Merging Company Cultures Together EMA Conference March 2002 Andrew D M Smith

1. Change Solutions Ltd. E m p o w e r i n g I n d i v i d u a l s, E n a b l i n g O r g a n i s a t i o n s Merging Company Cultures Together EMA Conference March 2002 Andrew D M Smith Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

2. Introduction • What is Organisational Culture • Problems when cultures have to integrate • Understanding the Problem • Strategy for Success Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

3. What is Organisational Culture? A good definition by Edgar Shein is: “a pattern of basic assumptions…invented, discovered, or developed by a given group…as it learns to cope with its problems…that has worked well enough to be considered valid, and therefore…is to be taught to new members as the…correct way to feel and respond to those problems” Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

4. But what does this mean… • What the leaders focus on, measure and control • How leaders react to crises • Criteria used for granting rewards and status • Criteria used for recruitment, selection, promotion, etc. • Design and structure of the organisation • Systems and procedures • The look and feel of the physical spaces • Any organisational folklore • Formal statements of philosophy Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

5. When cultures collide • The drivers to merge or acquire businesses are typically related to growth and/or profitability • The compatibility of the two cultures is often neglected • One of the two organisations is often perceived as superior • Due to size – either big or small • Due to success or current profitability • Due to operational efficiency Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

6. Why do problems occur? • There is no real plan for creating a new culture • Perceived negative outcome e.g. redundancy, more work • Lack of communication from senior management • It is human nature to be afraid of differences and to fear uncertainty • Organisations invest time and money building up a sense that their way is best – this is often fiercely defended by staff and managers Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

7. Understanding the Challenge • Challenges: • To actually realise the benefits of the merger – increased revenues, decreased operating costs, etc • Create a new integrated organisation that is greater than the sum of its parts • Risks • What if all the good people leave and all the average people stay • Drop in morale and then a subsequent drop in productivity Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

8. Strategies for Success • Value Difference • Communicate • Define a new culture for the merged organisation • Plan the change strategy • Keep a finger on the pulse Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

9. 1. Value Difference • Learn about the other organisation and the differences and try to understand why it is like that • People related policies and practices • Systems, processes and procedures • Attitudes to change, change history • Start to identify what is great about each organisation • Start to establish a clear need to change with everyone you talk to Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

10. 2. Communicate • A communication strategy is your top priority • As soon as the first word is whispered about a merger you have to manage expectations • Give regular presentations and updates • Talk to staff about there concerns and try and gain an insight into the practicalities of the merger • Try to minimise the “us and them” attitude • Promote the idea that the change is a good thing and the organisation and the staff will be better off in the long term Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

11. 3. Define a culture for the merged organisation • What is this new organisation, how has it benefited from the merger or acquisition? • Is it now a market leader? • Does it have a more diverse range or products or services? • Define vision and values – make these clear and compelling • What are the best elements from each organisation’s existing culture • How can these be built into a new culture Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

12. 4. Plan a Change Strategy • Define the physical things that must change to facilitate the culture change • Management structure • Location, environment • Rewards, benefits, hours • Systems, procedures • Prioritise the project list around real performance improvements and choose some quick wins • Focus on revenue increasing rather than cost cutting strategies to begin with • Build a strong change team • Include some senior management • Don’t leave it to external consultants or internal “off-line” staff, embed change agents across your organisation Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

13. 5. Keep a finger on the pulse • Survey staff regularly to measure the effectiveness of change strategies • Remember, the vision should stay the same however their is nothing wrong with modifying approach • Communicate, communicate and then communicate some more!! Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186

14. Conclusion • A merger or acquisition can create many people-related challenges • Invest time in understanding differences between each organisation and keeping staff informed about progress • Develop a strategy that recognises the best of each culture and acknowledges those who created it • Develop a change plan with some quick wins • Survey and measure regularly so that you can modify your approach if necessary • Remember: You are dealing with the futures of many people – talk to them, keep them updated and treat them with respect Emai: info@changesolutions.co.nz Telephone: +64 9 537 2186