Retaining Brand Identity is Important for Cultural Integration

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Brand identity is very important

Brand identity is very important
Brand identity is very important | Source
China finds it difficult to digest Tibet even after fifty years of swallowing it
China finds it difficult to digest Tibet even after fifty years of swallowing it | Source

Brand identity is very important

Retaining talent is a challenging task

Schneider is focusing on talent retention. Talent poaching is very common in the corporate world. Particularly when mergers and acquisitions take place, talent poaching reaches its peak. Existing employees, smelling foul, start leaving the company in packs. The HRD finds it difficult to retain the talent. Employees have a suspicion that the culture of the organisation is going to change with change in management. They also feel that their importance in the organisation will not be recognised in the changed scenario. Schneider Electric has been facing this problem acutely. Schneider Electric is an energy management company. It has acquired companies like Digilink, Zicom and Luminous. All these are very famous and familiar brands. But Schneider Electric is able to achieve 95% retention of talent in case of Indian acquisitions.

Power of communication

Schneider Electric’s employee strength has gone up from 7000 to 12000 after its acquisitions. Luminous had 3000 employees on its pay roll and is a popular company in inverter and batteries. What is the secret of the company’s success in retaining 95% of the employees in India? The answer is clearly the power of communication. Chinese leader Mao Tse Tung stated categorically that power flowed from the barrel of the gun. He was wrong. With a gun, Mao could not have conquered China. Mao did it with the power of communication. He used it lavishly to make his soldiers wield gun for him. It was not actually the power of gun, but power of communication that did the trick for Mao. The company communicated with its existing employees about its policies and programmes after the acquisition was over. This built trust in the minds of the employees. The company was able to open channels of communication with its employees.

China unable to digest Tibet even after fifty years

What about cultural problems? Well, acquisitions always bring in cultural problems in an organization. No two corporate cultures are exactly the same as no two human beings are same. The trick lies in reducing conflicts in culture and stress on similarities. If possible, an integrated culture should be followed, taking finer points from both the cultures. This is the essence of success for companies. Big companies that acquire smaller companies look only the balance sheet and finance. They ignore the most important part of the acquisition namely cultural integration, which does not show itself in the balance sheet, yet affects it in the short as well as long run. If cultural integration is not taken care of, then the digestion of the acquired company will not be complete and one will land up in the same mess as China has landed itself after acquiring Tibet. Digestion of Tibet is not complete and is posing problems even after fifty years of the event. Similarly if the acquiring company is unable to integrate the culture, then it will have prolonged problems from the company it acquired and ultimately may have to call it a day.

Cultural synthesis should take precedence over finance

It will be a good idea if an acquiring company studies the nature of employees of the acquiring company before it takes a plunge. The type of culture that is prevailing in organizations will help the acquiring company to decide whether it can bite more than it can chew or chew more than it can bite. In fact, this analysis should take precedence over financial analysis. If cultural integration comes compactly, then financial problems will solve themselves. If the employee morale is already high, then the acquiring company should come out with plans to boost and retain this morale. If a new branch manager is posted to a branch of a bank, then the employees get rattled as to what kind of person the new manager would be. Big organisations are affected by such kinds of thought still more. It is upto the acquiring company to dispel all the doubts in the minds of the employees and gain their confidence and contribution.

Retention of the brand is very important

If the brands of the acquiring and the acquired companies clash, it can unsettle employee morale. In case of Schneider and Luminous, both the brands are well known brands. Consciously Schneider Electric has allowed Luminous to retain its brand. The same strategy was followed by Coke when it allowed Thums Up to flourish. VIP allowed Aristocrat briefcases to flourish even after acquisition. Hindustan Lever allowed Pond’s India’s products to be sold, retaining their identity. If the acquiring company kills the brand of the acquired company, employees subconsciously feel that they are being sidelined and feel that they will not have any importance in the organisation. Bank of Thanjavur employees felt this way when Indian Bank acquired it. Global Trust Bank employees felt this way when their bank was forcibly merged with Oriental Bank of Commerce after a scam broke out. These employees felt unwanted in the beginning stage. It would have taken many years for them to fully integrate with the culture of the acquiring organisation. Therefore retaining brand identity is most important to foster confidence in the minds of the employees and to make them feel that they are important for the acquiring company. Once this feeling is embedded in the minds of the employees, then cultural integration will follow suit automatically and spontaneously.

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