The Culture of Change During Corporate Acquisition

Summary:

A culture of change results from the merging of two distinct corporate cultures as we see in acquisitions and mergers. Social and business perspectives must be considered during this time of delicate transition. Cultural sensitivity is vital to the successful implementation of new processes as well as fostering a lineage of potential leaders within the parent company and acquired companies alike.

Main Article:

As an anthropologist observing a corporate acquisition, I observed the culture of change. What I mean by this is eventually there is a middle ground where the acquisition itself fosters a new business culture entirely. For example, a private company with a small town mentality possesses its own individual business culture before acquisition. Then a corporation purchases the smaller company, in part or in whole. Acquiring corporations often possess a culture that thrives on profitability, effectiveness, and efficiency. Upon acquisition, the merging of these two cultures begins to develop a hybrid culture; this is the culture of change.

The culture of change is constantly developing with new interactions and participants. As long as the corporate arrangement remains the same, the hybrid culture will continue to develop in new ways. A mutually beneficial arrangement may be difficult to achieve because the acquiring company makes clear display of financial dominance. This carries a lot of weight in the business world and translates into a type of cultural dominance, in some cases. Employees do not like to think that they are automatically subordinate due to an acquisition, and they shouldn’t be made to feel that way. Unfortunately, this type of distinction between groups can emerge forcing individuals to reassess their role in the company. The culture of change can be mutually beneficial, and this type of change should be the goal of both parties.

Mergers and acquisitions affect corporate culture every day. Acquisitions are also a complex social merger whose effects must be considered in order to provide a mutually beneficial transition. Too often, only business factors like profitability are considered, and the human factors involved are overlooked. It is vital to strengthen professional relationships within a corporation to ensure efficiency and productivity in interdepartmental relationships and professional relationships. The restructuring that is inherently involved during acquisition can be difficult for some employees. A company with a compassionate attitude toward its employees is going to foster productivity and loyalty in its employees. One can argue that employees do not necessarily have to be happy in order to be productive. While that is the case, negative emotions regarding the work environment or job related tasks fosters resentment which will be seen in productivity and engagement over time. Many employees desire a challenge in their position, at least on some level. Stagnation is the easiest way to jeopardize the goals of the corporation. The company and its employees must continue to grow.

Strengths Finder 2.0[1] by Tom Rath urges management to focus on their employee’s strengths rather than their weaknesses. This simple change could translate into huge profits, and is applicable to all industries. Strengths Finder 2.0 is a 1# best seller on both the Wall Street Journal and New York Times bestsellers lists. According to the research performed by scientists, led by the late Father of Strengths Psychology Donald O. Clifton, having a direct supervisor or similar influence, who regularly focuses on one’s strengths can make a dramatic difference in work performance. This is based on a 40 year study of human strengths, translated into 20 languages, surveying more than 10 million people. One of the many facets this assessment analyzes is engagement based on whether your manager focuses on strengths, weaknesses, or just ignores you. If your manager primarily ignores you, the chances of you being actively disengaged are about 40 percent. If your manager focuses on your weaknesses, the chances of you being actively disengaged is about 22 percent. However, if your manager focuses on your strengths, the chances of you being actively disengaged falls to 1 percent. People respond to positivity. This data indicates that employees are far more likely to be engaged in their duties if their direct manager takes an active and positive role in their work, helping them to develop their strengths instead of constantly pointing out weaknesses to improve upon. The intuitive leap is not difficult to make. If employees are actively engaged in their duties, they are going to be more productive, and employee productivity is directly related to increased profitability for a company. Rath describes “society’s relentless focus on people’s shortcomings” as “turning into a global obsession”. Explaining employees have several times more potential for growth when they invest energy in developing their strengths instead of correcting their deficiencies. If the employer chooses to take an active part in this growth, the company itself should benefit from the growth of its employees. Corporate business culture should nurture its employee’s strengths and help them find a facet of the business they excel in for the sake of the company, and their employees. Many corporations do administer a personality profile before employment. It is an interesting consideration for an acquiring company to assess personality types for the purpose of determining how the employees’ strengths align with their job duties. If a company is going to nurture the strengths of its employees, they will first need to determine what those strengths are. The Clifton Strengths Finder Assessment is one way to do that. The culture of change, in this case, can change a company from assessments based on weaknesses to assessments based on strengths, improve the morale of its employees, and increase productivity.

At times, conformity across sites requires restructuring positions within the acquired company. Restructuring of positions can cause an employee to be essentially demoted simply because their position has been acquired. Care should be given to compensate individuals in these positions, and the negative cultural impact should not be ignored. The following example focuses on a hypothetical customer service department based on a real life example witnessed in a corporate acquisition. The hierarchy within the acquired customer service department was as follows: customer service representatives who answer phones, non-phone specialists, supervisors assist the representatives and may take a few escalated calls in between their desk work duties, team leaders assist the supervisors, and the departmental manager.

Anyone in business knows how important interpersonal relationships are. Climbing the corporate ladder entails building strong relationships with management and executives, if at all possible. How does one do this if, for example, they are part of an acquisition in Florida for a company that is based in California? How does the parent company utilize the full potential of its employees when they are overseeing multiple sites across the country? Talent scouting and employee motivation is essential to the upkeep of morale and therefore productivity. Human resources, a department devoted to the interests of the employee, must be part of the answer. HR should not become stagnant nor distant during acquisition. This vital department is key to the development of a sense of unity and equality. They must respond quickly and efficiently to inquiries and complaints from employees. An effective human resource department can make or break the new culture of change.

