Situation: A US-based company is in the process of merging with a foreign company. The US company has multiple locations across the US, and there are cultural differences between these locations. The CEO has worked diligently to mitigate these differences. The foreign merger presents new challenges. How do you maintain company culture in a merger?
Advice from the CEOs:
Between some of the US locations, there has been a “we make money, but you spend money” perception. How did the company get past this?
The company adjusted metrics to demonstrate the contribution of each division to short and long-term profitability.
This information was communicated selectively to key opinion leaders within the company.
Use the lessons from this experience to plan post-merger communications and protocols that will contribute to team integration post-merger and improve the chances of merger success.
Focus on the common vision and interdependency of the teams. This accommodates differences in culture and encourages teams to appreciate each other’s contribution. Use the same technique during the merger.
Have lunch with CEOs of other companies that have been bought by foreign firms. Learn how they adapted to the new reality. Ask what worked or didn’t work. Seek specific details of solutions that were developed that could be applicable to the planned merger.
Become better educated on business culture in the country of the company with which you will merge. Seek experts who can give seminars to company employees on what to expect and how to work most effectively with workers and executives of the foreign company.
Situation: A company is preparing for a reorganization. The CEO plans to hire a new manager to in time become General Manager of the company. He also wants to terminate two current employees. How do you manage a reorganization?
Advice from the CEOs:
Develop a 90-day integration plan for the new manager, including his/her top 3 to 5 objectives, and have the individual develop and execute the plan to achieve these objectives.
Use an early project to schedule working sessions with each department in the company during the new manager’s first week. This will help the new manager and current employees learn to work together and develop trust in each other.
In addition to providing broad objectives for the new manager’s first 90 days, clearly establish behaviors and outcomes that are unacceptable.
One of the employees to be terminated is a long-term employee who reports to the CEO but has not performed to expectations. The CEO should take the lead in terminating this person, and offer them a suitable severance package.
A junior employee who is not performing to expectations reports to a supervisor. However, the junior employee has repeatedly tried to work around his supervisor by approaching others in the company with his suggestions and complaints.
o First, make it clear to everyone that the employee’s behavior is not acceptable and that he has to work through and with his supervisor.
o Then let the supervisor determine whether or not to eliminate the employee, and support the supervisor’s decision. This includes offering a suitable severance package should the supervisor decide on termination.
Situation: A company is rapidly expanding and is considering the pros and cons of domestic versus off-shore expansion. One of the appeals of off-shore expansion is the availability of good talent at lower costs overseas. However there are appealing counterarguments for domestic expansion. What is your experience, and how would you advise this CEO?
Advice from the CEOs:
This is a challenging question. Based on others’ experience, success off-shoring depends on your ability to be disciplined and rigid in your design specs. If this is the case, then off-shoring can work. However, if either you or the partner changes the spec then delays and difficulties result. You have to make sure that the off-shore labor force possesses the skills that you require to successfully complete your projects and that your specs are sufficiently detailed to overcome challenges of language and understanding of usability.
Tightly specify each job that you want to have done off-shore, and develop performance metrics so that shortfalls will become obvious quickly.
Some large technology companies operate off-shore centers not to save costs, but because they actually find better talent overseas. India and China are producing excellent engineers, and given the size of the populations, the top percentile of talent can product a large number of talented people.
Some companies contract through off-shore entities, and tightly integrate the work of off-shore and domestic engineers. This is a perk for the off-shore engineers and helps to produce value.
One large company sends US Indian employees to India for 2-years stints to oversee their Indian operations.
Maintain strict hiring policies for your off-shore operations. Some companies have encountered difficulties when the managers of off-shore entities hired relatives because of family ties as opposed to talent or qualifications.
Over the past five years, the differential in pay for off-shore and domestic talent has shrunk. A large number of companies have found that domestic talent is easier to manage and in many cases is more productive. Further, there are no language challenges and time zone differences make working with domestic talent easier.
Key Words: Expansion, Domestic, Off-shore, Talent, Cost, Design, Spec, Skills, Integration, Hiring, Policy, Language, Time Zone
Situation: A rapidly growing company is expanding both in its primary market and into new verticals. A number of companies are interested in strategic partnerships. How do you select the right partner in the right space?
At the end of the day it’s about a connection with the partner which extends across both organizations.
Look for cultural synergy with the other company. Do your and their managers and employees “click” or are they oil and water? This is a gut assessment.
Is the quality of people in both companies complimentary? Is there similar drive for quality and attention to detail?
Will technical integration be smooth? Are systems complimentary? At a minimum are there the right skills on both sides so that this won’t hinder the project.
Are sales and marketing approaches compatible? Will teams be able to work together? What about other departments?
You need to have strategic commitment across both organizations.
Partnerships don’t work if there is only alignment at the top. Executives can’t shove a new opportunity down the throats of those who report to them. There must be excitement about the opportunity across both sides of the partnership.
There must be complimentary competencies, capabilities and commitment.
Is there a clear understanding of the goals and objectives succeed?
Reward structures and incentives must be aligned down through the two parties. Conflicts will lead to struggles.
There must be a strategic alignment between the two organizations so that both see the partnership as complementing their broader strategic plans.
There must be a fundamental strategic win-win. The venture must be seen by each party as core to their business, plans and results. If this isn’t present, the collaboration can be drowned when a better opportunity that comes along.
Look for some gauge that the partnership is as important to the other party as it is to you. What other partners do they have? Is the size of the opportunity enough so that you are assured of their ongoing attention?