IT integration

Mergers, acquisitions and especially integrations have been a way of life at TD Ameritrade Holding Corporation, the company I have called home for nearly seven years. Our approach to the integration process after a merger has become standardized, but each deal brings its own set of challenges.

Mergers, acquisitions and especially integrations have been a way of life at TD Ameritrade Holding Corp., the company I have called home for nearly seven years. From 2001 to 2005 we took on seven integrations, and we were successful each time. Last January we closed on the largest deal in the history of our industry when we acquired the U.S. brokerage operations of TD Waterhouse from Toronto Dominion Bank. Our approach to the integration process after a merger has become standardized, but each deal brings its own set of challenges.

Technology is absolutely critical to how we integrate business. We promise our clients an intuitive, secure and dependable experience, whether they want service online (as most of them do), over the phone or in one of our 100 branches. Our clients, who hold more than six million accounts totaling more than $265 billion in assets, depend on us to deliver a platform that justifies their confidence in making independent-minded financial decisions.

In conducting due diligence on TD Waterhouse, we realized our organizations were quite similar in culture and philosophy. Each group also had a number of strengths to consider. Ameritrade was committed to an aggressive, 10- to 12-week product cycle, while TD Waterhouse had the advantage in developing advanced tools that support operational excellence.

The due-diligence exercise gave us an idea of what the structure of the new organization would look like. More important, it helped us establish organizational guidelines – manager-to-staff ratios, seniority mix and overall size, for example – that would help us make our personnel decisions. Because we made all of the systems decisions before the acquisition’s close, we had the resources to focus on a bigger challenge: ensuring the success of our personnel and cultural integration. Taking care of our people is a top priority, whether or not they are going to be with us at the end of the day.

We tackled this challenge according to what we call our Integration Principles. The first is fact-based decision making. Decisions must be transparent and objective so everyone understands the biggest questions: why and how. We follow a strict process of developing measurement criteria, gathering data and making decisions based solely on our research.

Key is making human resources a partner, not a barrier. One of the things we’ve learned is the importance of determining who has the ultimate authority to make hard decisions and communicate them to our people. When working with two HR groups, each with its own procedures, identifying a project lead or a committee comprising folks from both sides helps minimize unnecessary debate, and ensures that decisions are made and communicated efficiently.

Our second principle is managing people with respect. We make a conscientious effort to treat everyone fairly. Early on we started delivering weekly communications, explaining our decision-making processes and providing status updates and checkpoints. Building credibility with the staff of the acquired company was a crucial step.

Within 30 to 45 days after announcing the acquisition last June, I was hosting small meetings with TD Waterhouse technology associates to help them understand our philosophy and processes related to the integration. I explained our commitment to people, and associates could ask questions, air concerns and receive candid feedback. Having an open-door communications policy helps put people at ease and diminishes levels of uncertainty in times of change.

When people lose interest in their work, things fall through the cracks, endangering the organization’s success. Although we are focused on the integration, we still have a number of other initiatives to deliver on: caring for our clients, developing new products and ensuring our work behind the scenes has no impact on the business’s daily operations.

So we work diligently to help our people stay focused and on task, reminding them never to jump to premature conclusions. The worst thing that can happen, whether or not you are in the middle of integrating, is discovering your people are disengaged.

The challenge is that you never know what will trigger disengagement, nor do you know who will be affected. We had an individual who was prepared to resign because he could not deal with the uncertainty of the selection process. This was an individual whom technology management acknowledged as one of our top performers. We had no way to predict his reaction, but we were ready to address his concerns.

Through communication and extra attention, we were able to reassure this individual TD Ameritrade was a place that needed him and would continue to challenge him professionally.

We started the integration with a combined team of about 800, and we expect that number to decrease by one-third. We also are in transition from four data centers to two, keeping the legacy Ameritrade facilities in Kansas City, Mo., and Secaucus, N.J. On April 24 our units merged to form one broker-dealer, TD Ameritrade, which marked the beginning of the technological integration that will culminate with all client information being integrated in one Web site early next year.

Now we are focused on building our culture. I still meet with associates regularly, and we have hosted a number of team-building exercises. We also insist that our people participate in professional and leadership development training. They are thrilled to be a part of something special.

Don’t get me wrong; we still have a lot of work to do in building a cohesive team. Some people in our organization today are here indefinitely, while others are here only temporarily, yet we make no distinctions between these groups. We continue to focus on employee wellness and team-building, and we communicate every chance we get. At the end of the day, it is our people who matter the most. The rest will fall into place.

Bartlett is CIO of TD Ameritrade. He can be reached at jerryb@tdameritrade.com.