technology; follow new processes, policies and procedures; and work effectively in a new culture.”
Holistic approach to change management
The Towers Watson team began by working with business unit and project leaders to identify change requirements and evaluate their impact by audience — including regional, district and branch managers; call center leaders and representatives; and associates in small business, deposit operations and commercial units. A master inventory charted the changes affecting each associate group and connected the dots for business leaders.
Rolling out change management activities
Next, the team developed detailed plans with specific change activities and solutions, incorporating a number of important levers for inducing and sustaining change. The consultants prioritized and sequenced change activities to maximize their impact while minimizing distraction from associates’ core activities.
“By customizing and pacing the change activities, Capital One ensured associates understood the changes, could sustain the necessary behaviors over time and were excited about the future of Capital One Bank,” says Towers Watson consultant Brad Messinger.
Employee readiness scorecard
The integration team and business leaders also assessed associates’ readiness for change before, during and after the conversion. “We used both qualitative and quantitative elements to produce a readiness scorecard,” says Towers Watson senior consultant Daniel Ferron. “This provided the project and associate readiness teams with the insights required to make course corrections throughout implementation so associates were ready at conversion.”
Capital One's Bill Flatley with Towers Watson account director Kathleen McClave
The integration team’s hard work paid off. “Our goal for the integration was to prepare Chevy Chase Bank associates for the changes, enable them to deliver on the business expectations, and ensure they were both passionate about owning the customer experience throughout the transition and proud to be with Capital One Bank,” LaChapelle says. “We achieved that and more.”
Associate engagement scores increased 10% during a time of intense change and heavy workloads, compared with the typical double-digit drop in engagement in similar situations. Of the issues reported to the integration command center when the transition took place, only 5% were linked to associate capability. Best of all, customer attrition was well below the acceptable threshold in multiple business segments.
The project also built capability and competence inside Capital One, transforming how the company perceives change and its management. “People talk about change differently now; they include the impact on people as part of the discussion. Today, we regularly hear business managers mention associate readiness whenever they’re discussing change,” LaChapelle says.
“The project was a great benchmark for how integration should look for the company,” she adds.
Lessons Learned Capital One Bank’s leaders offer the following advice for companies that need to prepare employees for significant change:
- Use a data-driven approach that aligns with business results. Undertake an inventory of change requirements to better understand both the magnitude of impending change and the impact of individual changes on different employee groups and their businesses.
- Avoid traditional “siloed” thinking. Major change often has a cross-function, cumulative impact on employees that needs to be managed.
- Listen for results and concerns. Tell people what’s going to happen and what it means for them. Set up feedback mechanisms for two-way dialogue. Act quickly with real solutions, not inspirational platitudes.
- Define and measure success. Set target metrics for employee retention, engagement and customer satisfaction, and be honest about whether they’re met so course corrections can be made where needed.
- Help managers become change leaders. Managers are the ones employees actually look to for leadership, so give them the knowledge and tools they need to lead the change.