Conflict

One of the Tests of Leadership is the Ability to Sniff out a Fire Quickly

July 18, 2017 By Nagesh Belludi Leave a Comment

I’ve previously stressed the importance of problem-finding as an intellectual skill. I’ve also highlighted why risk analysis and risk reduction should be one of the primary goals of any intellectual process. In this article, I’ll write about being proactive in identifying problems before they evolve into crises.

How Wells Fargo Failed to Recognize a Problem and Address it before it Became a Bigger Problem

As the Wells Fargo accounts scandal unfolded, it was clear that Wells Fargo’s leadership was well aware of the burgeoning problems early on, but failed to act decisively and nip the problem in the bud.

Given impossible sales quotas to reach, Wells Fargo’s “high pressure sales culture” opened as many as two million bank and credit card accounts on behalf of its customers without their consent. Employees were rebuked or even fired for not meeting aggressive cross-selling targets.

Human nature is such that high-pressure demands can deplete the willpower people need to act morally and resist temptations. And such demanding circumstances encourage people to go into defensive mode, engage in self-interested behaviors, and consider only short term benefits and dangers.

Leadership Lessons from the Wells Fargo Accounts Scandal: “A Stitch in Time Indeed Saves Nine”

Leadership Lessons from the Wells Fargo Accounts Scandal Wells Fargo’s leadership reportedly had data about ethical breaches, but they ignored or misjudged the impact of the problem. Wells Fargo even held a two-day ethics workshop in 2014 unequivocally telling their employees not to do that. As per an internal review, managers knew that 1% of employees had been fired for “sales integrity” violations.

Wells Fargo’s leadership didn’t act quickly and decisively to mitigate the effects of the crisis. Warren Buffett, one of the Wells Fargo’s biggest investors, summarized this leadership inaction at the 2017 Berkshire Hathaway annual meeting:

There were three very significant mistakes, but there was one that was worse than all the others … The main problem was that they didn’t act when they learned about it … at some point if there’s a major problem, the CEO will get wind of it. And at that moment, that’s the key to everything, because the CEO has to act. It was a huge, huge, huge error if they were getting, and I’m sure they were getting, some communications and they ignored them or they just sent them back down to somebody down below.

Leadership: “Only the Paranoid Survive”

Andy Grove (1936–2016,) the illustrious cofounder and CEO of Intel, was a famous worrier. At Intel, the focal point of Grove’s leadership style was worry and skepticism. He believed that business success contains the seeds of its own destruction, and that in order for an organization to have longevity, it needs to continue to worry about the future.

Grove’s principle was immortalized in his famous proclamation, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” He eloquently explained his worrisome mantra in his bestselling corporate memoir, Only the Paranoid Survive (1996.) He wrote in the preface:

The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off. And, of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.

At Intel, worrying about the future created a culture of triumph that propelled change and innovation. Grove never let Intel rest on its laurels and led the company to break boundaries in microprocessor innovation. During his tenure as CEO from 1987—98, Intel’s stock price rose 32% a year. Grove also said, “A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”

Idea for Impact: Learn to Sniff out a Fire Better than Anyone Does

The principal tasks of leadership are (1) identifying the biggest risks and opportunities, and (2) allocating organizational resources. Therefore, one of the tests of leadership is the ability to recognize a problem before it becomes a disaster. If identified and addressed early, nearly any problem can be resolved in a way that is beneficial for everyone involved.

Many leaders tend to be reactionary—they claim, “why fix something that isn’t broken.” Even when they see an impending problem, they may assume that the problem “isn’t that big of a deal” and wish the problem will just go away. Alas, many problems never go away; they only get worse.

To become a good leader, be paranoid—always assume that “there’s no smoke without fire.” If, according to Murphy’s Law, everything that can go wrong will go wrong, the paranoid leader has an advantage.

Whenever you are doing anything, have your eyes on the possibility of potential problems and actively mitigate those risks. Never allow a problem to reach gigantic proportions because you can and must recognize and fix it in its early stages.

As the medieval French philosopher and logician Peter Abelard (1079–1142) wrote, “The beginning of wisdom is found in doubting; by doubting we come to the question, and by seeking we may come upon the truth.”

