By Pamela S. Harper
Congratulations! The deal is done and you’re leading a merged business with the potential to become an industry powerhouse. Now you’re faced with needing to integrate the two organizations as quickly and effectively as possible. Over the years, numerous studies have shown that shared values are at the core of the most successful mergers and acquisitions. The challenge is, there’s an increasing disconnect in companies between their stated values and what happens on a daily basis. Left undetected, significant gaps in value systems can result in confusion, unnecessary conflict, cynicism and distrust that can grind your integration to a halt.
Even if your company’s values are strongly established, it’s unrealistic to expect that simply handing new executives and employees a copy of your values statement will be enough to produce meaningful changes in their values and behavior. The purpose of this special report is to provide you with practical steps for creating shared values so that the words on your values statement are actually reflected what happens on an everyday basis.
Step 1: Clearly Define Each Value:
In my work with merging organizations, I’ve noticed that different individuals often attach entirely different meanings to the same words and phrases. Complications occur when everyone thinks they are referring to the same thing while the multiple perspectives are left unspoken and undiscovered. For instance, try this test with a colleague: does the term “innovation” mean incremental improvements, breakthrough thinking, both, or something else entirely? The way each person answers this question provides a clue regarding the types of decisions he or she makes on an everyday basis. Multiply that by the many diverse aspects of your organization, and you can appreciate how complicated matters can get if disconnects are left to grow into missed goals, power struggles, and outright conflict.
Defining values can be especially challenging in multi-national mergers, where language and national cultures can impact understanding. Appreciating and addressing these differences can go a long way toward heading off difficulties caused by different interpretations. For example, one newly formed executive team handled this dilemma by jointly writing explicit definitions for each stated value. While this approach caused some eyeball rolling in the ranks, everyone was able to clearly and consistently describe their company’s values.
Step 2: Agree on the “Value of the Value”
As your organization merges, values need to be revisited to reflect changes that occur as the organization gels. Problems occur when people see a stated value as irrelevant to them in the here and now and don’t agree with or don’t care about it. For example, the values of the famous “HP Way” of Hewlett Packard, that promoted long term performance and employee retention changed considerably with the acquisition of PC maker Compaq. In order to promote consistent decision-making and interactions, top-level leadership needs to agree on why each value is important, and how it needs to be reflected in everyday business conduct. Is it significant because of company history? Does it reflect a competitive reality? Remember, as your organization grows, values need to be revisited to reflect changes that have occurred over the years.
Step 3: Discover Your Organization’s Real Values
The best way to discover what your organization truly values is by assessing how well stated values are reflected not only in various policies, procedures, but also in the practices, behaviors, customs, and other elements of your organization’s culture that can be observed in daily life. A few examples include:
- Written policies, practices, and procedures: How closely and consistently do employees at all levels follow them? Are exceptions frequent? How is information communicated? Look for trends to determine what is really valued.
- Organizational Structure: Is it flat, matrixed, or filled with many levels of hierarchy? To what extent does the informal chain of command follow the formal organizational chart?
- Incentives and rewards: What messages do your performance management and compensation systems send about the value of executives and employees? Do incentive programs favor teamwork or individual performance? What type of performance earns promotions?
- Customs: Do employees routinely work beyond official hours or on weekends? What types of celebrations do you hold, and why? Is it customary to avoid conflict between individuals and groups or to embrace it? How well do these customs reflect the “official” values statements of your organization?
In addition to observation, it’s helpful to use interviews, focus groups and surveys to gain perceptions of employees, customers, suppliers and other significant stakeholders. Although at times it may seem as though people are “wrong” about the feedback they provide (as one CEO said to me), remember that even mistaken perceptions trigger real action. Once this CEO was willing to look more objectively at the situation, he and his executive team were able to take actions to improve the mistaken perceptions of their employees so that they could continue to accelerate progress toward their integration.
Step 4: Improve Gaps Between Values and Actions:
If you observe discrepancies in any area, work with your executive team to determine whether the value itself needs to change to reflect new realities, or whether the value is important enough to you for you to address the issues in the organization that are causing the disconnect. Often times, there are multiple reasons for the gaps, ranging from simple misunderstandings and old habits to truly different ways of perceiving the world.
If you and your new executive team do have a conflict over values, it’s important not to rush to solutions. This can increase the risk of getting “lip service” agreement that gets little or no support on a daily basis, and only compounds your troubles. Instead, find out the reasons behind each person’s position on the issue and drive for dialog that can increase understand and commitment to seeking resolution. Getting beyond positions can help you come up with new solutions. For example, one newly formed executive team disagreed about the definition of “quality.” In this case, the conflict was based upon executives from the acquired company relying upon their traditional definition of quality rather than looking at the current needs of their customers.
It takes patience and persistence to uncover the root of a conflict. If you are truly gridlocked, an outside consultant can help you break out of the jam by helping your group move away from positions, gain new perspectives, and make decisions that they’re willing to act upon.
Step 5: Communicate Credibly About Values:
While meetings, training sessions and postings are helpful for initially communicating messages about values, your organization perceives a multitude of cues every day and decides whether these official messages are credible. According to the types of interactions you have with a particular stakeholder group, here are a few ways you can increase the likelihood of being perceived as credible:
- Consistency: The real values of your company are those that are modelled by top-level leadership. A good way to find out if you’re modelling stated values is to look at decisions you’ve made and actions you’ve taken over the course of a day, a week, and a month. The more you can link these decisions and behaviors to your stated values, the more likely it is that you’re communicating consistent messages to your stakeholders, and the more likely that they will mirror your values in their own actions.
- Suitability: Some communication styles are more suitable to particular groups or individuals. Sensitivity to this can help you communicate in a variety of ways that are suitable to your diverse stakeholders. For example, one group may be filled with analytical people who need evidence regarding the value of the value, while another group needs inspiration in order to internalize values. Shaping your messages to take the personalities and preferences of others into account makes it more likely that you’ll connect.
- Frequency: Value statements and motivational posters quickly fade into the background as everyday life takes center stage. Therefore, the more frequently you can incorporate discussions about values into real time situations, the more likely it is that people will take the message to heart and internalize it. For example, one organization incorporates into every meeting a five minute “what would you do” case study, linking real situations to company values. Providing frequent opportunities to apply these abstract values enables people to further internalize them.
An Ongoing Process
It takes more than posting documents and handing out policy manuals to integrate value systems, even when it appears on the surface that two companies are compatible. The more that you and your newly formed executive team work together in the early stages to clarify definitions, evaluate relevancy, and model values on a daily basis, the more you’ll be able to transform your statements into actions that result in a quick and effective integration and a deal that produces a high return on investment.
About the Author
Pamela S. Harper is founder and president of Business Advancement Inc., a professional speaker, and author of the critically acclaimed book Preventing Strategic Gridlock: Leading Over, Under & Around Organizational Jams to Achieve High Performance Results (Cameo Publications).