Organizational Issues of Mergers and Acquisitions - Part 2

Process and procedure are integral parts of corporate culture and as such must be closely scrutinized at all times, but never is it more critical than in a post-M&A scenario. More often than not, daily routines define a corporate culture when in fact the enterprise should infuse the organization with cultural standards that drive the ongoing development of process and procedure.

An organization's collective beliefs, behaviors, and assumptions affect daily business routines on two levels: the overt level, representing observable, intentional, and direct influences on operations (e.g., goals, policy and procedure manuals, and corporate philosophy statements), and the covert level, characterized by obscure, unintentional, and indirect influences on operations (e.g., informal ground rules, unofficial guidelines, or "the way things are around here"). (Connor, 1992, p. 166).

A corporation is an artificial culture that brings together persons from a variety of other naturally occurring cultures to form an organization designed for a specific purpose, which is, of course, to generate profit. The organizational design will be subverted over time by the influences of the multiple cultures imported by the individuals that comprise the organization unless there is a conscious effort to monitor and refine the culture as the enterprise grows.

Corporate cultures cannot be allowed to evolve in the manner in which social cultures do; they start out as engineered communities and must be constantly reviewed to ensure that the design criteria meet the current requirements of the organization. As global market and economic conditions change, and as technology delivers new tools and methodologies to address those changes, so must the culture of the enterprise be adjusted to take full advantage of the opportunities presented by a constantly shifting environment.

Refining the corporate culture is only half the battle. Cultural design changes must be accepted by the individuals and groups that comprise the organization. The unfortunate reality is that human beings are resistant to change; the key to acceptance is the judicious application of change management principles, and most importantly, effective communication.

The theory of the business must be known and understood throughout the organization. That is easy in an organization's early days. But as it becomes successful, an organization tends increasingly to take its theories for granted, becoming less and less conscious of it. Then the organization becomes sloppy. It begins to cut corners. It begins to pursue what is expedient rather than what is right. It stops thinking. It stops questioning. It remembers the answers but has forgotten the questions.

(Drucker, 1995, p. 31).

The most important point in the preceding quote is that the organization stops asking questions. It is easy to become complacent; if there are no disastrous events on the horizon it is simpler to accept the status quo and go on with the established daily routines.

Questions about Culture To Pose to Your Leadership Team:

1. What would you say characterizes our culture?
2. Which of those elements are important to retaining our customers and employees?
3. Which of those elements may tend to impede performance?
4. How can we both maintain the values and styles that are the foundation of our identity and success and still develop a learning culture in which people and teams grow, and through which the organization learns, innovates, experiments and thrives?
5. How can the potential pitfalls of distance and diversity and size best be overcome and turned into opportunities?
6. What should be our learning priorities?
7. What are the elements (policies and practices) regarding communication and learning that will promote a distinctive culture and excellence in performance?
8. How do we learn and grow and continue to be us?

(Gayeski, 1998, p. 1)

The fact of change cannot, and will not, be ignored. Any organization that fails to realize the importance of culture, or allows process and procedure to define that culture will find themselves on the road to obsolescence and eventual inability to compete.

Objective Evaluation

The allegory of Plato's cave can be applied to the concept of an objective, realistic evaluation of process and procedure. When conducting an assessment of daily business routines it is entirely possible, even probable, that what is being observed is actually a shadow of official policy and procedure. Unlike Plato's theoretical subjects, managers have the freedom to turn their heads and view the object that is casting the shadow, and therefore gain a more pragmatic understanding of the object's true form. (Cohen, 2002). Any procedural review should involve more than merely ensuring that the procedures are being followed and explore whether or not the procedures, even if followed, are the best way to accomplish a particular goal.

In reality, most corporations execute processes and procedures that are products of evolution rather than conscious design. This is not to say that cultural evolution cannot be beneficial, but it is important for management to be aware that the evolutionary path down which an enterprise is traveling could lead to extinction.

The process and the system which controls it represents the real problem facing business today, not the people who work within the boundaries set for them by management. Employees must work within the process and management must work on the process. (Harrington, 1995, p. 354).

