|
It is a well-known fact that most mergers and
acquisitions (M&As) fail due to people-centric issues as the
management is unable to harmonise the work cultures of two different
organisations. The challenges are greater in case of cross-border
integration and requires looking beyond the financial issues to
a more sensitive factor of handling people. The precautions of integrating
such multi-cultural teams are also aplenty, necessitating painstaking
HR efforts by those Indian companies who have made acquisitions
abroad. But then, is it actually possible to integrate the work
cultures of two organisations in different countries, which are
not just thousands of miles apart in distance, but also customs
and peculiarities?
Understanding differences
The truth is that a successful M&A is that
which understands the differences and finds the way around to strike
a common chord. Agrees R Chandra Sekaran, senior vice president,
Cognizant Technology Solutions (CTS), "Successful M&As
recognise that the two companies have unique cultures along with
different social, ethical and behavioural frequencies." Cognizant
had made two acquisitions recently-United Healthcare Ireland Limited,
employing 70 software professionals; and transfer of certain assets
of Silverline Technologies relating to provision of American Express
Travel Related Services Company Inc, employing 300 IT professionals
across the US, Europe, Australia and India. Informing that the company
has plans for many such small acquisitions to fill in its product
line and geography presence, Sekaran points out that there are many
facets to the winning formula that makes a merger powerful and harmonious.
"In both acquisitions Cognizant created a shared vision, prepared
people for a change, answered people directly without letting them
guess, and was willing to compromise on certain things. We looked
beyond the financial objectives for effective integration. Above
all, we valued open discussions and communication right from the
start. This helped us meet the challenge quickly."
The precautions
From an HR perspective the precautions that have
to be taken are many. Sekaran believes that these include initiating
institutional change along with proactive strategy. A cultural pre-assessment
is necessary across all key practices and processes, for instance
organisational culture and structure, recruitment process, transfer
and relocation practices, performance management processes including
promotion, reward and recognition, etc. Yet another requisite is
pre-merger integration-by bringing in key people and representative
employees of both organisations before the consummation of the M&A.
It is imperative to empathise and recognise workplace dynamics and
employee emotions, addressing all critical issues with an open mind
with all employees on a one-to-one basis.
"We must appreciate that an M&A is not
a machine or resources takeover, but will include intellectual property
takeover as well. Human issues are always critical and need to be
handled carefully. It is necessary to recognise this before the
decision on M&A is taken. If planned well, M&A can be a
success," says Sanjay Deshpande, CEO-international of Garware
Group's InterMedia Interactive Solutions. The Pune-based company
had acquired 11-year-old Philadelphia-headquartered InterMedia Interactive
Solutions Inc, in October 2000, with its 50 plus employees. Following
the acquisition, the company had taken several crucial steps to
bring about integration: visits by key employees across offices;
common HR documents, processes and policies (to the extent possible);
common newsletter about organisational happenings; common tools
e.g, project-related like tracking bugs; common activities like
global company meetings, peer reviews across offices; and weekly
management level calls, besides regular project interactions.
Deshpande believes that it is necessary to know
what motivates employees at the time of such mergers. Transparency
is a must and a senior executive should be made responsible for
responding to the queries of the people. It is also vital to create
a roadmap and share it with the people. "It is possible to
integrate the work cultures of two organisations in different countries,
however some inherent country specifications will remain which is
important for the people to understand. List strengths and weaknesses
of working cultures and let people understand and discuss,"
he adds.
Local angle
Integration is easier for organisations that have
a multi-cultural identity. Following the mergers, CTS has employed
a local person to head the respective geographies of operations.
"We believe that a local person understands the sensitivities
of the region well and this really helps us in an M&A situation.
Further, we also believe in moving people around. This continuous
integration, cross-pollination and voluntary relocation of select
people build a harmonious and synergistic culture across different
countries," states Sekaran, reiterating that the company will
continue to implement the same in its selective acquisition plans.
Kale Consultants has recently acquired software
products and client contracts section of Speedwing's Operational
Applications division. Speedwing is a wholly-owned subsidiary of
British Airways setup, for IT and IT services. Following the acquisition
the local UK operations comprise a 15-member team while the rest
of development and customer service takes place from Pune and Mumbai.
The UK operation is headed by a British national who had originally
joined Kale to head the New Zealand operations. While most of the
employees are Europeans, there are a few Indians. "Since the
employing entity is altogether a new company, everything from the
philosophy of people practices to the last administrative detail
of how to apply for leave had to be designed. The new people practices
philosophy took off from what we practiced in the rest of the world,
but of course had to be adapted for local nuances," says Vinayak
Kamath, vice president of HR, Kale Consultants. So they introduced
new employment policies and practices while retaining a few like
a uniform performance management system.
Tackling differences
Many direct orientation sessions (presentations,
demos, walk-throughs, meetings) and indirect ones (coffee room conversations,
parties, lunches and dinners) were organised before and after the
transition. "There are some differences but the level of openness
and the bonding that has taken place means that they talk about
it openly," points out Kamath. He cites an example to explain
some of the challenges faced by the company. Being British Airways
employees Speedwing staff were used to flying Business and First
Class. This was initially tough but when they realised that everyone
in Kale, including the chairman and managing director, fly economy
class, they reconciled to the fact.
An important measure of success is how the merger
affects working relationships and business. At Kale the teams in
UK, India and Korea are managing three-location software development
together. "When people successfully work together, that is
when true cultural integration takes place," reminds Kamath.
He points out that while culture means many things to many people,
there are some elements which represent a universal best practices
approach, for instance global thinking, meritocracy, transparency
and candor. And unless some of these elements are present in an
organisation they should not venture into an M&A.
Experts believe that organisations should plan
for ethnic and cultural diversity by design and not by accident,
as a multi-cultural perspective helps an organisation in many ways.
It is true that East is East and West is West, but the twain can
obviously meet at the workplace.
|
