Mergers and Acquisitions For Dummies (94 page)

For example, my company once acquired a number of local retail stores that I was charged with integrating into the company fold. I called a meeting with the dozen managers who reported to me, and I proceeded to give a rousing speech about how we were all going to work together and have the best stores in the company and how we were going to improve and operate even better than before my company bought their stores.

I thought I was giving the speech of my lifetime. Instead, I was met with awkward silence until one of the managers said, “You must think we're all stupid.”

Here I was smacked in the face with a cultural difference between the northern states and the southern states. My approach to communicating was as I had learned up north. I was direct. I simply said what I wanted to say.

However, my southern colleagues heard something very different. In the South, directness is akin to rudeness. Their takeaway was that I was informing them, in a not-too-polite way, that they didn't know how to run their stores. Because I was directly telling them what do, they viewed me as a rude Yankee know-it-all. So instead of directly telling people what to do, I learned to take the bypass. I got to the same location, but I didn't drive straight through town.

Successful communication involved telling people all the wonderful things they were doing, asking them about their families, talking about fishing or the big football game, and then after a few minutes of polite chitchat, discreetly pointing out something I wanted them to take care of. I'm sure they still thought I was a know-it-all Yankee, but I was able to ingratiate myself and eventually get the result I sought.

Today versus tomorrow

Another culture difference that often pops up as two companies attempt to integrate is urgency — in other words, the speed at which people accomplish tasks. Large, urban areas tend to have a greater sense of urgency about completing tasks. They get things done today. Rural areas often have a slower pace and are more accustomed to taking care of jobs tomorrow; those people may greet your query about an uncompleted task with a befuddled “Oh, you were serious about that?”

Another element in the today-versus-tomorrow issue may lie outside geographical boundaries, in the difference between ownership styles. Owners of privately held companies often aren't as forceful or assertive as owners or executives of larger, public companies. The laid-back culture of the pre-sale owner may be diametrically opposed to the high-charged, over-caffeinated culture of the new owner, and this difference can cause miscommunication and problems.

If faced with an acquired staff's more laid-back view of urgency, don't be surprised by an initial blasé attitude. But stick to your guns. Don't change your expectations. People will figure out quickly that the new owner expects things done differently, namely today.

Resolving conflict

Conflict between the new owner and the acquired company's employees is an occasional and unfortunate disease that pops up shortly after the announcement of the business sale. Initially, you meet with politeness and deference. However, because the employees are likely in shock and may not have yet digested the consequences of the sale, this politeness and deference may be more the result of the survival instinct than sincerity.

The clock is ticking. If you don't communicate fully and accurately with your new employees, those good manners may disappear quickly as skepticism and perhaps hostility creep into your new employees' relations with you.

Starting on the right foot is important, obviously. You want to win over the new employees as soon as possible, but if you've been unable to do that, you may encounter conflicts that need resolving. The following sections provide some tips on dealing with conflict.

Remember who's in charge: You!

Don't be afraid of letting people know there's a new sheriff in town. The sooner you start to institute changes and new rules, and the more resolute you are in applying those changes, the sooner the company will adjust.

Inertia (the flow of how the employees are used to working) can be difficult to change, and your odds of breaking that cycle improve if you offer a better way for employees to do their jobs. Assuming your changes are actually improvements, the employees will quickly forget the old ways after they get used to the changes.

This immersion method can be painful, but you need to be determined and committed. If you waver, people will go back to the old way of doing their jobs.

Part of remembering that you're in charge means stepping up and letting people go if they refuse to go along with the new standards. Although no one likes to fire people, you can't be afraid to pull the trigger if a situation with an employee is untenable. The later section “Firing people” gives you further guidance on letting folks go.

Move forward. Don't allow the employees to get wrapped up in past battles that may have flared during the sales process. Your mantra should be, “That's over; the past is history. I'm here to work.”

Set a high bar and be consistent

The best lesson I can give to anyone about implementing new rules and methods is to set a high bar and be consistent with your own actions and expectations of others. When you say you're going to do something, do it. Be on time; don't change plans at the last minute.

People want to be led. Don't afraid of changing the tone and applying fair discipline. Stay the course and demand excellence from others. They'll follow. You'll probably find that more people pull you aside and thank you for the changes than grouse and complain at being held accountable.

In one of my roughest integration processes, I took over a completely dysfunctional business with a culture of zero discipline and accountability (among other problems). I addressed the problems by giving the managers a pep talk and letting them know, in no uncertain terms, what I expected. Management and a number of employees quit en masse rather than abide by the new rules.

As I went about my work to fix the operations, a mother of one of the remaining employees (a high school senior), came to my office, obviously agitated and upset, and began to read me the riot act. Apparently, the daughter had informed Mom that the new boss was mean and cruel and was picking on everyone. The daughter, closely ensconced behind the mother, had a smug smile on her face.

I told the mother I expected my employees to show up for work on time and be ready to work. I expected them to be helpful to our customers and to be well groomed (asking them to tuck in their shirts seemed to cause a major problem). I wanted them to enjoy their jobs and work with their coworkers, and I wanted them to work in a clean environment (hence my insistence that they clean the restrooms and dust and vacuum).

I then asked the mother to tell me which of my rules she found objectionable. The mother's demeanor immediately changed as she informed the daughter, “You're not quitting,” and then pointing at me, added, “You're working for him.”

Pick your battles

When dealing with conflicts, you may have to prioritize and deal with certain issues before delving into secondary problems. Any business has a certain ingrained inertia in the way it does things, and that inertia can be tough to overcome. Although instituting change throughout the entity may be important, your focus should not be taken away from the basic blocking and tackling of a business: taking care of the customers, sales, inventory, purchasing, and paying bills.

Improving punctuality, following often-ignored minor rules, cutting down on needless office chitchat, and the like may be part of your long-term plan to improve the company, but until the big issues are addressed and fixed, these smaller issues may have to go on the back burner.

Acting like a leader at all times

Getting off on the right foot is important for building any successful relationship, and this is especially the case for a new owner meeting the employees for the first time. Injecting a positive culture into an organization isn't difficult; you simply need to be aware of the power of your words and actions before you step in to the new office. A truly effective leader is careful with every step, word, and action and presents an air of confidence, maturity, strictness, fairness, stability, decisiveness, and honesty, especially right after a deal closes.

Every leader is under a microscope, and the higher up the corporate ladder you are, the more powerful the observation of others becomes. Subordinates take their cue from their managers. As a result, the culture in any organization is directly tied to the actions of department managers, company executives, and ultimately the ownership of the company. Leadership is a double-edged sword: People follow your good examples but they also follow your bad ones.

You have a chance to shape how employees act, the way they think about their jobs, and most importantly, the way they interact with your clients. If you talk about clients and possible customers with an air of disdain, you infect your employees with that poisonous culture.

Be careful with your comments and jokes. Off-color jokes and rude comments can find their way to the employees. You can easily and unintentionally foster a negative culture through careless and ill-timed comments.

As long as your jokes are appropriate, though, you can also maintain a personality and sense of humor. In fact, reminding employees that laughing and smiling while on the clock isn't a crime is a wise approach. Accomplishment should be the first and most important goal, but setting an environment where people actually enjoy their work is tantamount to success, too.

Making friends

Be a part of the culture of the acquired company. Be willing to partake in local customs, and be sensitive to special events and occurrences in the community. Nothing creates division as much as being (or appearing to be) oblivious and uncaring to someone else's cherished rituals.

Being friendly with employees is important, of course, but don't go overboard and act too familiar. You shouldn't be standoffish or aloof, but employees are looking for a leader, not a best buddy.