Alexander Hughes PAGES 2-3 > KEVIN DUFFY Outsourcing Trends in Eastern Europe EXECUTIVE SEARCH CONSULTANTS PAGES 3-4 > FONS TROMPENAARS The Culture Shock of Mergers and Acquisitions European Newsletter PAGES 5-6 > INTERVIEW WITH JOHN ALLAN Chief Executive of DHL SEARCHSEARCH # 29 Successful Multi-cultural Integration – Science, Art or Craft? s the speed of communication and ease of of multi-culturalism did not provide the results for travel increases, the world seems to get which American parent companies were hoping. A smaller and businesses need to satisfy This has been particularly apparent in Europe where demand on a global basis. This has resulted in many Americans still see Europe as one large increasing numbers of cross-border mergers and country. Today, it is Europe that is leading the drive acquisitions, reported almost weekly in to global expansion, and Europeans who are seen to the press. We read about the failures where be “corporately wise” with a cosmopolitan integration doesn’t work and what went wrong. approach to business, and who are successful at However, companies where integration has been developing multi-cultural businesses. successful quickly become known as a global success story. The key to success for a multinational company has to be “think global, act local”. Any supplier The driving need for multinational and global has to have a team capability of making companies has come about because manufacturing relationships at a strategic level in big global and some aspects of customer service have moved companies and at the same time for providing a to lower cost economies in Eastern Europe and Asia; top quality service at the operating level in any graduates there are happy to take jobs previously number of countries. The same principle applies in located in the West at a far lower cost than the less a multi-cultural merger. well educated workers in Europe and North America. This issue of Search features an interview with John Allan, the Chief Executive of DHL, Deutsche Post’s In the past, the USA led the way with global Logistics Division, which includes the acquisition companies out to conquer the world. In many last year of Exel. ••• instances, a complete lack of understanding ••• As the article shows, the Logistics industry is traditionally locally based. Deutsche Post and Exel have grown through a series of mergers and takeovers to become multinational and are well practiced at the process of integration and DHL is now a successful global company. John Allan emphasises the need to VIVIENNE PACKER think globally in the interview. EDITOR OF THIS EDITION OF SEARCH, Success in any multi-cultural integra- IS THE MANAGING CONSULTANT OF ALEXANDER HUGHES UK, tion depends 100% on the BASED IN LONDON. people, but communication is key - make sure good news travels fast. People must be empowered locally All Rights Reserved for All the Photographs All Rights Reserved for and feel valued, and decisions about keeping or not keeping key personnel must be made very quickly to mini- mise uncertainty. Integration must be written about retaining wanted talent As the interview with John Allan seen as short term with the new com- post-merger. In multi-cultural mergers, demonstrates, practice makes perfect in a pany moving on as soon as possible successful international managers multi-cultural merger. A globally diverse to seeking new opportunities. will quickly be sought out by other management team is key to success. companies. For Deutsche Post/DHL, Any company working successfully their experience of mergers and In conclusion, how to make multi-cul- internationally will have a multi- acquisitions over the years has tural integration work? It’s a craft – the cultural top management team. enabled them to become skilled at craft of picking the right team, sending Depending on the focus of the the process of motivating and the right message, and building the business, the language of the com- retaining the right people. new global organisational culture. Ⅲ pany is very important. Deutsche Post, as a German company, chose English as its corporate language SUGGESTED READING… which has made the integration of • The Human Side of Mergers and Acquisitions: Managing Collisions Between DHL and Exel easier. But business People, Cultures, and Organizations by Anthony F. Buono, James L. Bowditch managers must understand the culture (BEARD BOOKS MARCH 2003) of their customers. Again, they must • Successful Mergers, Acquisitions and Strategic Alliances: How to Bridge “think global, act local” but at the Corporate Cultures same time have the ability and expe- by Irene Rodgers, Charles Gancel, Marc Raynauld, Marc Raynaud rience to input to the global company. (MCGRAW-HILL COMPANIES; 1ST EDITION JUNE 15, 2002) • Riding the Waves of Culture, Understanding Cultural Diversity in Business With an unusual approach, by Fons Trompenaars (NICHOLAS