Your business has a culture: good, bad or indifferent, it’s there. To you and your seasoned employees, it’s probably invisible. But it’s apparent to new employees or any prospective purchasers of your business. You and your management team may have created the culture intentionally or it may have evolved without conscious direction. Either way, your corporate culture is not wishful thinking; it is an actual reflection of your corporate values, vision, goals, mission, and direction that encompasses the way you behave toward your employees, your customers, and your suppliers.
Some researchers have posited that a company’s culture is its personality and like individuals, can exhibit different behaviours, expectations and communication styles. So, if you’re thinking of selling or merging your company with another, it’s worth considering how the two cultures will mesh. Will it be oil and water or coffee and cream? Does one enhance the other or diminish it? Will they be complementary or in conflict?
Barry Frank (not his real name) sold his company to a larger competitor. The buyer indicated he liked Barry’s culture, commenting that it probably contributed to the company’s better than average profitability. He said he wanted to incorporate more of Barry’s culture in the bigger organization. Barry was flattered with this assessment and agreed to stay on in order to help bring a new culture to the larger whole. He accepted a three-year contract, tied to performance.
It’s impossible to know whether the buyer was being honest or just wanted to make the deal, but Barry soon found that his new role didn’t allow him to help build a new culture. He was replaced as President with the owner’s son. The new President was very different from Barry: even though he was younger, he was an old-style authoritarian leader. He thought Barry was too soft on people and relegated Barry to his office with most of his responsibilities, power and authority stripped away.
Within six months, Barry’s division was going backwards, long-time employees quit, and customers left. He was so frustrated that he ended up breaking his contract just to extricate himself from a very negative environment. In doing so, he lost hundreds of thousands of dollars.
Perhaps if he had done more of his own due diligence he might have realized that the offer wouldn’t work. The culture of the larger company was too fixed and there wasn’t serious commitment from the senior leadership to make the change so the buyer’s company culture dominated.
A successful transition requires that you think about how your culture will fit with with another. Which one is more likely to be sustained? What are the ramifications for you, your employees and your customers if there is a change?
November 4, 2019
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