Factor 16: Attitudes Towards Mergers, Ventures, Etc.

This factor deals with attitudes towards merger, acquisition, joint ventures, and divestiture.

Factor extremes as measured in survey

Management has an open and relaxed attitude regarding merger, acquisition, joint ventures, and divestiture

vs.

Management has a narrow and closed attitude regarding merger, acquisition, joint ventures, or divestiture

Overview to restructuring initiatives

Purchasing a new business or company can lead to the acquisition of scarce talent and/or a new market opportunity as well as infusing a sense of growth in the acquiring organization. Often, however, such a move can be viewed as a threat to the culture of the acquiring organization and therefore resisted. Because of the secrecy that needs to maintained in the acquisition process, deliberations of this kind are also often conducted without the knowledge of the employee group as a whole. Thus it is important for the management group to express not only an openness to making acquisitions but also to be clear that they understand the impact of an acquisition on the culture of the acquiring organization and will act accordingly. An openness to making acquisitions can be signaled by the Board or by senior management. There should be a no-surprise policy regarding the general thrust to making acquisitions.

Possible Initiatives to Modify and Improve the Culture for Innovation

A history of successful acquisitions sets a pattern for creating an open and relaxed attitude

The most effective way for management to demonstrate an open attitude towards acquisitions, joint ventures and event divestitures is to have a successful track record of accomplishment. Accomplishment in this case being judged favorably by the impact on the parent staff and the culture of the organization. Staff, having gone through one or more acquisitions, gain an understanding of how management handles the acquired organization and will understand the impact, both favorable and unfavorable, on the enlarged structure. A good track record is key. Thus effectively managing the first ever acquisition is very important.

Spin-offs and sales of divisions represent an opportunity for management to demonstrate their ‘relaxed attitude’

A lack of fit with corporate goals, perhaps brought about through a strategic planning exercise, or as a result of the need to sell-off an underperforming division, can be reasons for divesting an organization. Industry consolidation may be taking place making it opportune to divest. How the management group manages the divestment signals a value system to the organization that can impact either positively or negatively on the culture of the parent. Essentially, the issue is the handling of personnel impacted by the divestment; not only the impact on those divested but also the impact on those remaining in the corporation. Managements approach to the laying off of staff has taken quantum leaps forward over the past 20 years and this has led, in general, to a more relaxed approach to the subject. Severance packages have increased in size and the stigma attached to redundancy is less marked than in the past. But it is still a sensitive issue. An openness in terms of explanation and communication about the divestiture, at the appropriate time, is required of management.

In deliberating a divestiture; management needs to demonstrate care and consider the alternatives to massive layoffs. Things to think about include; providing incentives for resignation, selective termination of poor performers, instituting a hiring freeze to minimize the size of eventual layoffs, converting full-time personnel to part-time, converting employees to contractors, in-sourcing subcontracted work, and retraining or redeploying staff.