More than ever, the USA is an immigrant nation. Historic demographic norms are shifting substantially, making the current “white, non-Hispanic” category a minority demographic. New Republic states, “The waves of Hispanics and Asians and multiracial Americans reshaping the country’s population are full of young people, who by some measures already outnumber their white counterparts.” In 2014, non-Hispanic whites constituted only 53% of the country’s population, down from 70 percent in 1990. With these changing demographics in mind, the likelihood that you’ll come into contact with someone whose cultural background differs significantly from yours is certain.
Business reflects demographic changes in population, if for no other reason than because it must draw its workers from that population. More than ever, the success of business requires respect toward other cultures. To comply with legal requirements, many companies have developed diversity and inclusion (D&I) policies that recognize the major demographic differences and ignore the other, more subtle distinguishing characteristics. D&I programs emphasize respect for cultural diversity. Dr. Asim Shah states his view of cultural diversity: “To me, cultural diversity means merging different cultures; introducing good aspects of your culture to others, but also accepting the positives of a new culture.”
Nowhere is this more applicable when combining two corporate cultures through a merger or acquisition. Before integrating your company’s cultural style with another’s, you must first understand your company and conduct background research to understand the other company’s current culture. Performance of this due diligence research allows prediction of how the combined workforce will mesh. Or not.
Once you’ve developed an understanding of how the two cultures relate and their differences, it’s time to meet with key leadership of both companies to develop a transition plan. Don’t beat around the bush during this phase of the consolidation of companies: be explicit and candid regarding both your observations and expectations.
The discussion should result in an implementation plan that takes the best practices of both organizations. In that way, each company culture gives a little and the integration of a new culture should result in an improvement over both. Understand that employees of both companies will worry about how the changes will affect them. Clear and candid communication may include delivery of bad news to certain individuals; however, it will also prevent the spread of rumors that destroy morale and build resentment.
In her paper “The Role of Corporate Culture in Mergers & Acquisitions,” Christa H.S. Bowman states, “Anecdotal and survey evidence suggests that cultural incompatibility between acquirers and targets is an important reason for merger failures.” She cites the failure of “high-profile deals” between Daimler-Chrysler and Sprint-Nextel as anecdotal examples of the importance of corporate culture when combining two companies.
What is the corporate culture? Typically created by a company’s founder, the corporate culture sums up the organizational personality: “its shared beliefs, values, and behaviors.” Bowman describes corporate cultures in four ways: role-oriented, task/achievement oriented, power-oriented, and person/support oriented. Incompatible cultures bode ill for successful consolidation. Accordingly to the TalentSpace blog, “In a true merger, no one culture should win.”
If history is written by the victor, then the acquiring firm generally overwhelms the acquired firm. This “us vs. them” scenario leaves the personnel of the acquired company feeling resentful and undervalued when nothing could be further from the truth. After all, if your company acquires another, it’s because that company produces a product or provides a service that you find valuable. Be sure to communicate that through word and deed.
Cultural due diligence and internal D&I programs basically boil down to the rigorous exercise of good manners, which shows respect toward others. This show of respect involves offering all parties a voice at the table and the honest treatment of their opinions as valid and worthy of consideration. It includes all parties within the business valuing the contributions and showing respect for those contributions of people in all parts of the business, regardless of title or position.
Respect yields increased innovation, improved morale, greater employee dedication, and higher satisfaction among clients. What’s not to lose?
Water, water, every where,
Nor any drop to drink.
~ From Rime of the Ancient Mariner by Samuel Taylor Coleridge
Corporate growth occurs along three basic paths: 1) mergers and acquisitions of related, rival, or complementary businesses, 2) organic growth through the acquisition and retention of new customers, and 3) one-time promotional events that gain mostly temporary customers. The third option usually does not result in substantive organizational change to the business. Organic growth can eventually result in the creation of new departments of business needs, which involves expansion of staff rather than consolidation of departments. Mergers and acquisitions, however, often involve the consolidation of departments and personnel from different businesses and business cultures. Combining departments gets tricky if it’s to be managed without inciting resentment, confusion, misunderstandings, and turf wars.
Luckily, we’ve got a process for that.
Okay, we don’t have a standard, one-size-fits-all process. But the process for merging departments does follow basic benchmarks which can then be tweaked to customize it for the particular needs of the business.