Become a Smart, Restrained Communicator Like Benjamin Franklin

July 11, 2017 By Nagesh Belludi Leave a Comment

Benjamin Franklin, America’s founding father, statesman, and polymath, was a doyen of the self-improvement movement. His methods for self-mastery are worth taking a serious look at if you’re interested in getting better at anything in life.

In his wonderful Autobiography (1791,) Franklin discusses his once-foolish delight in spinning artful arguments and doggedly winning over his opponents.

Winning an Argument Aggressively is but a Short-term Ego Victory

As a young man, Franklin had a habit of fervently arguing his case in all matters and alienating people around him. He frequently ensnared his challengers with hard-hitting rhetoric:

I found this method safest for myself and very embarrassing to those against whom I used it; therefore I took a delight in it, practis’d it continually, and grew very artful and expert in drawing people, even of superior knowledge, into concessions, the consequences of which they did not foresee, entangling them in difficulties out of which they could not extricate themselves, and so obtaining victories that neither myself nor my cause always deserved.

However, Franklin ultimately recognized that his take-no-prisoners approach of arguing was by no means endearing him to other people. His realized that his brash way of outwitting his challengers had been self-defeating.

Benjamin Franklin, Doyen of the Self-improvement Movement

Arguing, if it is to Be Constructive, Must Be Done Tactfully

In an attempt to develop amenable character traits, Franklin radically improved the way he interacted with others. He let go of all expressions of conceit and bold self-confidence. He stopped using words such as “certainly” and “undoubtedly” in his speaking and replaced them with phrases that signified personal opinions—for instance, “It appears to me, or I should think it so or so for such & such Reasons, or I imagine it to be so, or it is so if I am not mistaken.”

I continu’d this method some few years, but gradually left it, retaining only the habit of expressing myself in terms of modest diffidence; never using, when I advanced any thing that may possibly be disputed, the words certainly, undoubtedly, or any others that give the air of positiveness to an opinion; but rather say, I conceive or apprehend a thing to be so and so; it appears to me, or I should think it so or so, for such and such reasons; or I imagine it to be so; or it is so, if I am not mistaken. This habit, I believe, has been of great advantage to me when I have had occasion to inculcate my opinions, and persuade men into measures that I have been from time to time engag’d in promoting; and, as the chief ends of conversation are to inform or to be informed, to please or to persuade, I wish well-meaning, sensible men would not lessen their power of doing good by a positive, assuming manner, that seldom fails to disgust, tends to create opposition, and to defeat every one of those purposes for which speech was given to us, to wit, giving or receiving information or pleasure. For, if you would inform, a positive and dogmatical manner in advancing your sentiments may provoke contradiction and prevent a candid attention. If you wish information and improvement from the knowledge of others, and yet at the same time express yourself as firmly fix’d in your present opinions, modest, sensible men, who do not love disputation, will probably leave you undisturbed in the possession of your error. And by such a manner, you can seldom hope to recommend yourself in pleasing your hearers, or to persuade those whose concurrence you desire. [Alexander] Pope says, judiciously:

“Men should be taught as if you taught them not,
And things unknown propos’d as things forgot;”

farther recommending to us

“To speak, tho’ sure, with seeming diffidence.”

Learn to Resolve Important Issues through Sensible Discourse

Franklin realized that this measured conversation and gentler interactions was helpful in preventing conflicts and softening resistance in those he wanted to influence. He writes, “This Habit, I believe, has been of great Advantage to life, when I have had occasion to inculcate my Opinions & persuade Men into Measures I have been from time to time engag’d in promoting.”

This rule of skilful conversation and interpersonal relationships later became one of the foundational principles in Dale Carnegie’s masterful self-help manual How to Win Friends and Influence People—specifically, that our ticket to success in life is the ability to make others feel good about themselves.

Persuasion is Not About Outmaneuvering Others and Proving Them Wrong

The ability to communicate effectively, plead your case, and influence others is one of the most useful skills for succeeding in the modern world.

Learn to resolve important issues through sensible and mindful discourse.
Be assertive where you must, but never aggressive.
Be open-minded, understand the other person’s perspective, and keep your emotions under control.
Never insult, disgrace, or cause the other person to lose face.

Views, opinions, and judgments can differ, and these can and should be discussed civilly. However, to debate such differences vigorously so as to cause bad feelings toward is not necessary and is almost always counterproductive.