BREALEY 1993) Professor Fons Trompenaars has focussed on the culture shock of mer- • Building Cross-Cultural Competence by Fons Trompenaars gers and acquisitions to help indivi- (JOHN WILEY, 2000) duals get through what is a very diffi- • cult time. He has applied the four 21 Leaders for the 21st Century by Fons Trompenaars phases of culture shock to the takeo- (JOHN WILEY AND MCGRAW HILL, 2001) ver process. If you follow the right path, prepare well for the new cul- ture, focus on the positive and check and countercheck the worlds of Alexander Hughes employees and management, the IS AN EXECUTIVE SEARCH FIRM DEDICATED TO HELPING YOU ACQUIRE AND RETAIN THE merger of cultures has a greater VITAL HUMAN CAPITAL YOU NEED TO ACHIEVE YOUR STRATEGIC BUSINESS GOALS. ■ ■ chance of success. Much has been Based in 23 European countries Headquarters in Paris, France ■ 110 Executive Search Consultants ■ 50 Researchers 2 The Culture Shock of Mergers and Acquisitions FONS TROMPENAARS is world renown for his work as consultant, trainer, motivational speaker and author of various books on the subject of culture and business. As founder and director of Trompenaars Hampden-Turner, an intercultural management firm, he has spent over 20 years helping Fortune 500 leaders and professionals manage and solve their business and cultural dilemmas to increase global effectiveness and performance, particularly in the areas of globali- zation, mergers and acquisition, HR and leader- ship development. Listed in 2005 as one of the world's most influen- tial, living, management thinkers, he has been awarded the International Professional Practice Area Research Award by the American Society for FONS TROMPENAARS Training and Development (ASTD). he concept of “culture of excitement begins while preparing partners hits home and the honey- shock” was introduced in for what is to come, and the first moon is over. If you read the T1958 in psychology to des- weeks of working together are press releases of new mergers and cribe the dislocated feeling you get similar to the feeling of going on acquisitions in the beginning and ARTICLE when you find yourself in a totally vacation. The climate and food the news clippings a year later this new surrounding. I would describe are different and the feeling of dis- picture is often confirmed. [] it as the psychological and emotio- covery and surprise give a good The second phase was described, nal discomfort that you experience feeling. There is nevertheless an by my former colleague Leonel when you live in a totally strange important difference with a vaca- Brug, as the “Sauerkraut phase’. The cultural environment. Culture tion. When your international assi- positive feelings can switch to a dee- shock often leads to stress related gnment or posting is for a number ply negative feeling. Home becomes symptoms such as sleeplessness, of years, you can not turn back to idealized and the strange environment concentration problems, and even the psychological stability of your is ruthlessly criticized. In a sense, it is own home after three the hankering for sweets from home weeks. In a merger or that you never ate when you were In a merger or acquisition, acquisition, the first three there. The thoughts about a white the first three months bring months also bring with Christmas and the coziness of a New them positive feelings. It is Years’ party at home are heighte- positive feelings. exciting to get to know a ned, instead of the truer images of []new partner and learn wet, grey slush and the ordinary skin irritations. The four phases of from each other. Unfortunately, at glass of beer at a boring house party. culture shock, as initially described some point that vacation feeling Meanwhile, the plumbers in the by Clyde Sargeant, can as well be passes. In business we very often guest country also know this phase applied in business to the takeover notice initial excitement, initiated and thus no longer come on time, process. by short-term profits. But within while the workers never understand The first phase is like the a year or two the reality of what you really want. Ya, then “Honeymoon phase”. The feeling looking into the faces of the home seems so much better. ••• 3 ••• The Sauerkruat phase is the unrealistically. At the end of this time of dealing with the small phase, you reach the point when discomforts in daily life. These you realize that the strangers often being with the partner and don’t pay attention to any of your kids, who complain that they irritations and that you are only can’t tell the difference between torturing yourself. At this point the fine sugar and the salt, and you can let go of some of your What can we learn from the that the local children are unreasonableness, the “Rubber experience of culture shock in secretive or mean and constantly wall” falls back to the way it was mergers and acquisitions? Let’s copy-catting.