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MERGING WORK CULTURES CAN BE DONE, CAREFULLY

by Vera N. Held

“All for one, one for all, that is our motto.”
- The Three Musketeers, (1844), French author Alexandre Dumas

When separate companies with disparate cultures come together through buyout, forced amalgamation or merger does it make good business sense to try to blend them into one unified whole?

Well, it depends, not only on the companies, their distinct businesses and cultures, but also on who’s at the helm.

Meet David Shaw. As president and CEO of Knightsbridge Capital Management, which helps businesses attract, retain and, when needed, humanely transition people out, Shaw went from a staff of one in August, 2001, and has since bought “four separate silos”, as he calls them, to create one integrated workforce of 125. “We targeted for acquisition companies that matched our vision and our evolving, cross-selling business model,” says Shaw.

Shaw spent considerable time getting to know the organizations and their owners — building bonds of trust. So much so, that in February, 2002, despite the untimely death of Herman Smith, known as the “grandfather of executive search in Canada”, Shaw, with full support from the Smith family, bought Smith’s firm in May, 2002.

Janice Kussner, a then partner at Herman Smith, and now a partner with Knightsbridge Executive Search, says that the transition has been seamless. “I chose to be part of creating something new in the Canadian marketplace. There’s great synergy and camaraderie across our organization,” says Kussner.

But how about those big bumps in the road, when staff from lifelong and differing cultures don’t agree and are at constant loggerheads?

According to psychologist Dr. Sam Klarreich, president of the Berkeley Centre of Effectiveness, if pre-established guidelines for discussion are set and then enforced, excellent results are possible. “When you have an innovative leader and open-minded staff who critique methods and not each other, then there can be exciting joint solutions,” says Klarreich.

Enter Courtney Pratt, president and CEO of Toronto Hydro Corp. By provincial decree, Toronto’s six hydro utility companies amalgamated in January, 1998, and Pratt’s ongoing challenge is to unite their workforces.

“These professionals, all from mature cultures, have worked in a certain way their whole careers. Attached to their particular utility, they take pride in what they do and in how they’ve always serviced their customers,” says Pratt.

Social worker Hilary Freeman says, to help prevent merger fallout, management and staff can’t communicate too much. She says it takes a minimum of two years for cultures to fully merge. She also advises that management not try to bluff people. “Trust is a big issue in any work environment let alone one building a new culture.”

Shake hands with John Cross, vice-president of human resources at Hewlett-Packard (HP) Canada. Although HP “officially” bought the 1,400 strong Compaq Canada Corp. in May, 2002, this “friendly acquisition” has always been viewed internally, top down and bottom up, as a merger.

Openness, according to Cross, is what has paved the way to success; everyone’s view was asked for, considered and the results shared. “We encouraged people to get things off their chests. From that, staff came to believe they could learn from one another, and that both companies had things to offer by respecting the advantages and values of both cultures,” says Cross.

The two companies, he says, have fully merged product lines, software and hardware knowledge, cultures and have also succeeded in blending their values. “We had to learn to make quicker decisions; Compaq moved at lighting speed,” he adds.

HP’s current staff of 3,800 in Canada is down 10 percent; competing product lines had to be shut down resulting in job duplication. HP’s worldwide workforce of 150,000 has decreased by 15,000 employees.

But Klarreich, who claims “bigger isn’t always better,” remains skeptical of culture blending when the big fish swallows the little fish—along with its little fish culture. “Smaller organizations are leaner, have fewer chiefs, more people doing more things, and, therefore, have a quicker response time. But the larger company will inevitably take control,”

In October, 2002, Insurers Financial Group acquired Sentinel Insurance Brokers, a group of 7 seasoned insurance veterans.

Michael Freedman, CEO and president, admits that since their move to IFG’s Richmond Hill premises, some Sentinel employees have fit well while others have struggled.

“We’re slowly adapting but it’s been a major adjustment,” says former associate broker at Sentinel, Joe Sunshine, now an account executive with IFG.