Idea for Impact: Arguing for the sake of deciding a winner is never constructive. When an argument starts, persuasion stops.

Rapoport’s Rules to Criticize Someone Constructively

June 16, 2017 By Nagesh Belludi Leave a Comment

In Intuition Pumps and Other Tools for Thinking, philosopher Daniel Dennett lists Anatol Rapoport’s rules of constructive argument and debate:

Just how charitable are you supposed to be when criticizing the views of an opponent? If there are obvious contradictions in the opponent’s case, then you should point them out, forcefully. If there are somewhat hidden contradictions, you should carefully expose them to view—and then dump on them. But the search for hidden contradictions often crosses the line into nitpicking, sea-lawyering and outright parody. The thrill of the chase and the conviction that your opponent has to be harboring a confusion somewhere encourages uncharitable interpretation, which gives you an easy target to attack. But such easy targets are typically irrelevant to the real issues at stake and simply waste everybody’s time and patience, even if they give amusement to your supporters. The best antidote I know for this tendency to caricature one’s opponent is a list of rules promulgated many years ago by social psychologist and game theorist Anatol Rapoport (creator of the winning Tit-for-Tat strategy in Robert Axelrod’s legendary prisoner’s dilemma tournament).

How to compose a successful critical commentary:

You should attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.”

You should list any points of agreement (especially if they are not matters of general or widespread agreement).

You should mention anything you have learned from your target.

Only then are you permitted to say so much as a word of rebuttal or criticism.

One immediate effect of following these rules is that your targets will be a receptive audience for your criticism: you have already shown that you understand their positions as well as they do, and have demonstrated good judgment (you agree with them on some important matters and have even been persuaded by something they said).

This comports with the following sage advice gentle art of criticizing people effectively:

“If you disagree with somebody, you want to be able to state their case better than they can. And at that point you’ve earned the right to disagree with them. Otherwise you should keep quiet.”
—Charlie Munger, Warren Buffett’s business partner (see this article)
“The man who can hold forth on every matter under debate in two contradictory ways of pleading, or can argue for and against every proposition that can be laid down—such a man is the true, the complete, and the only orator.”
—Roman Orator Cicero (see this article)
“I have yet to find a more efficient and reliable way to probe the depths of a person’s knowledge and seriousness about an issue than asking them to explain the other side’s perspective.”
—Entrepreneur Ben Casnocha (see this article)
“If you can’t imagine how anyone could hold the view you are attacking, you just don’t understand it yet.”
—Philosopher Anthony Weston in Rulebook for Arguments (see this article)
“When you think you can nail someone with your argument, take a breath & see if you can phrase it as a face-saving question.”
—Career Coach Marty Nemko

How to Handle Conflict: Disagree and Commit [Lessons from Amazon & ‘The Bezos Way’]

May 5, 2017 By Nagesh Belludi 1 Comment

How Amazon’s Jeff Bezos Propels Innovation

Amazon’s founder and CEO Jeff Bezos once remarked that it takes five to seven years before the innovation seeds that Amazon plants flourish enough to have a significant impact on the economics of the business.

Since its founding in 1994, Amazon has made endless investments in expanding its business models. It has successfully used its money-making ventures to bankroll explorations into peripheral lines of business. Many of its capital allocation decisions haven’t yielded strong profits; yet, Amazon has flourished beyond everyone’s expectations and its growth potential is undeniable.

Central to this innovation strategy has been Bezos and his leadership team’s foresight, early commitment, and stubborn confidence in the prospect of R&D. Under Bezos’s direction and long-term focus, Amazon still operates as a founder-driven start-up in several major areas.

Bezos has a compelling cultural influence and has institutionalized his distinctive entrepreneurial mindset across the company. His core values are codified as Amazon’s 14 Leadership Principles, one of which is “Have Backbone; Disagree and Commit”:

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

“Disagree and Commit”

Jeff Bezos’s latest short-but-compelling annual letter to his shareholders contains pearls of wisdom on leadership, management, and teamwork. Read the letter; it won’t take long.

