• Why are their clients coming to them? Is it due to strong producer relationships or specialized expertise?
• How can you best retain those employees who support that service structure?
• If you move from a siloed approach to a team approach, will current customers understand that they may speak with people they have never worked with before the transition?
• Do your employees understand the need to build trust with these clients, not simply rush into any servicing issues the account may have?
• How will rotational servicing, where a relationship is difficult to build, impact stakeholders? How could these changes affect the customers’ and the employees desire to stay with the agency?
• Did the previous culture have an open-door policy? How does your culture differ and how can you help acquired employees adjust?
• If the corporate culture was a family-type organization, how can your agency maintain that culture and retain valued employees?
Establish or improve on any existing employee feedback processes. Solicit employee feedback regularly from both the newly acquired agency and your existing employees. The interaction between the offices may create challenges in both directions.
Address staff issues as soon as they arise because ignoring them can result in a resignation or employment-practices claims. Work together with the acquired agency’ s management team to align their culture with yours.
AVOIDING CULTURE CLASH
Culture has a direct impact on performance and one of the key“ levers” of performance is culture, according to consulting firm Deloitte. This cultural evaluation should begin early in the M & A process. By proactively considering culture, you can avoid most cultural clashes that may occur post-transition. Clearly, in most M & As, the financial aspect takes precedence. Rarely does a merger derail based on culture. However, if cultures do not eventually align, the merger itself may ultimately fail.
Deloitte explains that the most successful M & As evaluate each company’ s cultural strengths and differences as early as the due diligence phase. A cultural assessment to determine each organization’ s strengths and weaknesses is usually completed through qualitative surveys and interviews. Compiling this information in a management report can guide you through the people portion of the transition.
Analyzing the culture must continue throughout the lifecycle of the merger, specifically accelerating within the first 100 days post-acquisition when you can implement any strategy that you developed during due diligence. If you plan to bolt the acquisition on to your existing structure, it may be possible to allow the acquired company to maintain their own culture.
However, according to Deloitte, if you attempt to accomplish“ economies of scale,” there are two preferred methods: combine cultures, or adopt the dominant culture.
However, Deloitte warns that companies that fail to develop a cultural integration strategy run the risk of“ undermining the potential long-term value of the deal.” Additionally, adopting the dominant culture may cause employees to resign or retire early. In today’ s tough labor market, retaining competent employees is critical to operational success.
The key components of organizational culture include the following.
• Leadership model. This model can vary greatly by organization. The larger the organization, the more difficult it is to define its leadership style.
• Values and ethics. A very important aspect of culture is the emphasis on values and ethics. Particularly important to insurance organizations are ethical decisionmaking processes and abiding by state laws and regulations.
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