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Is Cultural Fit Enough?

CHANGE MATTERSDanone and White Wave made headlines recently when Danone made a bid to acquire the company known for their Horizon Organic and Silk brands. I was driving and only partially listening to the two CEOs during an interview on CNBC when I heard the CEO of White Wave, Gregg Engles, say something about that it wasn’t just a good business fit, but that it was a good cultural fit as well. My ears perked up at that statement. You so rarely hear that kind of talk these days – let alone by a CEO of a company. So when I got home I did a little research on the two companies. I’ve never been inside their walls, but their websites do have similar missions and purposes – better health, healthier food, commitment to the environment and their people. I can see why Mr. Engles said that. The question is, is it enough to support the acquisition and its business goals?

This talk of cultural fit also brought two memories into my head. One was a similar statement from the President of a pharmaceutical company that had just been bought by Johnson & Johnson. Someone in the audience had just asked him why Johnson & Johnson? The other memory was from work I recently did with a small marketing communications firm – really two firms that had merged in the last eighteen months.

Big Company/Small Company

In the first scenario, the President of this newly acquired company said that the reason they even agreed to be purchased by J&J was because the cultures and values were so similar and aligned. He was very sincere and I could tell that not only did he really believe that, but also he felt it was the basis for a smooth transition. Although that may have been true, the size differential between the two companies actually was a source of issues than anything else. When you are small, even if your values are the same and you think there is a cultural fit, you still will have to change a lot of your business processes. And if you are big, you just naturally assume that the way you do things is better – which may or may not be true. Maybe people thought that because the cultures were “so similar”, it wouldn’t be a problem. In this particular case, the issues actually grew over time. It created more problems to be solved and more things to work out. A lot of it could have been avoided if people hadn’t assumed that the cultural and values based fit prevent any problems. This oversight cost the company time and money in lost productivity and regrettable personnel losses. It didn’t have to be that way.

Two Very Different Cultures

In the second scenario, two similarly sized marketing communications companies merged so size was not the problem. The merger was based on perceived synergies. Leadership admitted that the cultures were really different, but they didn’t think that would be a big issue. Surprise! Unfortunately, they underestimated the depth of each company’s culture and how it would affect their merger plans. Every change leadership wanted to make was resisted. Every. Step. Of. The. Way. The leaders are frustrated, their employees are frustrated and no one seems to want to do the one thing that will end their frustrations – bring the two cultures together to create a third, new culture. They are a few years into it and it still impacts productivity and their ability to capitalize on the synergies they envisioned.

Culture Eats Strategy for Lunch

These two scenarios are both cautionary tales for the Danone-White Wave acquisition. Whatever they plan to do – leave it alone (like Danone did with Stonyfield) or bring it into the fold – it will work best if they have a plan that includes some focus on the culture and its impact on business. As several wise people have said over the years “culture eats strategy for lunch”. Danone and White Wave will do themselves and their shareholders, not to mention employees and customers, a big favor if they remember that in the weeks and months ahead.

Beth Banks Cohn
Beth Banks Cohnhttp://www.adrachangearchitects.com
BETH is dedicated to helping individuals and companies implement business changes that actually work. Beth believes in the ripple effect – that change handled well benefits everyone in an organization, over and over again. As a recognized expert in change as well as corporate culture, Beth consults domestically and internationally with a wide range of disciplines and businesses. Beth is the author of two books: ChangeSmart™: Implementing Change Without Lowering your Bottom Line and Taking the Leap: Managing Your Career in Turbulent Times…and Beyond (with Roz Usheroff).

4 COMMENTS

  1. Hello Beth, thanks for the interesting article.

    Employees are not stupid and they learn in multiple ways…
    Employees learn the culture from… 


    – pre-employment interviews
    – the employee handbook 

    – what HR says 

    – what the manager says 

    – what HR does 
- what the manager does 

    – what the manager rewards 

    – what the manager punishes 

    – what the executives say 

    – what the executives do 

    – what the executives punish
    – what the executives reward 



    Lastly, 

    1. employees read the words
    2. employees listen to the words 

    3. employees read the face that speaks the words 

    4. employees hear the voice that speaks the words 

    5. employees watch the behaviors of the person who speaks the words. 



    If 1, 2, 3, 4 and 5 all send the same message, then the employee is fortunate. 

    If 1 and 2 do not send the same message, then 2 controls. 

    If 2 and 3 do not send the same message, then 3 controls. 

    If 3 and 4 do not send the same message, then 4 controls. 

    If 4 and 5 do not send the same message, then 5 controls. 



    It would be a rare event to find two employers who behave the same.

    • ≈ 80% of employees self-report that they are not engaged.
      ≈ 80% of managers are ill suited to effectively manage people.
      * The two 80 percents are closely related.

      Employers keep hiring the wrong people to be their managers and then they wonder why they have so few successful, engaged employees. Successful employees have all three of the following success predictors while unsuccessful employees lack one or two and usually it is Job Talent that they lack.
      I. Competence
      II. Cultural Fit
      III. Job Talent 



      Employers do a… 

      A. GREAT job of hiring competent employees, about 95%
      B. good job of hiring competent employees who fit the culture, about 70%
      C. POOR job of hiring competent employees who fit the culture and who have a talent for the job, about 20%

      Identifying the talent required for each job seems to be missing from talent and management discussions. If we ignore any of the three criteria, our workforce will be less successful with higher turnover than if we do not ignore any of the three criteria.
      I. Competence
      II. Cultural Fit
      III. Job Talent

      There are many factors to consider when hiring and managing talent but first we need to define talent unless “hiring talent” means “hiring employees.” Everyone wants to hire for and manage talent but if we can’t answer the five questions below with specificity, we can’t hire or manage talent effectively.
      A. How do we define talent?
      B. How do we measure talent?
      C. How do we know a candidate’s talent?
      D. How do we know what talent is required for each job?
      E. How do we match a candidate’s talent to the talent demanded by the job?

      Most managers cannot answer the five questions with specificity but the answers provide the framework for hiring successful employees and creating an engaged workforce.

      Talent is not found in resumes or interviews or background checks or college transcripts.

      Talent must be hired since it cannot be acquired or imparted after the hire.

      • Thanks Bob for your comments. Interestingly enough, in the work I did for my doctoral dissertation I found that people took their queues about culture more from senior management. I do believe however, that culture is created and recreated each and every day with every action taken by every individual in the company. I totally agree with your statement that most managers are ill-equipped to manage others. It is a very sad state of affairs and impacts companies negatively each and every day.

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