The role of culture in workplace transitions

The role of culture in workplace transitions

Walmart.com President and CEO Marc Lore published a controversial article on LinkedIn, Empowerment after Acquisition. He explained how the mammoth company is managing the acquisition of leading outdoor retailer Moosejaw. Some people may be surprised by the unusual steps he’s taking to maintain Moosejaw’s culture.

But Lore, the former founder and CEO of Jet.com, has the right approach. And his focus on culture just may be the reason why this major transition succeeds.

Most workplace acquisitions fail

For decades, many corporations worldwide have been using acquisitions as their number one growth strategy. Unfortunately, the majority of these deals don’t live up to their expectations. 

According to the International Association of Business Communicators, half of all deals destroy shareholder wealth. More than 60 percent of acquiring companies see their stock prices lag behind their peers in the first two years.

In two-thirds of these deals, the acquiring company would have earned more had they taken the same money they invested in the acquisition and put it in a bank certificate of deposit. By the time it’s over, 60 percent of all deals have been divested within five years.

Transitions often fail because of communication mistakes

Mistakes such as inconsistent information, overly formal communication vehicles, and over- or under-communication can cause friction which impedes progress. Just as important, there are often cultural differences between the two groups. Poor communication can cause or worsen the culture clash.

Underestimating or devaluing the cultural differences can stifle productivity and negatively affect success. In his article, Lore explains that it’s not easy for a CEO to maintain the acquired company’s culture. He wrote: “If you simply tell them ‘keep doing what you’ve been doing,’ you take away the exciting part of their careers – the part where they face new challenges and experience the sense of accomplishment that comes with finding inventive solutions. Instead, that’s inadvertently replaced with a series of subtle limitations. Their future is no longer an open road – it’s a side road that can’t access the thrill of the highway.”

His solution was to give the Moosejaw leadership team more responsibilities and opportunities, and even greater challenges. With the right communication, this tactic may pay off well for Wal-Mart.

Before you act . . .

Seek professional communication counsel to manage workplace transitions such as acquisitions, leadership changes or restructurings. There isn’t a consistent formula that you can follow that will guarantee success. For acquisitions, the amount and type of communications required will depend on the acquisition motive. For situations where cultural differences exist, employee audits should be conducted to identify weaknesses, opportunities and cultural symbols. And above all, clear, consistent top-down communication is required throughout the entire process.

Melissa DeLayRead all author posts

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