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Business

Combating M&A Failure through Organizational Constitutions
By S. Chris Edmonds
Oct 5, 2014 - 12:12:17 AM

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The Culture Engine by S. Chris Edmonds
2014 has been a banner year for merger and acquisition activity by volume -- though 40-60% of those unions are expected to fail.

A recent BusinessInsider.com article revealed the volume of global mergers and acquisitions has reached its highest level in seven years. "Companies have strategic imperatives to do deals, they have the cash to do deals, and they can borrow additional cash at record-low rates," explained Frank Aquila, a mergers and acquisitions lawyer at Sullivan & Cromwell, LLP. "It really is a bit of a perfect storm when it comes to deal-making."

Unfortunately, a "perfect storm" for big deals can quickly devolve into a crisis for employee engagement, as companies attempt to integrate not only operations, but also disparate organizational cultures. As cultures clash, companies can struggle to realize the efficiencies they need to improve their standing in the marketplace. The hard numbers tell the story of this disconnect: 40-60% of this year's mergers and acquisitions are expected to fail.

The problem is, most leaders have not experienced a successful culture change. And even fewer leaders have led a successful culture change. Leaders owe it to their stakeholders to become aware of and address the issue of culture alignment, particularly when they undertake major change initiatives.

Below are four complimentary tips for creating organizational constitutions. An organizational constitution provides top executives with the step-by-step tool they need to lead their organizations through major change, especially when the stakes are high and the timeline is tight. In 18 months, these constitutions can inform gains of 40% in both employee engagement and customer service scores, as well as 35% gains in net profits for the business. These gains can make the difference between a successful merger or acquisition or a failed one."

Tip #1: Define desired values. Define what "great team citizenship" looks like for every leader and employee. These values form the foundation of an organizational constitution, as they reflect the ideals upon which the business operates. Values should focus on desired principles, such as standards for honesty, integrity, work/life balance or the meaning of organizational loyalty.

Tip #2: Identify valued behaviors. Specify the behaviors that every leader and employee should demonstrate, in every interaction, with both team members and the public. Be sure the behaviors are concrete, observable, and measurable. When taken in concert, people's behaviors will serve as evidence of the organizational constitution. This evidence will be noticed by both internal and external stakeholders, and will be used to judge the quality and health of the organization's work environment as well as the organization's performance .

Tip #3: Examine current beliefs. Most people don't examine their beliefs every day. They just do things that seem to make sense to them. A crucial step in creating an effective organizational constitution is highlighting "flawed" beliefs that may be driving undesirable behavior. For example, a work environment operating from a "competitive interaction" norm instead of a "cooperative interaction" norm encourages withholding of information and "I win, you lose" battles daily. Create a safe space in which leaders and employees can pinpoint and discuss negative beliefs and redirect them toward more productive ones.

Tip #4: Manage behaviors -- not attitudes. Contrary to popular belief, people's attitudes can't be managed. By definition, attitudes are internal, inside each leader and employee. Even initial high performers can lapse into poor attitudes and lackluster production when they're placed in pressure-cooker situations. Managing behavior is the only concrete, measurable way to encourage good/dissuade poor organizational citizenship.

In The Culture Engine these four tips are expanded upon and additional insights are provided into building an effective culture that will weather both the daily moves of the marketplace and the toughest change initiative.

S. Chris Edmonds
www.thecultureengine.com


S. Chris Edmonds is the founder and CEO of the Purposeful Culture Group, which he launched after a 15-year career leading and managing teams. Since 1995, he has also served as a senior consultant with the Ken Blanchard Companies. Chris has delivered over 100 keynote speeches to audiences as large as 5,000, and guided his clients to consistently boost customer satisfaction and employee engagement by 40+% and profits by 30+%. He is the author or co-author of six books, including Leading At A Higher Level with Ken Blanchard. His next book: A Framework for Driving Results, Inspiring Your Employees, and Transforming Your Workplace will be published by John Wiley & Sons in September 2014.

"The Culture Engine: A Framework for Driving Results, Inspiring Your Employees, and Transforming Your Workplace"
by S. Chris Edmonds
ISBN-13: 9781118947326
Publisher: Wiley
Published 9/29/2014
Pages: 272
Hrdcover $19
E-book $14


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