In order to integrate process and procedure between two organizations, there must first be a clear understanding of what they are and how they relate to the operation of the business. Assessing and documenting an organization's process and procedure is the first step in gaining the knowledge necessary to smoothly meld the daily routines of multiple workgroups into one.

The task of assessing and documenting should not be considered a one-time event. It is important to review and revise process and procedure to remain competitive in the constantly changing world of commerce.

'Within the bounds of our business processes, a framework for continuous improvement attempts to organize people, processes and documentation. Our first challenge is to capture an accurate snapshot of what we do now. The content of the snapshot provides a process knowledge base that may include process charts, process objectives and descriptions, procedures, task descriptions and work instructions, the names and contact information of the people who do the work and improvement team members, improvements, results of improvements.

We need to organize this content in a repository that is easily accessible by anyone who needs process information or support.

Our "knowledge-base" provides no value unless it is used. We want to encourage and promote the use of the content for training, to satisfy inquiries as to what we do now and as a baseline for further improvement work. We want to share the content as best practices, to build on good ideas, to apply good ideas in other situations and to spawn new ideas.

We need to breathe life into the content, so that it evolves with our processes. This means developing a systematic approach for reporting and seeking changes.' (Graham, 2001)

No corporation achieves perfection when it comes to process and procedure, but the constant struggle to reach that goal will contribute greatly to the success of the enterprise and its ability to remain competitive and profitable. Organizations that prefer to ignore the fact that they must evolve and change to keep up with the times will find themselves at the rear of the pack, their view of the marketplace obscured by their rivals.

Formulating Best Practices

There are a number of basic concepts that must be embraced in order to foster an environment where best practices are formulated and implemented. The most important concept to understand is that each group within an organization has some measure of responsibility for achieving the corporation's strategic goals, and that the most effective method of reaching those goals is to treat other business units within the enterprise as customers.

"Capabilities is a strategic framework that asserts that the focus of strategy is the nurturing of business processes and practices that deliver value and satisfaction to the customer. " (Boar, 2001, p. 167)

The idea of internal (vs. external) customers is not new, but most corporations espouse the ideals without actually putting them into practice. Each business unit within an organization must be willing to take the responsibility for the goods or services that are expected of them internally, and agree on a schedule of delivery and level of service that allows other business units to function efficiently. Whether the product is customer invoices, network services, or the external purchase of office supplies, having an established process that is streamlined and understood by the users will ensure the smooth flow of daily routines and allow the organization to concentrate its best efforts on dealing with the unusual situations that will inevitably occur.

A major obstacle to operational efficiencies when dealing with internal transactions and their associated obligations is the lack of empowerment at the task level. This lack ties in with the absence of a proper framework to make routine decisions, and the need for clear-cut direction from management as to the objectives of the group and the corporation. Management staff members should confine their efforts on an operational level to dealing with situations that do not appear to fit within the framework of everyday business functionality.

Companies that undertake reengineering , not only compress processes horizontally by having case workers or case teams perform multiple, sequential tasks but vertically as well. Vertical compression means that at the points in a process where workers used to have to go up the managerial hierarchy for an answer, they now make their own decisions. Instead of separating decision-making from real work, decision making becomes part of the work. (Hammer & Champy, 1993, p. 53)

The notion of interdependency between functional business units must be clearly understood, and the appropriate methodologies formulated and implemented for effective decision making and communication to occur at any level. When authority for decisions is delegated to non-management team members these factors increase in importance.

When creating interdepartmental relationships, the following subjects need to be taken into account:

· Sharing of information for both departments to make decisions.

· Joint planning and commitment to the project's success.

· Equal understanding of the needs driving the project.

· A win-win relationship of managerial power and influence.

· Visible management commitment of necessary resources.

· Sharing knowledge about the other's expertise.

· Giving permission to challenge each other.

· Avoiding situations where "my need is your problem".

· Consensus implementation of plans, milestones, and feedback systems.

· Sharing the glory as well as the efforts.

