Guest blogger: Augustine Hong
The current pace and the number of mergers and acquisitions are reshaping the financial services industry. The pursuit of scale, for many smaller firms, is not an option but rather a necessary response to the shrinking market share and profitability resulting from the encroachment by well-capitalized mega firms offering a compelling suite of expertise, technology, and unique client experience. One of the more critical issues facing firms employing an M&A growth strategy is building a shared culture, especially when dealing with a heterogeneous composition of retained employees.
Firms adding personnel through an organic hiring process versus inheriting them as a result of an M&A transaction will have an easier time building a shared culture since they get to choose who they hire. When you inherit, you are typically more limited in the exercise of your discretion. The typical heterogeneity of the personnel composition resulting from M&A activity makes it challenging to achieve successful acculturation – which is so vital to the ultimate positive impact of any M&A transaction. A great deal of patience and thoughtful culture-building ideation is required for this strategy to achieve its intended outcome.
Culture is how we think and act. Therefore, a starting point for building a shared culture is establishing clear communication of the firm’s destination (mission) and the path to getting there. This narrative is your organizational navigation system, not unlike the navigation in a car, moving people towards the same destination with a shared sense of purpose. However, don’t expect a Coachella response. For most people, the reality of change brings stress and anxiety, particularly for those who have experienced success doing it their way for a long time. So anticipate awkward gatherings and discussions where people appear and/or feel selectively indifferent, entitled, and perhaps even too good to participate in requisite collaborative exercises. The process of building a shared culture demands not only a string of happy moments but also a set of uncomfortable experiences shaped by the honest reflection of everyone involved as they grow together in familiarity and trust. In some ways, challenging, and even painful, growth is the most enduring.
To take a creative approach to building a shared culture, try designing a custom-branded organizational ecosystem that outlines desired outcomes and incorporates detailed instructional clarity to make the execution of those directions unique to your organization. In our company, we branded our prospect qualification process (suspect to prospect journey). We call it DNA Analysis which stands for desire, needs, and ability. This nomenclature understood only by our employees, serves as a means to create a collective experience and lexicon that brings employees together. All religions, cults, and even sports teams employ custom rituals. So take a lesson from the secret handshakes, code words, etc. and create experiences for your employees that connect them to each other in ways specific to your organization. As long as such efforts and programs are thoughtfully communicated and contextualized to the mission of the company, they should shape the thoughts and actions of all employees.
Augustine Hong is the CEO of Alexandria Capital, LLC, a regional investment and wealth advisory firm with research and advisory centers in New York City, Washington, DC, Tarrytown, NY and advisory offices in Boston, MA and Portland, Oregon. He is a passionate builder and strategic innovator in the financial services industry. For his other posts, please visit him at: https://alexandriacapital.com/building-culture-when-m-and-a-is-your-growth-driver/.