Sue Lee, senior vice president, human resources and communication, Suncor.
Sue Lee, senior vice president, human resources and communication, Suncor. Photographer: Redstone Pictures

While most companies began 2009 confronting one of the most challenging global economic downturns in history, Suncor Energy chose not to retrench. Instead of waiting out the financial storm, Suncor explored ways to turn adversity into opportunity. The plan: Merge with Petro-Canada to create Canada's largest independent energy company.

Suncor saw the merger as a unique opportunity to create a flagship Canada-based corporation with the assets and financial strength to compete against the global energy superpowers. Suncor projected that a merger with Petro-Canada would achieve annual capital efficiencies of $1 billion by reducing overhead, sharing infrastructure and technologies, and realizing operating savings of more than $400 million per year.

The perceived benefits were great, but bringing the two large companies together would be a massive undertaking.

Moving swiftly

Following the March 2009 merger announcement, Suncor worked quickly to secure shareholder approval in June and final approval from Canada's Competition Bureau a month later. Moving rapidly was necessary from both a business perspective and a people standpoint.

"The key to a successful merger is speed and decisiveness. The longer mergers last, the more difficult they are," says Sue Lee, senior vice president of human resources and communication at Suncor. "So it's vital to move fast and reduce uncertainty for employees."

With a tight schedule for consolidating the two companies, the HR team brought in Towers Watson to help plan and manage the complicated process. Having worked with Towers Watson over the past 20 years on executive compensation, retirement plans, and health and welfare programs, Suncor's HR leaders knew that Towers Watson consultants understood the company's business strategy and culture.

"Shaping a culture for the new Suncor and supporting change management were key goals," says Lee. "And we were committed to doing this as quickly and efficiently as possible."

Integrating the people element

Paul Gardner, vice president, HR and corporate programs, Suncor
Paul Gardner, vice president, HR and corporate programs, Suncor (center) with Towers Watson consultants (left to right) Fiona Macdonald, Brian Reidy, Gwen Yager and Mark Dahlman

The creation of a Project Management Office (PMO) was the first step in bringing coordination to the project. Towers Watson supported the PMO by providing oversight and guidance to the various project teams.

At the same time, the HR integration team began working with executive leaders to create a vision and values for the new company. These efforts were informed by the results of a cultural assessment, following approximately 100 focus groups of Suncor and Petro-Canada employees. The assessment's goal: to identify the positive cultural attributes of each company and use these to set the tone for the new Suncor.

A series of cultural and strategic alignment sessions for executives followed. "It was important to have executives — and later, directors — understand our new vision, values and business strategy," says Paul Gardner, vice president of human resources and corporate programs at Suncor. "Everyone needs to speak the same language from day one of a merger, especially those at the highest levels of the organization."

Once the vision and values had been established, organizational design and employee selection began. "It was a delicate situation," recalls Gardner. "Because the Canadian Competition Board was unable to commit to a specific approval date for the merger, we had to work within an unknown time frame. We could not wait until the final approval to begin working on organizational structure issues. Instead, we started designing the new Suncor before the official approval came through, being careful not to break any competition rules."

Again speed was an important factor. Suncor put its executive-level teams into place just before the merger was approved. Then the most intense work began. In the six weeks after merger approval, the HR team worked tirelessly with leaders on the selection process. "Essentially, the operation center worked around the clock, processing selection decisions from business units, uploading data and generating letters regarding the status of approximately 14,000 positions," says Gardner. "We were able to meet our astounding six-week challenge through detailed planning and execution."

Adds Mark Dahlman, Towers Watson account director, "This intense process focused on employees from both Suncor and Petro-Canada. The goal was to determine which employees would be critical to the new organization. Every employee went through the same evaluation process, regardless of which company they were from."

Dahlman (left) and Gardner at Suncor's Calgary headquarters
Dahlman (left) and Gardner at Suncor's Calgary headquarters

Meanwhile, HR leaders worked on the design of new programs, including compensation, benefits and pension arrangements. With the help of market data, they created HR programs and put new policies into place.

Throughout the process, internal communication played an important role. Due to the tremendous amount of uncertainty, employees at all levels needed communication that was constant, open and honest. Leaders held town hall meetings in every location, conducted conference calls with senior managers and distributed written updates frequently.

A continuous journey

"Overall, it was very successful, and we still have more to do," says Lee. "The Suncor/Petro-Canada merger is known as the quickest close of any merger of this size in North America. Our goals were quite aggressive, but we were able to meet them with the help of our Towers Watson consultants. They understand change management and culture, and they helped us to think holistically."

Gardner agrees: "A merger is a significant journey for any company to undertake. We achieved our goals, but change doesn't happen overnight; it takes a long time. Establishing a culture for the new Suncor was and continues to be a challenge. We're still working through the process. It's definitely a journey."

Lessons learned

Suncor's HR leaders offer the following advice for successful merger integration:

  • Set clear, leader-supported goals for the merger and the new company. Short- and long-term goals are key to achieving the vision and values of the new company.
  • Partner with consulting firms you trust. Long-term partners have a vested interest in your success.
  • Build a team of dedicated people. Select the right people with the necessary skills for your integration management team; define their roles, and give them the resources to move the process forward.
  • Move quickly through the merger. In a sensitive merger, moving slowly won't work. Immediately establish the company you want to be.
  • Pay attention to culture. The new organization's culture and tone should be informed by a cultural assessment and must be created at the top level of the organization.
  • Communicate consistently and constantly. Be transparent and honest from day one. Give employees the good news and the bad news. Use numerous communication methods and channels to target employees so you reach everyone.