(Miller, 1987, p. 124-125)

Gaining a clear understanding of each department's role in the organization, and how those roles intertwine with those of other departments will go a long way towards guaranteeing the maximum measure of success possible. It is also important, however, to break down corporate strategic objectives to a series of manageable tasks.

Translating strategic goals into specific tasks is obviously one of the most important aspects of innovation personnel management. The effectiveness of this process of strategy implementation substantially affects the ability of the entire company to realize its goals. It would otherwise be impossible to define the skills and staffing levels required to manage particular types of change. Evidence supports the view that there is a close relationship between the innovation task and knowledge of what the current organizational structure is capable of achieving. (West, 1992, p. 129)

The creation of best practices can be an intimidating challenge for a corporation that is accustomed to a set of daily routines that have been accepted for an extended period of time. The principles of change management can be of tremendous value when properly understood, and applied to the effort of establishing an organization that is adaptable and prepared for the constantly changing world of modern commerce.

Implementation and Change Management

Managing change will always be a challenge, but the obstacles presented by implementing change can be overcome if an effective method of communication is first established, then put into practice. This is a crucial area that needs to be explored in order to determine what changes need to take place within an organization that wishes to create an environment that is amenable to modifications in process and procedure.

The act of communication within an organization is subject to a variety of interpretations, many of which are based on widely accepted fallacies. The most dangerous misconception is that communication consists of keeping the user community informed of impending changes and providing whatever training may be appropriate. In point of fact, communication should be a multi-directional exercise, and should mark the beginning of any process review and redesign.

In this society, knowledge is the primary resource for individuals and the economy overall. Land, labor, and capital - the economist's traditional factors of production - do not disappear, but they become secondary. They can be obtained, and obtained easily, provided there is specialized knowledge. At the same time, however, specialized knowledge by itself produces nothing. It can become productive only when integrated into a task. (Drucker, 1995, p. 76).

Another popular misconception is that a procedural change within a business unit will have little, if any effect on other business units. This form of tunnel vision can have devastating effects on the enterprise, and negate any advantages that a new process or procedure has for the workgroup which is primarily affected. Functional groups within an organization do not operate in a vacuum; everything they do has some connection with at least one other group, and any changes made will have a ripple effect on overall operational efficiencies. Planning and implementing process modification requires that the architects of change comprehend and clearly define the desired end results and grasp the cross-functional nature of business processes.

"Synergy is the soul of a successful change project. In a synergistic relationship, individuals or groups work together to produce a total effect that is greater than the sum of their efforts. " (Connor, 1992, p. 188).

Effective change management relies on several key concepts: a thorough understanding of the strategic and operational goals of the entire organization, how those goals can be achieved through inter-departmental cooperation, and consistent, productive communication.

References:

Connor, D. (1992). Managing at the speed of change: how resilient managers succeed and prosper where others fail. New York: Random House.

Drucker, P. F. (1995). Managing in a time of great change. New York: Dutton.

Gayeski, D. M. (1998, April 11). How to Create Learning Systems that Sustain Strong Organizational Cultures. In Innovative approach to communication and learning in organizations. Retrieved June 12, 2004, from http://www.dgayeski.com/culture.html

Cohen, M. (2002). The allegory of the cave. Retrieved July 10, 2004, from http://faculty.washington.edu/smcohen/320/cave.htm

Harrington, H. J. (1995). Total improvement management:The next generation in performance improvement. New York: McGraw-Hill.

Graham, B. (2001). Capturing corporate knowledge in a process library. Retrieved May 9, 2004, from http://www.worksimp.com/articles/capturing%20corporate%20knowledge.htm

Boar, B. (2001). The art of strategic planning for information technology (2nd). New York: John Wiley & Sons.

Hammer, M., & Champy, J. (1993). Reengineering the corporation: a manifesto for business revolution. New York: Harper Collins.

Miller, W. (1987). The creative edge: fostering innovation where you work. Reading, Ma.: Addison-Wesley.

West, A. (1992). Innovation strategy. Needham Heights, Ma: Prentice Hall.

Producer Price Index. (2001). Retrieved August 29, 2004, from http://www.ftc.gov/speeches/leary/learyuseu.htm