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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. |