Something often overlooked during acquisition is the changes in responsibilities that occur, and the tasks which still need to be performed but go unrecognized by the acquiring company. In the example above the supervisors’ responsibilities changed rather drastically. In a similar manner, responsibilities and accountability can change. What happens if the acquiring company does not absorb or recognize responsibilities that still need to be performed within the acquired companies? Lack of communication can mean that some employees are not properly compensated because the parent company doesn’t recognize some of the vital duties that they are performing. This also potentially leads to dissatisfaction and ultimately poor performance. Overflow tasks in a department may be assigned to random individuals, adding to their work load, but not increasing their compensation, when cumulatively these tasks should have been designated to a new position entirely. Instead of incurring the cost of hiring new employees, the company fails to assess the importance of these tasks and is satisfied to have them done by several individuals. This may complicate things even further because these individuals may not conform to a standard format or methodology. The tasks would also be performed at varying levels of aptitude. It is also vital to understand what each employee’s duties are, not only because other employees may need to ask questions to further understand a processes, but also for accountability’s sake. Who is accountable for the task? It is easy to over burden employees with excess tasks to the point that the quality of their standard duties suffer. If there are overflow tasks in a department, management should assess if cumulatively these tasks are sufficient to request budgeting for an additional position, or positions.

A distinction must be made between individuals who are promotable within a department and those who are perhaps a better fit in another part of the company. Generally, an individual’s direct supervisor or manager looks for those who are promotable, but only within that department. Imagine if HR actively looked at employee records to find qualified employees to fit where there is a need. While individuals should always try to market themselves and apply for positions of interest, HR should be consistently offering jobs that would fit employees and assist in adding value to the company. The majority of employees are interested in upward mobility and not satisfied with being stagnant in a position for more than a few years. For example, let’s say there is a customer service representative with a degree in finance or accounting and HR posts a job opportunity in accounting to the company website, as is typical for a new opening. Although this internal individual may be well qualified and the position entails a higher salary, he is never even aware of the opportunity. This is especially true when you are dealing with the parent company and acquisitions. HR should know the employees who are willing to relocate, or open to changing positions, they should also be aware of their employees’ qualifications and the relevance those qualifications to their job. A corporations should be interested in their employees’ upward mobility. Employees with quality performance in their job duties should be promotable within the company. At times internal discrimination exists within the company with preference to those within the original parent company, acquisitions while supposedly internal, are sometimes treated very much like external applications with little differentiation made between those applicants and truly external applications. On the contrary the creation of a productive culture of change should entail the exchange of ideas and positions which are beneficial to both the employee and employer. Whether an employee is hired, after submitting an application or not is irrelevant to HR’s need to follow up with that employee. Even if it is a simple communication to express thanks to the employee for the application, but that the position has been filled. This is especially true of internal applications received in HR.

Students are often an untapped resource, but there are still other ways to implement a program on a strict budget. Employees often will participate in company wide competitions for a simple opportunity. For example, when faced with a website marketing need an employer may announce a company wide video submission contest about the values of the company to be used on the company website. This is excellent for a few reasons. Firstly, the commercial will feature employees, not actors, and therefore there is a reduction in potential costs to the company. Using authentic employees in the video also adds credence to the sincerity of the message which is generally centered on company values or ideals. A competition like this could be company wide including even entry level positions, or it can be directed more toward middle management as there is the potential to groom the winner(s) for a promotion. The value of a competition like this is not only monetary. This interaction has the potential to strengthen the culture of change by increasing interaction between the acquired companies and the parent company in a positive manner. This is a way to bring corporate cultural cohesion by selecting a winner from each office and then a grand winner if need be, or perhaps several winners. Employees could vote on the video, or elect a panel to judge it to ensure confidence for an unbiased judging process. In a similar program I observed as an employee, the grand prize was a trip to corporate headquarters to meet with executive management. This is excellent because it provides exposure for up and coming employees, and makes it possible to interact with officers that otherwise would be mostly inaccessible. On the other hand, this same tool could be used to ostracize and demoralize. Let’s say all the winners are based in the corporate office causing employees at sites in the company other than headquarters to feel ostracized. Care should made there is no discrimination based on job sites.

During acquisitions there are so many variables to consider. There is a need for more sensitivity to the business culture during acquisition. An environment of mutual respect is paramount. Corporations can achieve a more favorable transition by instating programs aimed at cohesion and improving processes which are already set in place in vital departments like Human Resources. These programs do not have to be of staggering expense, but with strategic implementation can benefit all parties involved with a focus on improving strengths employees already have. Executives and middle management alike can learn from the mistakes, but also the successes, of other acquiring companies. As employees continue to invest precious years of their lives into a company, the company in exchange should similarly be investing in its employees. Securing and fostering talent and future leaders will ultimately prove beneficial for employees and contribute to a company’s continued success. Management must take an active role in improving the business’ cultural sensitivity processes with every acquisition as they strive for excellence in all business ventures.

[1] Rath, Tom. Strengths Finder 2.0. Gallup Press. 2007