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How Do You Grow a Company Without Losing its Culture?

Mature male executive having a discussion with two younger colleagues

Today’s economy is providing an opportunity for companies to grow both organically and through acquisitions. Additionally, many companies are spinning off divisions to become their own publicly traded entity. Examples like ADT (Tyco’s spin-off), Phillips66 (Conoco), Carefusion (Cardinal), and QEP (Questar) come to mind. With growth and changing infrastructure, senior leadership must wrestle with how to grow while preserving the values and culture that provided the foundation and resulting success for their businesses.

How are they doing this? All of the executives with whom we spoke agreed that everyone in the company needed to understand and live the company’s values. As growth or change occurs, they again ask questions “What are our core values? Who do we want to be to our employees, customers and shareholders? Do we have alignment? If not, what do we need to do to achieve this? Have any of the changes that have or will happen through growth and changing infrastructure require a change of values or culture?” As one Chief Executive Officer stated “It is important to realize that culture is a living organism and will change over time in response to economic, changing business realities and the world in general.”

While each company will develop its response to how growth and acquisitions will impact culture, here are seven pieces of advice:

1. If growth is a result of mergers or acquisitions, honor some legacy of both entities.

The Chief People Officer of one of the nation’s largest retailers commented: “incorporating the best of both can be very beneficial as you work together to define new core values and culture. This coupled with crafting common language around the new culture, and nominating “culture” champions to focus on how the new culture is supporting the growth, will generate engagement and accountability.”

2. Maintain a transparent, inclusive, and ongoing dialogue about culture.

Cubist Pharmaceuticals, a Boston-based bio-pharmaceutical company, has created an enviable legacy as it has grown through acquisition, global expansion, and organically, while receiving countless awards for its culture and being a top place to work. Rob Perez, President and COO of Cubist Pharmaceuticals, gives great attention to their incredibly unique culture and is extremely proud and protective of their “secret sauce.” He commented: “it has to be EVERYONE’s responsibility to stand guard and ensure that growth does not become the enemy of the extraordinary culture we have all built together. In fact, we want just the opposite to occur: our growth should help us strengthen the company’s business and culture alike.” Perez practices what he preaches and solicits ongoing input from the entire Cubist organization about any cultural impact issues that raise concern, and equally encourages the team to propose solutions that might lesson the “cultural tax.”

3. Strike a balance to preserve the core values of the current culture while keeping an eye on the future.

A retail executive who helped redefine the strategies of a small regional retailer that became a nationwide Fortune 50 big box retailer relates to the challenges that come with transformation: “as we entered a period of meteoric growth, we had to adjust our culture to meet the new demands of the business and changing business model. We created a new “shared” vision that drove our decisions and strategies to be the first choice store for our category products while retaining the customer-focused core values that supported the existing culture.”

4. Zealously guard and keep the core cultural elements alive.

Over the past two decades, Latham & Watkins has transformed from a regional law firm to one of the world’s leading law firms, both in client service and as a desirable place to work. Josh Friedlander, Chief Human Resources Officer of LATHAM & WATKINS LLP, commented: “You can keep the core culture of an organization alive for generations to come via stories, well-illustrated examples of who you are, and actions. He also says “organizations must be willing to remove those who do not share the values the company holds dear. It can be very costly to have the wrong people who do not display actions and values consistent with the culture, regardless of how talented they are.”

5. Have a clear purpose and set of values that are consistently communicated and rewarded by senior leadership.

Rita Mitjans, Chief Diversity & Corporate Social Responsibility Officer of ADP, shared her first-hand experience navigating acquisitions and high growth: “Cultures are the bloodlines of organizations – strong ones withstand the test of time, in spite of new values, traditions and behaviors that can cause an imbalance. Develop a strong branded experience beginning with an onboarding program that reinforces core values and ties them to joint success. Create venues for open exchange between the old and new guard, encouraging collaboration to tackle obstacles, and engage newly acquired talent in activities that support the company’s values, e.g. community volunteerism.”

6. As you expand globally, be sensitive to how your values fit with a country’s customs.

The CEO of a global niche manufacturer that has grown organically as well as via acquisition remarked: “While organic growth has its challenges, it is even more challenging to retain a company culture when acquiring businesses in different countries where societal and business cultural differences exist. Culture is a living process. Encourage site locations to nurture their teams and develop performance metrics and leadership competencies that reflect these cultural nuances to the extent that they can be consistent with overall corporate culture. Sharing success stories and highlighting employees’ specific achievements is a great way to reinforce values in a way that they can relate to and appreciate.”

7. Be willing to start over.

One leading technology executive who merged a customer focused company with a technology innovator, stated that rather than go with standard business norms of taking the best aspect of each company’s culture, they decided to build a culture from scratch. “It has been a journey to get the blended leadership to jump on board and our new culture will continue to evolve as the business grows and customer needs change. We work hard to take the hocus pocus out of culture and build it daily via transparent people programs, customer communication and internal and external engagement.”

Long term growth and sustainable business performance go hand in hand with leadership that defines, establishes, and nurtures a company culture that is passionate, transparent, and has a fluidity that allows it to respond to changing business conditions. Companies can strengthen their platform and foundation for continued growth by investing in their culture and values, and by hiring people at all levels who reflect those values.

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Beth Ehrgott

Beth Ehrgott

Managing Director