Feature

Bridging cultural gaps during M&As

In any collaboration, it is necessary for the people involved to understand and blend with the changes. Renuka Vembu looks at people-related issues that emerge during mergers and acquisitions

When companies get into the merger and acquisition mode, people-related issues are bound to spring up. This holds true for deals within the national boundaries, and more-so-ever when it is a cross-border acquisition. To achieve cultural balance, yet maintain the distinct identity is important and an indispensable aspect to oversee. It is necessary to make people aware of the changes that are likely to take place, and clear all perceptions and fears of the future profile and role insecurity. The adjustments that need to be made have to be highlighted, and the benefits of the M&A clearly defined.

Anagha Wankar, Group Manager, HR, Fujitsu Consulting India asserted that transition to a new culture, work or social, is a tricky and gradual process. Fostering a sense of appreciation amongst employees of varied cultures helps bring about a congenial atmosphere at the workplace.

Ybrant Digital adopts a three phased approach. The first being basic integration letting the new business unit function with no loss in people or revenues. Once comfort levels are achieved, they move towards cross selling and deeper integration, and finally strive to bring out synergies between all the units. While Infosys BPO acquired three captive units of Royal Philips, they had a strategic orientation for all the employees and managers to discuss the values and culture of their organization.

Jeanne Lim, Marketing Director, APAC, Tandberg, felt that often an M&A involves a bigger company buying a smaller one, in which case it is likely that the acquiring company will have a more formalized structure and more narrow roles and responsibilities, whereas the smaller company may have a more fluid structure and less defined roles and responsibilities. There needs to be a balancing/bridging of the extremes so as to strive for a good working structure with clear ownership, while leaving room for creativity and innovation in work.

Cultural sensitivity

As part of the globalized world, people need to be familiar and sensitive to the cultural nuances of various countries. Even before embarking on a M&A, culture, values, mission statement, etc., need to be understood and a plan formulated to bring about a balance. Rakesh Singh, VP Products and MD, Citrix R&D India, asserted, “The most important aspect is to work out a strategy that would make the two cultures come together. This plan must be in place even before the companies approach each other for the merger. It should co-ordinate the different company cultures to eliminate the barriers in leadership styles, hierarchy in the organization, communication models, personnel system and performance appraisals.”

People-related issues

People are shaped up by behaviors; and behavioral patterns emerge from individual surroundings, environment, family, upbringing and social circle. So, just like the geographical boundaries need to be bridged during M&As, social patterns need to be understood and individual traits accepted. Instilling trust amongst people, assuring them of job security, giving space to national identities, adopting the different styles of functioning and also accommodating and respecting the differences, is the key function of the HR and the management alike.

Ashutosh Labroo, AVP, HR, iVitesse stated, “The ability to succeed in a M&A depends entirely on the people who are driving the business—whether they have creativity, capacity to innovate and ability to execute, and more importantly, whether they can do these things collaboratively. To ease the transition and make sure the pieces fit together as seamlessly as possible, HR should take the initiatives in management, recruitment, structure, retention, and managing cultural change.”

Training programs

To make employees familiar and comfortable with the new workforce and work environment, designing training initiatives for the top management and middle-level leaders so that they can impart the learnings to the employees down under helps in easing out the initial inhibitions. KPIT has a 100-day integration framework where they start integrating the customers and ensure that within the time frame, they start perceiving both the companies as a single entity. Also, in this period, focused efforts are done to eliminate the ‘Us and Them’ factor such that both companies start aligning to a common vision and start behaving as a united team.

Abhay Valsangkar, Senior Director, India, HR, Symantec Corporation added, “Companies need to design programs that will suit the interest of all the teams and create platforms for interaction within teams. In global teams, employees have to understand the human dynamics and sensitivities affecting the work environment. Since they experience the interplay of cultural sensitivities, their ‘communication skills’ have to be strengthened.”

Blend yet be distinct

The most important yet difficult aspect is to maintain one’s individuality, while trying to gel with a group. Likewise, when two companies join together, bringing in the variant features, different cultural nuances, individual characteristics, and working to blend with people of varied backgrounds takes precedence.

Ravindran, Principal Architect, Helios and Matheson viewed, “To ensure smooth transition, rational, emotional and ethical dimensions of human interactions need to be taken care of. People integration is a key aspect for any successful transition. Retention of key personnel (we keep the management team intact) ensures very low attrition rate, generates employee security and confidence because they know where they are going and what they need to do. Open and continuous communication with the new employees and letting them function autonomously initially has ensured that we retain the entrepreneurial spirit post acquisition.”

It is of foremost priority to ensure that the inbuilt trust amongst employees isn’t lost. Also, there should be no job insecurity breeding, and the incoming of new members or management should reflect positivity around, rather than being seen as an intrusion, or spread negative vibes.

Balakrishnan Anantharaman, Country Manager, Blue Coat Systems India, said, “Leadership should identify best practices from both organizations and implement them quickly (cross learning). Additionally, organizational policies, systems and branding policies need to be understood to maintain homogeneity across its offices in the different geographic regulations and at the same time retain the influences of the ethnic culture of the workforce.”

Cultural indicators

Harsha Jalihal, Manager, HR (M&A/Integration), Cognizant, gave several indicators of organizational culture, which impact employees during M&A deals. These include:

• How risk-tolerant or risk-adverse an organization is
• Importance that an organization places on diversity in the workforce
• How important is the creation and management of relationships within the organization in order to get your job done
• How important is learning and development to the company, and what kind of investment is made in these areas
• How responsive is it to change

She added, “It is a misconception that cultural integration in an M&A deal implies a total assimilation of both cultures. Each deal is different and for that very reason, the extent to which the two cultures integrate also varies.”

Indian mannerisms

Indians, as compared to their Western counterparts, are found wanting in aspects like time management, being organized, maintaining detailed records/documentation, decision-making prowess, clear unambiguous communication channel, etc. Deepak Desai, CEO, GlobalEnglish Corporation, said, “Norms of behavior and culture are different in different locations. These include style of leadership, organization of activities as well as even simple things like conduct of meetings and seating positions during meetings. Protocol is often different and needs to be understood.”

Nina E Woodard, Executive Director, SHRM India, asserted that if the cultural differences are not bridged—either the organizational cultural differences and/or the national cultural differences—there will be considerable fallout of people, practices and policy and ultimately customers.

Sachin Tikekar, Chief of People Operations, KPIT Cummins Infosystems, explained, “The business practices are now unified across the globe, but what differs extensively is culture and people. Indians need to be adept with factors like motivation, and the existing management and leadership styles also need to be studied in depth.”

Sanjay Vig, CEO, Orange Business Services, said, “Cultural adjustments are varied from being gigantic to minute emotional differences and physical changes. Work-style, reporting style, working hours may differ. Sometimes, physical location of the office and office space design may also affect the employee attitude and productivity.”

Ravindran summarized that the structure of every acquisition is unique, each has a one of a kind business strategy; each has its own personality and culture. No matter how many insights and models previous transactions generate, the next deal is always different; as much an art as a science. We therefore accept and work with the maxim that competence is something never fully attained; it is only the jumping off point for an even higher standard.

renuka.vembu@expressindia.com