Trompenaars Hampden-Turner Culture for Business
THE ART OF BEING ACQUIRED Being part of an acquired company can be exciting, scary and paralyzing, all at the same time. Numerous articles have been written advising the optimal process of integrating two companies, which often includes readiness assessments, workshops around new organizational identity and the necessity of addressing culture as a critical enabler in the integration process. However, most of these articles implicitly or explicitly take the point of view of the acquiring company or the leaders of the new organizational entity, who will be the ones to drive the integration process and make the changes necessary to realize the acquisition business case. Unfortunately, this view often underestimates the role of the acquired company in the success of this process. Rumors start spreading long before the formal announcement of the acquisition, and will continue thereafter as uncertainty and anxiety take hold, which can be destabilizing. Very little has been published from the acquired company’s point of view, but from our experience these dynamics can have a negative impact on the potential value of the merger. Therefore preparing the acquired company for the changes ahead is well worth the investment. We call this the Art of Being Acquired. In our work with multinationals through the post merger integration process we have noticed three key focus areas that often are not addressed, to the detriment of the integration. 1. Leaders do not lead the change. Generally leaders and managers focus on strategy, results, people and change processes within the context of their business. In this new unique situation, being the acquired party, leaders need to lead the organization through a type of change which goes beyond operations and strategy , for which they may not always have the required competencies and skills. Some leaders go into a ‘flight mode’, where they become paralyzed, waiting for instructions from their new parent company. Others actively manage their own interests and pursue the ‘what’s in it for me’ agenda, without realizing the example their behavior sends to the rest of the organization. Change comes with resistance and leaders are humans going through these typical change 1 phases as well, especially in situations where the takeover is hostile or when the parties have limited experience with integration processes. Being aware of these dynamics both on a personal and organizational level is crucial for a successful integration. Leaders should embrace the change themselves, lead their organizations through the process and, as a leadership team, hold each other accountable for displaying the right behaviors during the process. 2.
Key staff and customers may leave. The uncertainly and ambiguity of the acquisition often cause staff and customers to rethink their positions. The announcement may come as a surprise and employees and customers may process through a change curve, encountering different phases such as denial, resistance and exploration of the new reality prior to committing to the new future. Some staff may be enthusiastic about the changes and new opportunities. Other may express negative views and may completely withdraw or sabotage the change process. Experience shows that a majority of the staff will be in the middle and take a ‘wait and see’ strategy. Setting up a dialogue to help the majority to cope with the situation and to make them aware of the change process they are going through will help to reduce uncertainty and stress and may help to avoid the productivity loss that is often associated with an acquisition. The dialogue process is also a means of receiving feedback from your key talent and important customers on their perceptions of the acquisition, and an opportunity to give them special attention 2 to keep them on board. Not addressing the change could risk losing key people and this will not only impact your companies’ competencies, but also send a message to the whole organization.
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Kubler-Ross, E (1969) On Death and Dying, 4 Macmillan, New York
2
Culture integration in M&A, Survey Findings AON Hewitt, 2011; McKinsey&Company, Perspectives on Merger Integration, June 2010
Trompenaars Hampden-Turner, A.J. Ernststraat 595G, 1082 LD Amsterdam, The Netherlands Phone +31 20 3016666 www.THTconsulting.com
Trompenaars Hampden-Turner Culture for Business
3. Cultural mismatch. Much has been written about the impact of organizational and national cultures on the success of 3 M&A and the advice to the post-merger integration team to place this topic high on their agendas . We often see a significant gap between the ideal preparation for understanding and embracing a new culture, and the current practices of many acquired companies. To begin, the acquired company can identify and describe its own culture: What are the cultural identity and value drivers, what has brought the success so far and what elements should be preserved in the new collaboration? If this is not made explicit and not made a specific part of the discussion, it may get ‘lost’ in the integration process, despite the best intentions of the acquiring company. There is a responsibility here for the leaders of the acquired company to actively own and address this topic. In addition, the integration teams must identify the cultural gaps between companies and be proactive in trying to understand both national and corporate cultural characteristics of the acquiring company, since intentions and decisions are often culturally influenced. Being able to ‘read’ the clues effectively will minimize disturbance and misunderstandings in the integration process. Embracing the new culture and reconciling the strengths of both into a new culture that contains the best of both worlds. The above summarizes the critical change management and cultural factors that each acquired company should be aware of - and actively address. The overview is by no means exhaustive; there are other factors e.g. technical, legal and strategic which play a part depending on the circumstances. However, the three points above are key in managing the change and cultural aspects. This is the responsibility of the acquired party and the perception of the impact depends on factors such as: earlier experience with integration processes, the degree to which the company is accustomed to change, previous exposure to cultural diversity, etc. The acquiree can play an active role in preparing for and engaging in the integration process. Solutions do not have to be expensive and time consuming. A facilitated meeting for leaders to build awareness of the dynamics and to engage in solutions can already impact the rest of the organization. Change workshops for (key) staff can bring awareness and a different mindset. Creating a dialogue about culture and diversity between key groups will facilitate mutual understanding and reduce anxiety. For leaders to actively take ownership of ‘being acquired’ requires courage and creativity, but the impact on the people and the organization involved can be considerable.
Theresa Sigillito Hollema Robert Paul Schwippert
3
Trompenaars Hampden-Turner, Riding the Waves of Culture, Nicolas Brealy, London, 1996
Trompenaars Hampden-Turner, A.J. Ernststraat 595G, 1082 LD Amsterdam, The Netherlands Phone +31 20 3016666 www.THTconsulting.com