M&A: Assessment key to avoiding a culture clash

Focus groups are generally one-hour professionally and independently facilitated sessions in which employees can share their views on corporate culture, values and norms. These open and personal forums provide opportunities to express perspectives honestly and without judgment.  Sessions are used to compare and contrast perspectives. Typically, eight to 10 standard questions are prepared to capture recurring themes. Examples of open-ended questions leveraged for focus groups and one-on-one interviews may include the following:

• How would you describe the working environment/culture here?
• What excites you about coming to work here?
• What kind of person fits into this organization? What kind of person does not fit?
• What elements of your culture help make your company successful?
• What elements of your culture sometimes get in the way?
• What are your perceptions about the acquirer or target organization?
• What do you think is key to successfully integrating the two companies?

Reviewing key business documents identifies themes through the use of language, metaphors, corporate stories and success stories. A formal document review includes an analysis of both internally facing messages, such as leadership messages and meeting minutes, and externally facing messages, such as websites and brochures. How are communications used to influence various audiences? Is there an alignment between written messages and the other observable aspects of the culture? What are the kinds of stories included in the company newsletter? What does the CEO communicate? What accomplishments are celebrated? Is there a publication that communicates the corporate vision? Some examples of materials to be evaluated in the document review include the following:

• Vision/Mission/Values statements including documented behavioral norms
• Employee communication examples (newsletters/memos) and communication plan
• Company strategy documentation (annual operating plan key objectives)
• Management reporting (key performance indicators/dashboards)
• Employee policy handbook
• Performance management policy, process and procedures
• Salary administrations (policy, process and timing)
• Turnover data for previous three years by department (separating salary vs hourly)
• Employee reward and recognition (programs, methods, incentives and perks—both formal and informal)
• Job descriptions (examples from each level and sampling of departments)
• Hiring process (external and internal)
• Employee census (name, age, hire date, title, length of service and in current position, salary vs hourly)
• Training plans (description, approach, identification of positions)
• Health and safety programs
• Sales and marketing (product and service promotional materials)

In addition to a formal document review, the culture audit should also evaluate key metrics associated with the organization’s culture. Dr. Tiffany Yates, Grant Thornton senior manager, Organizational Strategy, suggested that the analysis should also include evaluation of employee engagement scores, culture surveys and other culture-related measurement.

“Some larger organizations are fine tuning their culture alignment by aggregating existing data with more nuanced data,” Yates explained. “It’s important to conduct a longitudinal study so that the measurement is not just a one-time event but includes a full aggregation of the data. You’ll be able to see over the course of years any trends or patterns related to your organization’s culture.”

Whittle agreed that collecting data over a period of time will help organizations determine whether their culture is being sustained or going stale. “Is the culture continuing to grow and permeate through the organization without formal initiatives in play?” she suggested. “You can’t discount the importance of gathering data. It’s one of those things that organizations need to pay attention to, including aggregating data over years and including measurements such as results of employee exit interviews.”

She added that it’s important that organizations track the reasons that employees are leaving because many times the cause is tied to culture.

A cultural dynamics survey provides a quantitative assessment of the organizational culture, which can be charted visually and provide a snapshot of the current culture. The survey provides an opportunity to anonymously source opinions from a wide range of individuals. The data can be broken down to identify subcultures through the use of custom demographic questions. Key cultural dimensions addressed in the survey include:

• Organizational cultural environment
• Independence/decision making
• Teamwork and collaboration
• Change and innovation
• Risk and control
• Rules and procedures
• Leadership and power
• Customer focus and service
• Quality orientation
• Proactivity and empowerment
• Trust and loyalty
• Open communication

Ronaldo Loyola, Human Capital partner at Grant Thornton Brasil, adds that in Brazil the company uses Richard Barrett's methodology of Organizational Culture Mapping for its clients. "It is the most complete culture diagnostic tool available on the market, it can be customized for any organization and it allows to obtain detailed indicators regarding the organizational culture".

Observation and shadowing is used to validate the information gathered from the focus groups, interviews and surveys.  It serves as an opportunity to gather information in a natural setting about an organization’s espoused values and beliefs, as well as their actual behaviors.  Inquiries and observations on elements of the culture can yield insights into what the culture is like throughout the organization and whether the desired organizational culture is what really happens on the front line.  Some key tips for the observation phase of the culture audit include the following:

• Keep an ear out for conversations in and around the site—the language and tone used will give an indication of how communication is made in the environment.
• Take an office or site tour to get a feel for the location.
• Observe notice boards, framed corporate wording, office layouts, breakout areas, etc.
• Look for stand-out features---such as trophies or company distinctions.
• Our observation starts from the moment of arrival to the moment of departure---consider the whole.

A combination of these four activities will help to objectively assess the organization’s culture through a variety of lenses and gather a full picture of cultures and subcultures. Key among them are a review around the organization’s people programs to determine whether they are driving the desired behaviors and an analysis of the organization’s strategy to ensure it is driving the desired performance outcomes.

The combination of these four activities helps to objectively look at the organizations through a variety of different lenses and gather a full picture of cultures and subcultures. By consistently tying the culture assessment data points to a culture web we are able to identify behavioral, physical and symbolic manifestations of culture, which provide a meaningful framework for understanding the most influential aspects of the target’s and the acquirer’s culture. We are then able to bring out the cultural dynamics of each organization, the areas of commonality and potential friction points. Further, employees feel engaged in the integration process.