When Corporate Cultures Clash
When Corporate Cultures Clash in global organizations, multi-nationals and domestic alike, all share a common thread; culture. When organizational, environmental, financial and industry change disrupts culture, the impact is felt throughout the core and many times can rock the foundation of even the best companies.
During and after the financial crisis we witnessed one of the most turbulent times of change that I can recall in my career. In fact, the predominate project my firm was working on at that time was in the change/culture area. The catalyst for these culture/change based projects was being driven through increased M&A, re-thinking talent strategies and general market reconfiguration. Regardless of the catalyst, organizations were being forced to respond quickly to change and overcome the cultural hurdles in order to stay competitive. The following are a high level look at the lessons learned as we reflected on the challenges and solutions related to these three impact points:
Mergers and Acquisitions (M&A): Probably the most obvious of the culture/change drivers, yet sometimes the most overlooked in terms of planning for cultural impact. What we have seen during “chaotic change” periods, (which is how we classify an M&A process), is an assumption that the execution of the M&A action itself has accounted for the culture. The reality in most cases is that the assumption is wrong or the data is skewed. We found that organizations do a good job looking at technology, process redundancy and logistics when it comes to M&A as they are usually measured on the ROI associated with the driver for the change. However, without compromise the greatest challenges are more than likely going to show up when culture, meets culture and it is time to execute against the process and technology. I have found that the following mitigating steps can be set in motion to overcome culture clash, mitigate the impact of it, or at the least, clean up some of the carnage caused by poorly planning in the earlier phases of the change initiative:
- Consider the “Culture Impact Hot Spots; “suffering, diversity, fear, normalcy. In the organizational psychology playbook, there are multiple examples of these four elements playing out in a macro way to completely derail an organizational initiative. However, many human resource departments don’t address these items head on as they delve into a gray area of, personality vs. behavior. That said, there are ways to get ahead of, and out from behind this missed step. Get to know the “people” not just the cohort and understand the personal pain/gain associated with the impacts of change. Understand the geography in terms of diversity as well as the generations as both will impact how change is accepted. Be empathetic to off-set fear with sincere and proactive communication. Lastly, don’t assume that “normalcy” will ever be restored and take the opportunity to set in place the “norm” of dynamic status.
- Regardless of how hard we try to down play the win/lose scenario, no one will ever buy the fact that they are not on one side or the other of that equation. The reality is that you will have wins and losses on both sides of a balanced M&A initiative. How we translate them into opportunities to meet the goals is what will bring the culture together. This effort ties directly to the need to communicate and more importantly, keeps the focus on the ultimate strategy and diminishes the personal aspect of intent. So, clear and visible goals with explanations are a way to “micro” communicate the strategy and allows teams and individual contributors to find their place in the process so they feel ownership. Thus, the “victim syndrome” is almost eliminated.
- During the financial crisis I was advising to a big five banking institution, (going through an M&A process), on a leadership program roll-out. As we traveled the world helping to integrate a baseline the biggest success inhibitor was the clash between the two cultures that were separated by finite industry vertical, leadership style deviation and geography of corporate offices. Although these three variables seemed relatively simple at the time, they contributed to making the M&A a very difficult one with people related carnage literally spread across multiple counties and impacting thousands of employees. I believe that if the organization were to have embraced the preliminary considerations denoted in the items above, much of the damage may have been contained. That said, as the change initiative matured and some of the items above were implemented, the damage began to subside and a “new norm” was established. My point here is simply this; change, and the impact of it, is never going away, what we can do is “lessen” the impact and refocus the energy to positive actions. This progressive approach will ultimately enhance the bottom-line, mitigate loss in the process and set a stronger foundation for the future of the married organizations.
