Wachovia Acquisition May Put Leave Plan in Peril
They believe it could be the tether that brings employees who are on leave, retired—or who even may be laid off—back to the company again once good times return.
Wells Fargo paid $14.8 billion to buy Wachovia after federal regulators pushed the cash-strapped Charlotte, North Carolina, bank to find a buyer last fall at the height of the nation’s financial crisis. The deal, which was finalized in January, created the country’s fourth-largest bank by assets, with 6,600 branches in 39 states, 276,000 employees and 48 million customers.
Wachovia launched its innovative leave program in January 2008 to give employees the chance to take up to three years off to care for a sick family member or for other personal reasons. Employees on leave aren’t promised their old jobs back and don’t get benefits. But they are treated as part of the fold, receiving regular company communications, news of job openings and, upon their return, immediate re-enrollment in benefits and 401(k) plans.
The program is still running, but its fate remains undecided as the company’s HR leadership grapples with the aftermath of the merger, according to spokeswoman Julie Andrews. She declined to estimate how many employees are currently on leave through the program. “As we look at both companies’ policies we’re determining what’s best for the organization,” she said.
If Wells Fargo’s HR management knows what’s best, they’ll keep the program, and other companies should do likewise, especially companies laying off workers, said Jason Averbook, CEO at Knowledge Infusion, a Minneapolis-based HR management consulting firm. Incentive plans are designed to keep people part of the company while the company cannot afford to pay them, Averbook said.
“Once the economy bounces back, if these networks and communications are not in place, the chances of that person coming back are significantly reduced compared to those where constant engagement has occurred,” he said.
In addition to Wachovia, IBM pioneered extended leave programs, and finance and consulting firms such as Deloitte and PricewaterhouseCoopers have used them, especially to make it easier for women starting families to leave and rejoin the workforce without the process “being so onerous,” said David Astorino, management due diligence group practice leader at RHR International, a Chicago management consulting firm. “This is one benefit that keeps them connected to their talent pool,” Astorino said.
But Astorino isn’t sure leave programs would work with laid-off workers. Employees may resent being let go, and that could make them uninterested in returning to an old job, no matter what the benefits, he said.
As for what Wells Fargo decides to do with the Wachovia program it inherited, “all bets are off,” Astorino said. “It’s hard to say any program or benefit is not going to get re-evaluated.”
On the other hand, such a program isn’t a high priority, and Wells Fargo may decide to leave well enough alone, “because messing with benefits makes people upset,” he said.