The Pain's All Yours

IT'S THE MEMO EVERY WORKER FEARS: ""Dear Employee: Today we're announcing plans to merge.'' From the clerk in Accounting to the VP on Mahogany Row, thoughts turn to the person in the same job at the other com pany. Will they need us both? Is she more qualified? If there's only one job, will I beat him out? But when employ ees at H.F. Ahmanson & Co., the country's largest savings and loan, arrived at work last Tuesday, the memo announcing their company's hostile bid for Great Western Financial contained a surprise. Their boss, CEO Charles Rhinehart, told them to rest easy. ""No current Ahmanson employee will cease to have a job ... as a result of the merger,'' he wrote. In other words, the bloodletting in this deal--and there will be plenty--will come only from the veins of Great Western.

The move was a new pirouette in the ancient corporate mating dance. It's no secret that the target company in a takeover usually suffers the bulk of the job cuts. But ritual dictates that every acquired employee appear to have a fair chance at a job. Rhinehart's apparent flouting of that rule--some called it a wholesale attack on the merit system--shocked M&A pros. ""I'm stunned,'' says a veteran takeover adviser. ""I can't imagine why he said it.'' Rhinehart insists his words were misinterpreted. ""We're still going to pick the best employees,'' he told NEWSWEEK. ""If it's one of their managers, we'll find a job somewhere else for our manager.'' But the memo still caused an uproar. Great Western chairman John Maher fired off his own memo expressing his ""personal outrage'' over the promise of one-sided job cuts. ""I find [Rhinehart's] statements highly repugnant,'' he added.

Aside from the extraordinary no-layoffs promise, the bid is no surprise. Sleepy S&Ls like Ahmanson want to grow, and a combination with crosstown Los Angeles rival Great Western offers $400 million a year in savings, much of it from axing 4,500 workers. But Rhinehart's your-job-is-safe pledge to his own team could thwart Ahmanson's plans, since Great Western will work extra hard to find a white knight who will make the cuts more fairly. Even if one appears, life won't be much fun inside Great Western. Most merging companies swear they make staffing decisions based strictly on performance. But skepticism remains. ""It's political,'' says Chicago outplacement consultant John Challenger. ""The company in the driver's seat keeps its own employees.'' Senior execs do well in mergers because their employment contracts and stock options cushion unemployment. Low-level employees like tellers should be OK, too: high turnover makes it easy to cut through attrition. Headquarters and back-office staffers are most at risk, but headhunters say the job market is strong.

To the larger question--will Rhinehart's novel takeover tactic start a trend?--the early answer is a resounding no. It's just too risky to make blanket promises to your employees, experts say; Ahmanson may even be missing a big opportunity to weed out its own weakest players. At Great Western branches last week, employees were tight-lipped about their angst. ""I'm just doing my job and don't want to lose it,'' said one longtime loan officer before calling security to escort out a NEWSWEEK reporter. Lots of luck, ma'am. Unless this takeover is derailed, keeping your head down may not be enough to save your job.