Speaking about high-velocity decision making in an ingenious culture, Bezos says he encourages Amazon’s leaders and employees to use the phrase “disagree and commit” to disagree respectfully and experiment with ideas:

Use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time. We recently greenlit a particular Amazon Studios original. I told the team my view: debatable whether it would be interesting enough, complicated to produce, the business terms aren’t that good, and we have lots of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away with “I disagree and commit and hope it becomes the most watched thing we’ve ever made.” Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment.

Note what this example is not: it’s not me thinking to myself “well, these guys are wrong and missing the point, but this isn’t worth me chasing.” It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way. And given that this team has already brought home 11 Emmys, 6 Golden Globes, and 3 Oscars, I’m just glad they let me in the room at all!

Bezos’s “fail-and-learn” refrain echoes what he wrote on risk-taking in Amazon’s first annual shareholder letter in 1997: “Given a 10 percent chance of a 100-times payout, you should take that bet every time … Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” That letter has become Amazon’s manifesto on the benefits and methods to long-term thinking and Bezos quotes that letter in every year’s annual letter.

To “disagree and commit” compels people to step out of their comfort zones and to sincerely commit to a project’s success. There is no room for sabotage and disruption—neither can people wait in the wings to exclaim “I told you so.” To “disagree and commit” is to be willing to take prudent risks by acknowledging that others may have diverse beliefs, approaches, ideas, and styles.

Idea for Impact: Embrace Failure because it Leads to Innovation

Many people want to be curious, creative, and experimental—they like to take initiative and investigate new products and solutions. But, when facing difficult choices, they’re naturally afraid of what they don’t know. Self-doubt sets in. They resort to safe and predictable processes. This mindset stifles the very inventive approach they want to apply and foster.

Fear of failure and self-doubt are not usually rooted in facts. They’re emotional. Don’t let this emotion make you play it safe. Don’t overthink your way out of challenges. Understand the types and amounts of risks that are acceptable to you. When facing the prospect of failure, you’re more likely to get unstuck by trying low-risk actions. Experiment. Fail. Learn. Innovate.

Success may instill confidence, but failure imparts wisdom.

How to Handle Employees who Moonlight

September 27, 2016 By Nagesh Belludi Leave a Comment

Moonlighting—working a part-time job or having a business “on the side”—can pose a challenge for employers. Moonlighting can lead to divided allegiance, conflicts of interest, and poor job performance.

Employers expect employees to be present and prompt at their jobs. If employees are hustling to attend to multiple commitments, fatigue, lack of sleep, poor attentiveness, tardiness, and absenteeism can become problems. When an employees’ moonlighting hurts their on-the-job performance, employers are within their rights to discipline and terminate employees. For these reasons, some employers limit or prohibit moonlighting.

The proactive approach to moonlighting

One way to head off moonlighting problems is to have a policy about part-time jobs and running side businesses. Institute a policy that sets performance expectations, protects proprietary information, avoids conflicts of interest, and averts divided allegiance. Your moonlighting policy cannot regulate employees’ off-duty activities or prohibit employees from having other jobs. But it may expect employees to disclose and get approval for supplementary employment. A moonlighting policy may also require senior managers and leaders to disclose directorships and financial interests in other companies.

Tell employees they can’t mix their business with your company’s business

If you find an employee doing side work for pay from your office, tell him that this is a clear violation of office expectations; he should conduct no business other than your company’s during work hours. Tell your employee, “You can’t mix your other business with our business. Your time at this job should be exclusively for this job. Our company resources are for our company’s purposes only.”

If your employee gets occasional calls that he needs to attend to, reiterate the above expectation and encourage him to answer the calls during break time and away from his desk. Encourage him to respond to those calls with “I’m at my other job right now. Let me call you back later.”

Discourage employees from selling stuff to other employees

If you find an employee selling stuff to other employees or soliciting outside business during paid working time, discourage it as soon as you discover it. Explain how this interferes with your office’s work.

Discourage your employees from turning your office into a showroom and making customers of other employees. Selling merchandise could impair work relationships when a buyer is unhappy with a product or service. Worse yet, side-businesses can easily grow unmanageable in case of network marketing programs (e.g. Amway, Herbalife) that encourage upselling or getting others involved as salespeople.

Employees can involve their colleagues in side-businesses outside your office, as long as such activities don’t harm at-work relationships.

