Strategic and Financial benefit, Cultural Disaster

This topic contains 2 replies, has 3 voices, and was last updated by  Sandie 3 months ago.

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  • #121188

    Elizabeth Perlak
    Participant

    When you are working with a team who has identified a target with great strategic and financial benefits but the culture will be difficult at best to incorporate – what are your strategies for communicating the issue to the team? If the green light is given, what can be done to make the cultural integration as smooth as possible?

    #121218

    Terrific question @perlake! In determining that culture integration will be difficult, you should have identified specific factors – values, decision processes, command/control structure, cultural flexibility factors, L&D tolerances, tech-savvy, etc. – to which you can point and show where the challenges lie. It is recommended that you just be very direct at pointing out the respective challenges first and foremost. If the benefits of the merger are significant enough, as you shared they are, then the next step would be to identify solutions to each of these challenges. Always come to the table with a set of solutions. Those may not work or they may not be the final set of solutions, but they will start the discussion at the very least. Be sure to engage in open dialog with the deal team and the represented HR teams from the merging companies.

    Communication is the most critical tool. Crafting appropriate messaging, communicating the message as transparently as possible, with empathy towards the respective audiences, and adapting the messaging to match the respective audiences will make or break the integration. It is strongly recommended that strategic planning be part of pre-integration, that the outcome of the strategic vision and mission align with the merger thesis, and that appropriate unified values be determined that pull from all merged entities to reflect true unification of the businesses. Each audience will need to understand WIIFM (What’s In It For Me). The unified organization needs to come up with methods for integrating systems, processes, procedures, policies, total rewards (and corresponding philosophies around compensation & benefits), organizational design, command/control structures, decision processes, and develop appropriate retention strategies for key talent. The treatment of people exiting (due to duplication of resources, lack of cultural alignment to the future state organizational culture, or other business cases, whether voluntary or involuntary) should be managed with the highest integrity, providing appropriate severance packages based on level, tenure, behavior and performance factors.

    Its not a succinct response, but neither is your question free of nuance. Hopefully that provides some guidance, context, and vision for how to proceed.

    #121229

    Sandie
    Participant

    This is a very important topic and one that becomes very relevant in many deals where cultural challenges are underestimated – even though they may cause obstruction in achieving those strategic and financial benefits that has been identified. That could be one way to communicate the challenges and the impact they may have. It is difficult to quantify, but many strategical and financial benefits require some kind of behavior from the parties involved to become achievable.. and behavior is hugely interlinked with culture. So identifying the necessary behaviors and trying to quantify the impact of inappropriate behaviors might actually significantly reduce the strategical and financial benefits. And if the deal is still assessed as being valuable enough to proceed, then you know where to focus your energy on the integration efforts. win-win from an integration perspective.

    When facing significant cultural differences or challenges one should also be very mindful of the extent of the integration. It might not be necessary to go for a full integration on all aspects (absorption), other integration models (preservation, symbiosis or holding) could be more appropriate and reduce the impact of cultural differences and allow the integration team to focus only on the key interfaces.

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