The Semco Style 5 Principles to transform the way we work

The Culture Merger

Taking the time to integrate cultures the right way

Corporations go through cycles of growth and retrenching, what I call corporate yo-yo dieting. Companies that expand continually are companies that grow fat. Then they’re forced to diet, or downsize in “corp” speak, until they can grow again and reengineer (a new body in ninety days!), merge and acquire other companies (weightlifting and muscle training) until the cycle starts anew, and they’re forced to reduce again (lose twenty pounds in six weeks!).– Ricardo Semler


In a Nutshell

Mergers, acquisitions and joint ventures are great indicators of a company’s performance: The better performing company obviously takes over one that’s been underperforming; or, two equally-footed companies might join forces to take on bigger business. Either way, whenever there’s a merger, acquisition or a joint venture on the horizon, it spells a period of intense activity and dramatic change in the existing landscape.

And, like any kind of change, it doesn’t sit well with the people in both the organizations. In fact, for many employees and managers, a merger could signal a time when their personal goals and ambitions are disrupted. Or, more traumatically, they could lose their jobs in the “integration” process that follows a merger. In fact, about 30 percent of employees risk losing their jobs when their company enters into a merger or acquisition within the same industry.

The first few months after a merger are the both crucial and painful because that’s when people from both sides learn to work alongside each other. Very often, there are clashes of perspectives or confusion in the way things are done. There might be other cultural and language-based barriers that make working together much more difficult. Finally, there may be new policies and politics to keep in mind; vast differences in culture to bridge; and new clueless managers to report to.

In short, people need to overcome their existing biases and learn to work with each other even though they don’t really want to. While it’s not exactly a walk in the park, the tough times ushered in by a merger can be converted into both teaching and learning moments.


What

Initiate a real exchange of ideas between your company and the one that you’re merging with to create a new, stronger hybrid culture.


Why

When companies merge with each other; acquire another entity; or, enter into a joint venture, it’s not restricted to the financial dimension alone. Instead, it’s a coming together of people, processes, cultures and aspirations. When done right, people can be shown how to view their differences as being complementary; when leaders walk the talk, it’s easier for new employees to assimilate into an alien culture; and finally, it can provide multiple opportunities for people to exhibit collaboration, innovation and empathy.


How

 

Spearhead integration with a leader who understands your culture: When two companies merge, it’s natural for people to feel confused and lost. But it’s extremely crucial that the person leading the transition is someone who is in no doubt about any aspect of the bigger company – whether it’s the culture or the working style. Only then can he/she facilitate the assimilation of new employees into the existing culture.

Avoid a top-down approach to the merger: Instead, start a real exchange between people of both companies. Focus on not just adapting the external employees to your local culture and working style, but also on helping your existing employees embrace the new culture. It can be particularly challenging when the merging companies are large entities with predefined processes and culture. In such cases, it’s all the more important not to impose your culture on the newcomers. It really won’t work if you just say, “Here’s our new employee handbook. Read it and live it.” You need to lead by example, start dialogues and offer trainings with interactive opportunities. Make people understand that it’s safe for them to voice their fears, ideas and participate in this new venture.

Support employees who aren’t part of the regular workday: If your merger leads to employees working in multiple shifts, offer additional support to those work the late night shifts. Since these employees will rarely have the chance to join general meetings and discussions conducted during regular office hours, they lack a forum to raise their concerns and needs. You could address the issue by setting up an HR team that solely focuses on the late night shift employees.

Offer trust and demonstrate commitment: In mergers and acquisitions, people often find themselves working under a leader from the bigger company. It’s a situation that naturally breeds suspicion, fear and a loss of engagement at work. In such cases, it would do wonders for employee morale if the leader personally reached out and interacted with them. Convening yet another meeting isn’t the way to do it – meet employees at their workstations, at a time when the work is happening (even if it’s at midnight) is the way to go. This is a great way to show that you care; that you’re all in this together; and that you’re ready to listen to their voices.

Walk-the-talk and be hands-on in your leadership: Whether you’re a manager or the CEO at the newly merged venture, it’s important to show people that you’re willing to work with the team. This is particularly relevant in times of crises – natural or otherwise – when people are feeling overwhelmed by the enormity of what needs to be done to restore normalcy. For instance, if there’s torrential rain and the office has been flooded, be among the employees and help remove the water in buckets if you have to. It’s a great gesture that communicates your intention to stand by your employees at all times.