Idea for Impact: Managers can forestall many employee problems by being proactive and setting expectations

In general, moonlighting is neither unethical nor illegal. It may become an issue when the employer specifically prohibits it and/or where the other job is with a competitor, supplier, or customer and is therefore a potential conflict of interest. The only time you really need to challenge an employee’s moonlighting is when it can affect your business in terms of conflicts of interest and deficient work performance.

Bear in mind: don’t overlook or disregard such concerns until they become major problems.

Being Underestimated Can Be a Great Thing

September 23, 2016 By Nagesh Belludi Leave a Comment

This spring, I attended the 2016 annual meeting of shareholders of Fairfax Financial Holdings Limited in Toronto. Fairfax’s chief executive Prem Watsa opened his remarks with the following joke:

A young boy enters a barbershop.

The barber whispers to a customer, “This is the dumbest kid in the world. Watch while I prove it to you.”

The barber puts a dollar bill in one hand and two quarters in the other. He then calls the boy over and asks, “Which do you want, son?”

The boy takes the quarters and leaves.

“What did I tell you?” says the barber to the customer. “That kid never learns!”

Later, when the customer leaves the barbershop, he sees the same young boy coming out of an ice cream store licking a wafer-style ice cream cone.

He summons the boy and asks, “Hey, son! May I ask you a question? … Why did you take the quarters instead of the dollar bill?”

The boy licks his cone and replies, “Sir, because the day I take the dollar, the game is over!”

Although the barber sought to characterize the young boy foolish, the joke was really on the barber.

The barber never suspected the boy’s recurring motivation to seem stupid. Additionally, the barber never learned his lesson or questioned his own assumptions.

Idea for Impact: As the above joke attests, being underestimated, underrated, or misjudged can often have its benefits. Don’t sweat when others think less than you actually are. Don’t let them make you feel small. Embrace their misjudgments with equanimity. Believe in yourself with humble confidence. Then outthink, outsmart, and outperform. Surprise them.

The Truth Can Be Bitterer than a Sweet Illusion

October 6, 2015 By Nagesh Belludi Leave a Comment

Bitter Pill - The truth can be bitterer than a sweet illusion

In 1998, as CEO of 1-800-Flowers.com, Jim McCann could not bring himself to let one of his senior executives go. McCann and the rest of his leadership team understood that this senior executive was neither right for the job nor performing well.

For McCann, the biggest hindrance was that he was friends with this executive and had spent time with his family. McCann agonized over being heartless to a friend and couldn’t bring himself to dismiss the executive.

Unexpectedly, McCann met General Electric’s CEO Jack Welch at a dinner party and discussed this dilemma. Welch advised, “When was the last time anyone said, ‘I wish I had waited six months longer to fire that guy?’ Always err on the side of speed.”

Urged by Welch’s counsel, McCann deftly dealt with the situation. Initially, McCann felt that being tough was unjustifiable and was pained by the loss of a friendship. He was hurt but relieved because firing the executive was the right decision for everyone.

On a happier note, the former executive soon got a new job that better suited his background. Their friendship stood the test of time and they eventually made up.

Firing is awful—indeed, it’s the most difficult thing managers have to do, especially for those who encourage camaraderie and treasure loyalty. As in McCann’s case, if you think an employee isn’t up to par and you may fire him/her within the next year, it’s always better for management, the employee in question, and other employees to take the right actions promptly.

Idea for Impact: Don’t Be Conflict-Avoidant

Confront the Bitter Truth The truth is that the truth hurts sometimes. Even if the truth can be bitterer than a sweet illusion, delaying action will only make things harder.

Making the right decision and taking the action may involve unpleasant confrontations. Though conflict can be emotionally distressing, being decisive and doing what’s best eventually works out well for everyone.

Instead of being hyperconscious of other’s possible judgments and avoiding conflict, do difficult things as soon as practically possible.

When dealing with difficulties involving others, there is nothing more insidious than unresolved conflict and inaction. Read “Five Dysfunctions of a Team” (by Patrick Lencioni) to understand how to engage in conflict in a way that nurtures (rather than harms) relationships. Also, read “Crucial Conversations” (by Kerry Patterson, et al.) on how to conduct effective discussions by stating the facts, speculating possible remedies, and then skillfully leading the other person to a course of action. Stick with facts to reduce defensiveness. Have the other person develop and commit to a course of action on his/her own.

