Building a Culture: Beyond Declarations in Mergers

When organizations merge, the integration of their cultures is crucial for success. Just declaring a new culture won’t suffice; it’s essential to translate that culture into actionable behaviors and shared mindsets.

Cultural Integration: More Than Words

Nuveen's recent acquisition of Schroders, valued at $13.1 billion, showcases the importance of cultural dynamics within business mergers. CEO Bill Huffman underscores a common pitfall: acquirers often rush in, assuming they possess all the answers, which can lead to misalignment and confusion. Instead, he advocates for a listening-first approach after the acquisition.

The Problem with Culture Declarations

While leaders tend to enthusiastically declare their new cultural ethos—phrases like “We prioritize our customers” or “We act as one team”—these statements often lack practical application. Different team members interpret these declarations in varying ways, causing confusion and disconnect.

• A Nuveen operations director might see “listen and learn” as a delay in decision-making.
• A portfolio manager from Schroders may perceive it as a set-in-stone approach that’s unlikely to change.
• A finance director might think it’s merely a passing statement that doesn’t affect financial negotiations.

This discrepancy illustrates the Translation Gap: while strategy comes from the top, its execution relies heavily on the frontline, and how these ideas are understood varies significantly among individuals.

Mindset and Behavior: The Core of Culture

Culture cannot be dictated—it resides in the everyday actions of employees. For meaningful integration, cultural concepts must first be converted into widely accepted mindsets, and then into visible actions. Without clarity on what concepts entail, team members will revert to familiar routines.

For nothing to be lost in translation, it’s important to clarify key principles, such as:

• How to approach differing processes—adopt, analyze, or alter?
• Who needs to justify changes when practices conflict?
• What does “listening” truly entail in various contexts?
• What should happen when someone raises concerns about established practices?

Without these answers, high-minded declarations remain empty sentiments, often faltering in the face of real-world challenges.

Framework for Cultural Translation

To effectively cultivate a culture, it's crucial to move from ideals to tangible behaviors. This can be achieved through a structured approach that translates core values into specific actions everyone can relate to in their role.

For instance, consider how Huffman’s principle of “assume the other side knows something we don’t” can be broken down:

• Before suggesting changes, team members should ask how processes operate and the reasoning behind them, ensuring valuable practices aren’t discarded.
• They can also track and highlight effective practices from the newly acquired entity to foster a culture of learning and collaboration.

By creating a framework that emphasizes observation, evidence-based decisions, and mutual respect, leaders can more effectively cultivate a shared corporate culture.

Utilizing the Integration Period Effectively

As Nuveen and Schroders navigate their integration, the upcoming 12 to 18 months serve as a pivotal time. While operational separation may protect individual entities, it doesn’t automatically instruct teams on how to collaborate. Assigning collective definitions and behaviors prior to combining efforts ensures both parties start from a shared understanding.

During this window, leaders from both organizations should engage in discussions about what cultural concepts like “listen and learn” really mean, practicing and fine-tuning defined actions collaboratively.

Transforming Declarations into Real Culture

Huffman’s intuitive approach acknowledges the value that the acquired company brings. However, it’s essential to understand that simply stating a cultural vision isn’t enough. Successful integration requires transforming those declarations into defined behaviors shared by all.

For true cultural alignment, deeds must follow words. Leaders should prioritize defining actionable mindsets and behaviors that employees can adopt in their daily activities. This transformation from declaration to authentic culture is vital for a smooth integration and sustained success.