Talent Strategies: The DNA strand of all organizations consists of; people, process and technology. Culture is interwoven through this DNA strand and is obvious in the molecular structure of everything an organizations does/is. Talent is at the core since none of what an organization does can really be done without it. Thus, progressive minded companies seek to proactively mitigate cultural impact by properly aligning talent with work, skill and collaboration:
- Work: What an easy word, we all do it and without it no organization will succeed. Ironically though, some organizations seem to work themselves into failure. Forcing production and workflow is not an optimal state for an organization and talent managers are starting to recognize that seeking “harmony and unification” through talent ultimately compliments, process and technology. This can be accomplished by a deeper understanding of geographical norms, generational norms and even departmental norms. (Culture). Now, believe it or not, I am not a fan of the word “norm” so let’s break that down for a moment. In any organized group there will be tendencies and benchmarks, in the case of an organization they can appear in any of the forms noted above, so, leaders and talent managers need to understand them in alignment with the goals of the business. Once we can illustrate the alignment we can then make decisions that work toward the goals in a unified way.
- Skill: What does this simple word have to do with culture? Have you ever tried to teach a group of cross business/function managers a new skill? If you have, you know exactly how culture and skill can clash; it happens in the implementation, the most critical part of our business. People, learn differently, they work differently and they think differently, so the “skill” is always seen through a varied prism of variables at execution. Thankfully it is this diversity that when embraced helps us to be even more competitive. Yet, some organizations attempt to “cookie cutter” change especially during M&A and thus they not only exclude but isolate many people in the process. Today’s dynamic workforce requires that change agents look deeper into the core of skills development and take into consideration that the cultural norms as defined above are going to interact with the process of talent development. Thus, progressive talent managers are creating skills inventories for the roles and responsibilities associated with work flow and then helping managers and organizations to leverage that data as various cultures come together. Again, I will focus on the phrase; organizational optimization.”
- Collaboration: If we do everything correctly, collaboration is a simple and obvious derivative of the action. However, think of the loss if we cannot optimize around collaboration. Ultimately, talent strategies need to have the goal of collaboration, this is harmony and that leads to productivity and isn’t that what we are all aiming for as organizational leaders? Cultural synchronicity NOT assimilation, is key to this success.
Market Re-configuration: Market driven organizations understand the importance of this and embrace it as critical to their success. The term is sometimes misused to illustrate a “service” mindset and although I feel it has application there, the meaning is much greater than that. Moving markets require that we evaluate the cost of doing business, the availability of talent and ultimate supply chain.
- Cost of doing business: In the last twenty years we have seen global supply chains emerge for companies large and small, this will continue to evolve. However, what we are seeing now is less of as focus on one particular location due to cost; we are now seeing a focus on value measured by productivity, attrition and skill set. This is a wonderful transformation in the decision criteria for organizations seeking optimization and it is directly impacted by culture. Many extended teams now work hand in hand around the globe, they have their own “cultural footprint” and many times they clash in style and even intent. Also, we should revisit the “culture hot spots” mentioned above because they all play out in these micro scenarios as well. The cost of doing business now has a critical connection to a well migrated culture in a global setting and progressive companies are spending time ensuring the connection is strong and agile.
- Availably of talent: With technology the talent pool is now global for teams and individual contributors alike. Ensuring that we have a cultural fit is paramount and also that we have access to talent when and where we need it. On the surface this can cause some concern for job security in the masses, yet the reality is that it allows our leaders to focus more intently on actual performance as a way to obtain “career security.” Thus, the culture in our organization needs to be thinking less about where talent comes from, and more about where the talent “is” and go there to get it. Once you acquire the talent, ensure the culture of the organization is structured to promote, diversity, inclusion and participation. Those three words are at the cornerstone of any solid culturally diverse organization and if they are leveraged upfront set a tone for the “new norm.”
- Supply chain: the term supply chain is misconstrued and cut short many times. Supply chain embodies; people, process and technology, thus it threads all we have mentioned above together. Thus, it is imperative to think about your supply chain in a macro way and engineer in the cultural norms of the organization. This exercise will help with internal and external management through the process and more importantly add your cultural control limits to a measurable quality matrix.
The above thoughts are built from years of projects across multiple industries and global locations. That said, a common thread has emerged in my mind; culture when managed upfront and dynamically can be your best friend or worst enemy. Taking the time necessary to include some of the items we have discussed here can save cost and reduce loss while helping to optimize for the future.
Written by Phil Ventresca, M.B.A.
- PMI – Project Management Institute
- IIBA – International Institute of Business Analysis
- SHRM – Society of Human Resource Management
- ATD – Association of Talent Development