How to Argue like the Wright Brothers

February 15, 2012 By Nagesh Belludi 2 Comments

The Wright brothers, most notable for inventing powered flight, also enjoyed developing their critical thinking by fiercely debating with each other.

Wilbur and Orville found debating and challenging each other’s viewpoints was a constructive way to identify solutions to a myriad of problems or resolve their interpersonal conflicts.

The Wright brothers often took two different sides of an argument, debated the subject, then switched sides and debated the opposing argument. Orville Wright once narrated, “Often, after an hour or so of heated argument, we would discover that we were as far from agreement as when we started, but that each had changed to the other’s original position.”

Idea for Impact: Only when you contrast your point of view with an opponent’s does your own make sense. Use the Wright Brothers’ technique of double-sided debate to question your own preconceptions about an issue and appreciate alternative perspectives.

Why Mergers Tend to Fail

August 31, 2010 By Nagesh Belludi 1 Comment

Corporate mergers tend to fail because of conflicting corporate cultures

Many corporate mergers and acquisitions (M&As) fail to realize their wished-for synergies, and eventually fall short of producing value to the stakeholders. Some years ago, a KPMG survey estimated that 83 percent of all mergers fail to create value and half may actually destroy value.

M&As invariably produce disappointing results because of a variety of reasons. One of the principal reasons has to do with the failure of management to integrate successfully the operating cultures of the individual companies. During M&A deals, the due diligence processes tend to focus more on the corporate matters (market synergies, product or service offerings, financial projections, legal and regulatory matters, etc.) and overlook the organizational and cultural challenges.

Integrating Conflicting Corporate Cultures

Undoubtedly, the biggest barrier of post-merger integration is the conflicting corporate cultures of the individual companies. Management consultant Rick Maurer likens corporate mergers to the marriage of two single parents each with their own children—“just because mom and dad are so in love, they fail to see that the kids don’t get along.”

During a merger, two organizations with unique cultures cease to exist and a new organization is supposed to establish. The erstwhile individual organizations simply will not let go of the past and move on. In time, when the “stronger” partner tries to thrust its culture on the new combined organization, employees of the “weaker” partner resist change. This impairs cooperation among employees, as was case with AT&T’s unsuccessful acquisition of NCR in the early ’90s.

Forcing Employees to Mesh

If cultural differences are far apart, the merged companies often fail to compromise and stick to a middle ground. The ill-fated Daimler-Chrysler merger suffered immensely from differences in the engineering and corporate cultures of the supposedly equal partners, Daimler-Benz and Chrysler Corporation, as well from differences in the national cultures of Germany and the United States. Within years of the merger, the dominance of the Daimler culture did not go well with employees in the United States. In December 2001, DaimlerChrysler CEO Jürgen Schrempp exclaimed, “What happened to the dynamic, can-do cowboy culture I bought”

Conflicting corporate cultures between US Airways and America West Combining two individual cultures and intricate administrative processes is very difficult to execute and manage successfully. Forcing employees to mesh behind the scenes is often ineffective because differences in organizational cultures are indiscernible to the top management. Take, for example, the merger of the Phoenix-based America West and Washington, D.C area-based US Airways in 2005. Many years into the merger, US Airways’s managers spoke of the “east side” (referring to the former US Airways) and the “west side” (referring to America West.) The unions continued to squabble over pilot seniority. Even though the company obtained a single operating certificate, two distinct cultures functioned internally resulting in poor employee morale, unhappy customers, and unpredictable financial performance.

Retaining Key Talent

Sagging morale and employee disorientation about job insecurity, company structure, seniority, decision-making processes, and promotion and growth opportunities often constitute another barrier to successful post-merger integration. Employees of the “weaker” partner or the acquired company tend to distrust the management of the “stronger” partner or the acquiring company. Fears of layoffs and new power equations in the merged entities often result in the exodus of key talent from the acquired company.

Forcing employees to mesh » why mergers fail

Engaging the Rank-and-file

“Human due diligence is every bit as important as financial due diligence. Ultimately, every deal will succeed or fail based on the collective efforts of the individuals who make it up.”
* David Harding

The success or failure of a merger results not from what happens at the top management level, but from what happens at the rank-and-file level. The importance of engaging the rank-and-file employees in the merger process and retaining key talent during the initial transition period cannot be overstated.