The process begins with preparation and planning before the merger. Assign teams to analyze the existing processes within both organizations. Although the business being merged into another company may be expected to relinquish much of its own processes, you will find that there are some insights to learn from the way they do things that bear incorporation into and implementation within your company’s processes. After all, your company is acquiring and/or merging with the other company because there’s value, so don’t throw out the proverbial baby with the bath water. They bring something of value to your company, don’t discard the processes and culture that contribute to that value. The key is to figure out what those advantageous processes are and then to integrate them into your processes as smoothly as possible.
Consolidation of companies and the departments within companies affect everyone within both companies. Understand their anxiety. Such business decisions often mean the elimination of jobs, the addition of new responsibilities, the reassignment of responsibilities, and redistribution of roles. Every single person involved should have the opportunity to contribute to the process to help determine who will do what and when. Promote ownership of the process.
The merger and acquisition of businesses generally takes place to add or expand service or product capabilities. Keeping customers satisfied during the transition helps to minimize disruption and confusion for both the clientele and your employees. Maintaining efficient operation during the transition may mean that it takes longer than desired, but the slower pace will allow time for glitches to arise and be rectified and new processes developed to avoid repeating them.
The preparatory phase of the merger and acquisition should identify those processes which take priority as well as point out where new processes must be developed. Involvement of all parties and continued operation during the merger will either bring new information to light or confirm existing conclusions which will lead to the determination of which processes are the most effective, which need to be combined, and which must be replaced or simply eliminated.
When integration is complete and the dust has settled, monitor the newly combined staff and the new and revised processes for continued efficacy and efficiency. Because business continuously evolves, processes must be periodically reviewed and adjusted to accommodate changes in personnel, organizational structure, technology, or other impact affecting the delivery of service and/or products to your clients.
A lot of thought and content goes into analyzing what customers want. Technology companies and business management scholars have dedicated countless hours to customer management, client relationship management, customer expectations, and the like. University courses are dedicated to this subject. The horrifying truth is that it’s all pretty simple. Customers want the best quality delivered yesterday for free. Obviously and unless you’ve got close ties with the occult, that’s not likely to happen. Your clients aren’t stupid; they know they’ll have to pay and that the goods and/or services purchased will take time. When expectations and delivery don’t meet, frustration arises.
The ultimate goal of business is to make money. Everything else supports that goal. Lucky for customers, good customer service also supports that goal because every business relies upon satisfied customers. In fact, Fonolo.com states “nearly 95 percent of leaders say that providing customer experience is a top strategic priority, and 75% want to use customer experience as a competitive advantage.”
Every business must figure out how to set its prices, which can then be adjusted as circumstances change. Your customers don’t care how you set your prices or what variables–like labor, material and overhead costs–factor into those calculations. They want to be convinced they receive good value for their money. You must justify their cost with your reputation.
The variables that go into developing a reputation include:
● Response time
● Personalized service
● Problem solving
● Ease of doing business
Your customers likely won’t put pencil to paper and perform comparison analysis of value between competitors. Each customer has his or her own overarching priority. For some, it’s price. They’ll sacrifice the rest of the qualities in order to get the best price. For others, it’s quality–nothing else matters more. Most customers understand that they must balance price and quality. You get what you pay for isn’t a truism for nothing.
With the growing dominance of internet marketing and internet-based business, a company’s online reputation forms a critical piece of the branding puzzle. Negative rankings cost money in lost business. A Google search on online reputation management will yield myriad consultants all eager to polish your company’s reputation. One insight regarding online reputation comes from Forbes magazine: a company’s face–usually its CEO–assumes intimate association with the company. In other words, if the CEO has a negative online reputation, chances are the company’s reputation will also suffer.
Inc. magazine offers yet another interesting insight into reputation management: “Interestingly, the foundation for understanding reputation is decidedly old-school. What used to be called “word-of-mouth” is now global, with online review sites, blogs, and social media making it easier for customers to learn about brands and what other users think about them.” The worst thing about reputation management is that a business can’t stop people from posting negative reviews. The great thing about reputation management is that a business can address a complaint in public and reap the benefits of having attended to and resolved a customer’s problem.
A stellar reputation can justify higher fees. Customers know what they want; however, when faced with an abundance of options, their business may very likely go to the company that shows the highest approval ratings. Authors know this. Reader reviews bolster or damn book sales. Restaurants and hotels know this: check review sites like Yelp, as well as blogs by informed critics and ordinary people.
Positive reviews foster trust. It’s up to you and your staff not to break that trust. The Heggen Group can help your company establish processes that streamline keeping your clients’ trust by ensuring predictable, high quality outcomes.