This article originally appeared in the spring edition of OBJ's HR Update. Click here to read more practical workplace solutions for Ottawa employers.
Merging two corporate cultures is one of the biggest HR challenges of business acquisitions. But getting it right is key to a company’s success.
“There is a cost to poor culture. The research is clear that companies with a good, strong culture are outperforming,” said Carol Ring, president of Culture Connection.
She knows first-hand the HR challenges posed when trying to meld two companies. The HR consultant helps businesses shape their corporate culture as they go through acquisitions and mergers.
Ring was regional president for Rogers Communications Ottawa when it acquired Maclean-Hunter in 1994. The two organizations provided identical operations in Ottawa, each with its own call centre, marketing, engineering, administrative services and field technicians. But each communications company also had a very different operating style.
Maclean-Hunter had a more conservative approach and viewed the entrepreneurial Rogers Communications people as, “cowboys riding into town.” Both approaches had value; they were just different. Ring admitted there was no assessment and understanding of Maclean-Hunter’s work environment before the merger.
“In hindsight, we would’ve gotten ahead much faster and achieved benefits much sooner if we had recognized how different the two cultures were before we started to integrate the operations,” said Ring.
As with most mergers or acquisitions, employees fear losing their jobs. It was extremely stressful for the Maclean-Hunter employees – largely because as the acquired company, they assumed their jobs would be the ones cut. Ring said she made sure that wasn’t the case.
“It was an opportunity to look at best practices of both groups,” said Ring. “I looked at both people in the same job to assess which one would enable the culture that we wanted and deliver the best results, regardless of which company they came from.”
Lynn Stevens, principal consultant for Lynn Stevens Consulting Services, is former chief human resources officer for Calian, an organization that’s acquired multiple companies since going public in 1993. It developed a process to help people integrate into the “Calian family” that focused on communication, both prior to and post acquisition.
Prior to an acquisition, Stevens would evaluate the structure of the company and the way it was set up to give insight into how it operated. She realized the importance of appreciating the differences between companies and recognizing the challenges for those employees who had to deal with changes and adjust to new processes and procedures.
“It’s really important for the company who is doing the acquiring to be clear on things that are negotiable and things that aren’t, right from the get go,” said Stevens. “Communication is the biggest thing to making it work.”
Stevens also knows what it’s like being on the other side. She was director of HR for Canada for Fisher Scientific, an American laboratory equipment company, when it merged with Thermo Electron in 2006, forming Thermo Fisher Scientific. Both billion-dollar organizations had acquired smaller companies from around the world, bringing the combined number of employees to 70,000. The merger meant big changes for the Canadian division, which had maintained a relative autonomy until that point.
“It seemed things were slowly being pulled away, and we no longer had control over it. As members of the executive team in Canada, we felt, ‘Why are they doing this? They don’t trust us,’” said Stevens.
She realized afterwards that it wasn’t personal. The company was making the best choices for the business. However, if companies are not clear with their integration plans, employees will be missing an overall perspective and may feel undervalued and insecure about their position. Stevens said taking things personally is a normal reaction when communication is not a part of the integration process.
Ring said she is a huge proponent of having a formal change management program in place to effectively help employees within both organizations adapt to changes.
“There’s a whole process – explain why change is happening; what’s going to change; what’s in it for them; how we’re going to train them – and not just make changes and let them figure it out for themselves,” said Ring. “Companies need to be clear they’re going to help all employees through the change, and then continue to support them afterwards.”
Both Stevens and Ring agreed change is not easy for people. Open and transparent communication with employees is critical to a successful merger of two companies.
“You have to look across all facets of the organization,” said Ring. “And whether it’s your brand promise, your processes, your technology, your people, you need to make sure you keep everything aligned towards the culture that you believe will make you most successful.”