HR Due Diligence Role in Preventing ‘Culture Clash’
- This topic has 38 replies, 38 voices, and was last updated 7 months ago by
.
-
Posts
-
What a great question, Sultan.
It may be essential to ensure that a true value is being creating, especially post-integration.
Also, it may be beneficial for the company to have what some might consider as the M&A HR Toolkit.What do you think?
Great question! In my opinion, a detailed cultural assessment of both parties (Buyer and Target) across different functions needs to be executed to identify what kind of cultural integration will help to prevent cultural clash. For a perfect example of what culture clash actually means, watch ‘Emily in Paris’ where a young American female struggles to understand the French culture – 2 hrs. Lunch, Office start time being 10 AM,etc. HR Due Diligence will definitely help to identify the gaps, however a strong change management, an integration team and smart Corp Communications team is necessary for avoiding cultural clash.
1-Start early. This is the no.
2-Be clear on the value you are trying to achieve.
3-Define the end state for culture.
4-Conduct a culture assessment during due diligence.
5-Pay attention to all decisions being made.
6-Focus on emotions.
7-Bring people with you on the journey.
8-Be open.Above what already mentioned, aligning the overall strategy and efficient communication will help prevent any potential culture clash.
Setting an overall HR strategy prior execution to ensure smoother transitioning. Most importantly, the HR principles/management should have flexibility to adjust some aspects while ensuring to keep the work/productivity unaffected. I think the nature of M&A transactions should experience such cases, however it should be managed promptly.
I agree with Saif. Got to define, be open and transparent and anyone who doesn;t want to be on the bus, get them off.
There have been some great replies to this post already. Empathy is key! Put yourself in the acquired company’s proverbial shoes. Understand their process, conduct an assessment, identify the similarities and differences, have a clear vision and strategy that is developed together. Communicate until you think you are done and then do some more.Transparency, clarity, timelines, topics, impact, end goal, the individual employees role in ensuring the company’s success.
Saif made an excellent idea. I would that you need to understand the policies. You may recall the M&A of Air India and India Airlines. Part of the problem was a different payment system that was never integrated hence it created a mindset of “different classes” of pilots.
In answer to your question, No HR DD will not resolve everything. Sometimes the leadership that takes over the new company matters too. HR DD may show potential issues and possible solutions, but if the leadership follows, the HR DD is will be of no use.
Great question! I’ve found that every deal will have some culture clash. The question is, how much is too much?
All respondents pointed out critical pieces to the equation of managing the clash. It starts with the executive leadership team. If they have unhealthy conflicts, then the deal value erodes very quickly. Leaders set the pace, show what is essential, and model the go-forward culture.
Great points have been already made above! From my personal opinion as HR consultant, many companies fail to define end-state as integrated operation during the deal phase. Many of them only realize that they do not have goal image when the deal is closed. It is important to have dialogue/ focus session between management members to facilitate the discussion and identify the ‘to-be’ state of the post-close organization.
At the end of the day, HRDD only identifies the ‘current state’ of the target.The culture of the organization must be revised, and HR policies revisited as necessary. Clearly communicated to the organization, change must be implemented in a short period of time to avoid losing momentum and people being absorbed into the old system. The message from management must be clear to all employees and compensation and performance must also be linked to the culture change that is targeted for change
I don’t think that HR Due Diligence can alone prevent culture clash. If a seasoned and well established market leader acquires a start up, we will see lot of differences between the way how each company operates. Start-up was focused on innovation and causing disruption and emerging well in the market which prompted acquirer to acquire it. May be target company does not rely heavily on big documentation, they do not follow old software methodology where there are multiple people performing redundant responsibilities like an office of PMO, portfolio management or Agility management. They are used to the way of being agile and put the product fast on the market. This difference in way the companies operate can cause clashes where the target might feel they are operating in next gen capabilities while the acquirer is sticking to old ways of doing business.
Overall I agree, but there are several strategies that could prevent culture clash after an acquisition, HR and senior corporate leaders should recognize and take the lead to implement before/after the acquisition:
• Analyze cultural differences before the acquisition happens
• Communicate and listen to employees
• Define and implement your new culture
• Celebrate and embrace change
- You must be logged in to reply to this topic.