Recommended Resources

Bain consultant David Harding offers insights into M&A best practices in his book, “Mastering the Merger: Four Critical Decisions That Make or Break the Deal”
Wally Bock illustrates the importance of integrating corporate cultures with case studies from Chevron + Gulf Oil and HP + EDS
Carol Hymowitz’s WSJ article “In Deal-Making, Keep People in Mind” lists cultural problems that plagued other mergers

The Nature of Worry

August 25, 2010 By Nagesh Belludi Leave a Comment

“When you stop to examine your thoughts you start to see that they have a life of their own, they come and go, generally in a random, idiosyncratic way. Recognizing the constancy of our endless thinking process is said to be one of the important early steps we take on the meditation path.”
—Bob Sharples, Do the Thoughts Ever Stop

Have you ever realized that most of your anticipated misfortunes never occur, that some of life’s difficult scenarios never come to pass, or that most of your worrying is ultimately fruitless and life goes on?

Below, I present a simple exercise to help you discover the lifecycle of worry. I encourage you to sit down at a quiet place, somewhere you can relax and reflect. If necessary, fetch yourself a journal, special notebook, or a piece of scratch paper.

Mindfulness Exercise

Consider a recent upheaval or stressful event. Go back in time and experience that moment for a minute. How do you feel? What preoccupies your mind?

Under the direct influence of your anguish, your mind is bewildered. You feel disoriented. Your mind is filled with apprehension. Bearing the burden of this stress, you cannot take your mind off the imagined ramifications. The wounds of your sorrow seem incurable.

Now, fast forward to a few days following the stressful event. What do you experience now? Your troubles no longer hold a grip on your life as before. You feel released from that moment’s immediate affliction. As you reflect the situation’s progress, you feel amazed by how your feelings have changed. What happened to the irreparable hardship?

Storms of Distress

Allow another interval of time to elapse. How do your feelings compare now? The original despair is diminished further. The event feels formless; your apprehensions are no longer recognizable. You may even find humor in your past misfortune.

A few days later, you are surprised by how easily these storms of distress passed. You wonder how these depressing emotions could have possessed you. The events are not undone and the external circumstances remain unchanged. What has changed is your mind’s condition?

Idea for Impact: “This too shall pass”

“Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight.”
—Benjamin Franklin

It is your mind that relates external circumstances to your internal being. Joy and sorrow, hopes and despairs, elation and desolation, pleasures and annoyances are nothing but outcomes of your sensibility. Outside forces are challenging to conquer—our control over the exterior world is narrow, and merely illusory. However, the evolution of your thoughts and feelings and your responses to distressing situations are within your power.

The next time you experience a hardship—a conflict, a distressing situation, or annoyance, recall what happened with your prior hardships. Recognize that everything happening in your external environment is but impermanent. Say to yourself, “This too shall pass.”

« Previous Page

Conflict

How Wells Fargo Failed to Recognize a Problem and Address it before it Became a Bigger Problem

Leadership Lessons from the Wells Fargo Accounts Scandal: “A Stitch in Time Indeed Saves Nine”

Leadership: “Only the Paranoid Survive”

Idea for Impact: Learn to Sniff out a Fire Better than Anyone Does

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Winning an Argument Aggressively is but a Short-term Ego Victory

Arguing, if it is to Be Constructive, Must Be Done Tactfully

Learn to Resolve Important Issues through Sensible Discourse

Persuasion is Not About Outmaneuvering Others and Proving Them Wrong

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How Amazon’s Jeff Bezos Propels Innovation

“Disagree and Commit”

Idea for Impact: Embrace Failure because it Leads to Innovation

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The proactive approach to moonlighting

Tell employees they can’t mix their business with your company’s business

Discourage employees from selling stuff to other employees

Idea for Impact: Managers can forestall many employee problems by being proactive and setting expectations

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Idea for Impact: Don’t Be Conflict-Avoidant

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Integrating Conflicting Corporate Cultures

Forcing Employees to Mesh

Retaining Key Talent

Engaging the Rank-and-file

Recommended Resources

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Mindfulness Exercise

Storms of Distress

Idea for Impact: “This too shall pass”

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