Provide autonomy to employees: When you’re a leader in a new joint venture or merger, it’s important to understand that your employees were, until very recently, working under a different corporate culture. They may not immediately understand or appreciate the rationale behind your ways of working, processes and controls. Therefore, it’s critical to limit the number of rules and procedures you impose upon them. Instead, offer people the autonomy to work amongst themselves and come up with autonomous solutions to problems. If they know that they have the freedom to make their own decisions, people are likely to collaborate better, be more transparent and productive. And those are the things you need to sail over the rough wave of a merger.

At every opportunity reinforce their value: Mean it when you tell your employees that every single contribution they make is valued. And, reinforce it by starting every meeting with appreciative inquiry; by providing more spaces for late night employees to engage with the management; and by recognizing work that usually goes unnoticed. This will create a value chain that will ultimately lead to happy customers and positive word-of-mouth that brings new business.


Level to implement

 Hard


DO’S

Facilitate the merger with a leader who knows your culture well

Create safety for people to be open about their fears, concerns and ideas

Limit the number of processes and controls

Offer autonomy and freedom to make their own decisions

Acknowledge the work of every single employee irrespective of their level

Give trust and show that you care

DON’TS

Impose your culture

Assume a top-down approach to the transition

Expect to have things in place instantly

Accelerate things that need to be done gradually

Implement all changes at once

Expect trust from day one

Ignore bottom-up feedback

Play favorites with your current employees

Go overboard in the things you do to make newcomers feel welcome

Pros

Makes it necessary for people to overcome prejudices and work together

Reveals complementary aspects that can further strengthen the organization

Helps people develop interpersonal skills to work in hostile climates and collaborate better

 

Cons

Risk of a mismatch between expectations and ambitions which might make people quit

The minor company may resist a leader from the major company in a merger

There might be short-term loss in productivity until procedures and control systems are put

  in place

Time-consuming to achieve alignment


Case

 

During the 90s, there was a long period of intense expansion, with Semco entering into multiple mergers, acquisitions and joint ventures (mostly with companies in the U.S.) in a variety of fields and industries. The HR department, which was responsible for not just welcoming the new employees, but for also facilitating the transitions and for taking care of the operational side of things.

The integrations were done with two main points of focus in mind: First, to adapt the international employees arriving in Brazil to the local culture as well as the unique work culture at Semco. And second, to help existing Semco employees embrace the external culture in order to create a new culture that would represent and respect the values they’ve imbibed until now.

The mergers, acquisitions and joint ventures opened up a real dialogue between Semco and the other companies. There was no top-down imposition of the Semco culture on newcomers. Instead, it was a real exchange of ideas and opinions between both parties involved.

It was quite challenging because these new ventures were often done with very big international companies that already had a strong corporate culture and lots of processes in place. So, joining forces with Semco and its culture was a challenge for both sides. For instance, the American companies were usually quite rigid about their control systems and procedures and were very structured and process-oriented. Semco, on the other hand, was much more organic and informal in the way it went about doing things.

In 1998, the SEMCO RGIS was created and it specialized in inventory services with people working round the clock on different shifts. One of the main challenges brought in by the new venture was integrating the large number of employees who worked the late night shifts.  

Semco solved the problem by working very closely with the team leaders, who were representative of the voice of these employees. It was crucial that these team leaders understood the key elements of the Semco culture so that they could replicate it for the employees who worked the late night shift. Since it wasn’t possible for these employees to attend the trainings and discussions conducted during regular office hours, extra attention was paid to the training of the team leaders.

To ensure that the late night shift employees aligned themselves with the culture and values at Semco, the team leaders and the Semco management co-created a very intense program of training, onboarding, conversations, meetings and alignments. Once they were adequately trained, the leaders passed on their training to the 10 people in their teams. Overtime, all employees were onboarded with the Semco style of working and even clients were able to notice the alignment.

In each of these integrations, Semco had to repeat what it did with its own employees at the beginning of its transformation into a democratic company. But, now they had the support of the current employees who had imbibed the strong culture and were open to embracing new companies and helping them move in their direction.


Changemaker

Expert avatar

Borges, Ian

Co-founder at LeadWise | Partner at Semco Style Institute | Entrepreneur | Lifestyle Strategist | Digital Nomad

Rio de Janeiro, Brazil

Portuguese, English, French, Spanish

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Related Resources

Before a Merger, Consider Company Cultures Along with Financials

Podcast: The Big Idea: The New M&A Playbook

TED-Ed Lesson: Top 10 Disastrous Mergers & Acquisitions (M&A)

TED talk: How diversity makes teams more innovative