Oops #13: Mergers, Acquisitions, and Other Forms of Reorganizing

alliance photoMergers, acquisitions, and other forms of reorganization have increased dramatically over the last decade, and with increased globalization they will continue into the foreseeable future. However, if they are done in the same way in the future as in the past, millions, no billions, of dollars will be wasted!

In this podcast Richard Warner and I discuss how to do them differently or, what to do instead.

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Outsourced: New show bound to spotlight what NOT to do when managing in new cultures

outsourcedfinalI can’t help but think that Outsourced, a new workplace comedy scheduled to air this week, will give us another reason to laugh at potential real-life business scenarios. In a vein similar to The Office, this show centers around an American manager who relocates to run a call center in India, and how he interacts with the cast of characters he is charged with managing.

The premise of this fictitious show reminds me of the challenges organizations face in managing different cultures in a global environment and the one common mistake that most make—thinking people are different in other countries.  As a matter of fact, I made this mistake early in my career too!  My client, a textile company in Italy, was the first work we had done outside the U.S.  We had trained an internal consultant, Enrico, to assist in implementing a performance improvement initiative in seven of their plants.  At lunch on the day Enrico was to return to Italy, we were discussing the details of the implementation when I remarked “I sure do hope this works in Italy.”  He responded, “It will work in Italy.  Do you know why?”  “Why, I asked?”  He replied, “Because Italians are people too.”  Touché.

The laws of behavior are the same in Italy as they are in the U. S. – exactly the same!  The principles that cause people to do their best are the same in India, China, Russia and the rest of the world.  When managers export techniques that they have learned in the U. S. to other cultures without an understanding of the science of behavior, they are bound to have problems as I am sure that this series will exploit.  In the US, when managers implement ‘best practices’ without understanding the laws of behavior, we get funny shows like The Office and just as likely, Outsourced. Such shows are made very funny because the scenes show that the boss doesn’t have a clue as to why employees do or don’t act the way the manager intends. Equally important to managing employees globally is to successfully identify the right reinforcers. Managers must understand what is reinforcing to each individual in order to get the right behavior going, and keep it going. Given the cultural differences between the US and India, I expect many laughs on this topic as well.

Whether managing locally or globally, follow these tips (validated by the science and applied across the U. S., and in over 30 countries, for the past 35 years) for improving performance:

  1. Discover the positive reinforcers of each individual involved. They are different for every individual, regardless of geographical locale. Dinner with the boss, while reinforcing to many is terrifying to others. Standing before a group to talk about some personal work accomplishment is what many employees strive for while others dread.  Social reinforcement cannot work without a good personal relationship.
  2. Determine the behaviors that add value. Not attitudes or competencies but things you would want to see someone do. Make sure they are directly related to a specific business result.
  3. Graph progress of individuals and/or the group. Post group progress publically; individual progress privately
  4. Reinforce behaviors that contribute to the progress. If you do it right, you can’t do it too much.
  5. Celebrate results. Relive the accomplishment by having employees describe actions that created the result.

When managers know the scientific principles that explain why people do as they do, the setting is no longer strange and mysterious—another culture and thus not relevant to us.  Rather, they can see the humanity common to us all.  They can use these scientific principles to derive techniques that consider and respect the particular culture in which they are applied.  They won’t be as funny as Outsourced, but will certainly be more effective.

Does Money Make You Smart?

Let’s say that you make business decisions where the impact on the future of the business is not well-thought out. The decisions are praised by Wall Street but, even so, turn out to waste the resources of the business over the long term. Let’s also say that in an effort to grow the company fast, you buy assets above market value to close the deals quickly, hire talented employees and pay them outlandish wages in order to get up and running as soon as possible. You also have little understanding of how to effectively motivate people but believe that money is most effective. In particular, you believe that money will buy you the right talent, since you believe money is what matters most to talented people. Therefore, you either use salary, bonuses or other perks to motivate them.Then let’s say that as the result of current economic conditions, your company has fallen on hard times in no small part due to the excesses created by your growth strategy and financial excesses. (more…)

Speak of the Devil

In OOPS! , mergers and acquisitions is one of the 13 management practices that waste time and money. In a Business Week article, Drug Mergers: Killers for Research by Catherine Arnst she quotes Dr. Joseph Schlessinger, Department Head of Yale’s School of medicine who sold his company to Pharmacia in 1999. Arnst quotes him, “Until the merger is completed, everyone in the labs of Wyeth and Pfizer and Merck and Schering-Plough will stop doing anything except talking about ‘what is going to happen to me?’ They are going to stop producing for a long, long time,” he says.

This is the classic problem that I wrote about in the book. How much will it cost these companies to have professional researchers sitting on their hands for a day, a week, a month? If they are talking about what might happen in the future rather than concentrating on their research, who else in the company will be affected? Eventually, most. You can bet that the competition is not sitting on their hands. (more…)