Mergers and Marriage

Michael Bonsignore, CEO of Honeywell, states that Honeywell will not be an extension of the old Honeywell or Allied Signal. He is creating a new culture that blends the best of the merged companies of Honeywell and Allied Signal. He says that Honeywell will compensate and reward people that look for best practices from both companies in creating a new corporate culture and punish those who do not.

As marriage counselors, my wife and I stay pretty busy.  The bulk of the “irreconcilable differences” between couples arise from poor communication, selfishness, and a lack of empathy.  The same hurdles show up in company mergers.  Kevin Voigt (2009) from CNN reported, “As high-profile merger plans proliferate in the wake of the credit crisis, one problem seems to be overlooked: corporate mergers fail more often than marriages.  Divorce rates vary according to country, educational levels and income, but generally hover between 40 percent and 50 percent in North America and Europe. Conversely, a 2004 study by Bain & Company found that 70 percent of mergers failed to increase shareholder value.  More recently, a 2007 study by Hay Group and the Sorbonne found that more than 90 percent of mergers in Europe fail to reach financial goals” (CNN, 2009).

In 1999, Honeywell merged with Allied Signal and like a marriage; they have experienced their fair share of challenges.  Michael Bonsignore of Honeywell teamed up with Lawrence Bossidy of Allied Signal and combined forces.  Bonsignore was tapped as CEO.  Two years later, Bonsignore was out and Bossidy was in.  While the name on the door is important, it is the integration of two company cultures that determine whether a merger will be successful or not.  Leaders and managers encourage employees to view cultural integration  (combining beliefs, values, norms, and goals) as a process and not an event.

In marriage, two people from different families and various backgrounds join lives to make a family and a future.  Marriages that succeed are those able to build upon common ground while finding a mutual compromise where there are differences.  Mergers have similar characteristics.

Do you predict Honeywell will be successful?

The New York Times said the merger between Honeywell and Allied Systems is a “merger made in heaven.”  Asked about the challenges inherent in merging two companies and creating a unified corporate culture, Bonsignore said, “We will take the best of both and create a new culture.”  One of the ways in which Bonsignore hoped to achieve those goals was by providing straight and unvarnished truth about the company’s situation and what they are doing; in short, communication.  Without honesty, authenticity, and open communication, the merger will collapse before it ever gets started.  I believe Honeywell will succeed in the venture to merge with Allied Signal as long as they set small, measurable goals for the new company and do not try to force change too quickly. 

What barriers do you see based on what you observed in the video?

Five years ago one of the guest speakers at a marriage seminar said, “I heard that once you get married, the ‘two shall become one.’  The question my wife and I wrestled with was ‘which one would we become—her or me!’”  From the video, Michael Bonsignore was candid about wanting to combine cultures and use rewards and punishments to promote or prevent behavior.  From his demeanor, he appeared mildly distant and unconcerned about employee fears and anxieties surrounding the venture.  His focus on rewards and punishments rather than opportunities and synergies, seemed misplaced and disconnected from the pulse of the people. 

One of the barriers he will face is the normative behaviors and actions of Allied employees.  For nearly ten years, he has lead Honeywell employees in embracing their core values.  Honeywell’s code of conduct identifies growth, customer focus, results, risk-taking, teamwork, and diversity.  Each of these codes will be tested during the merger. 

Allied Signal’s core values are customers, integrity, people, teamwork, speed, innovation, and performance.  Both Honeywell and Allied have similar values “on paper.”  The challenge is integrating these on the floor and in the boardroom.  With Bonsignore taking over as the first CEO after the merger, some of the Allied folks may feel Honeywell employees have an advantage.  As stated earlier, two years after the merger took place, former Allied CEO, Lawrence Bossidy assumed the lead role.  Whoever is at the helm, they must ensure that the employees view the organization as one unit; not two separate entities under one name (another marriage similarity).

What critical success factors should Honeywell consider as it crafts its organizational strategies around a new culture?

Honeywell should focus on people, performance, and profits.  According to the New York Times, “The merger was expected to eliminate 4,500 jobs, with 2,000 of those coming in the first six months after the deal is completed.”  The first place Bonsignore and Bossidy needed to focus is on their people.  After seeing thousands of employees eliminated, it will require more than catchy slogans and promises.  Employees are often “shaken-up” after a merger.  The strength of the leadership and their ability to communicate will either facilitate a smooth transition or increase the anxiety and fear.  As the people find their footing, the Honeywell leaders need to unpack opportunities and combine processes for the greatest results.  And lastly, Bonsignore and Bossidy should track and report company growth to employees and make changes where and when necessary.

What can you take away from this exercise to immediately use in your career?

This exercise reminded me to continue strengthening the alignment between Lockheed Martin core values and my personal mission statement.  Lockheed core values are “Do what’s right; respect others; and perform with excellence.”  These are the same values that guide my life though my terms are: integrity, service, and excellence.  By combining values, both the company and the employee win.  This exercise demonstrated that what sounds easy in theory can be extremely difficult in practice.  Anyone celebrating twenty-plus years of marriage will tell you that there were good days and bad days.  Success came by celebrating the good times and communicating through the bad times.

Steve

Deutsch, C.H., & Holson, L.M. (1999). Allied Signal and Honeywell to Announce Merger

            Today. Retrieved from http://www.nytimes.com/1999/06/07/business/allied-signal-and-

            honeywell-to-announce-merger-today.html

Voigt, K. (2009). Mergers fail more often than marriages. Retrieved from

http://edition.cnn.com/2009/BUSINESS/05/21/merger.marriage/

Leaders: Change, Fear, and Faith

In his 2013 book Change or Die, Alan Deutschman asks, “Could you change when change matters most?”  Rarely does a person respond negatively as if to admit they cannot control their emotions, responses, and behaviors.  “Yes,” they exclaim. “If it was important, I could change.” Well, based on Deutschamn’s book, the experts think otherwise.  In fact, the scientific studies are reporting nine-to-one odds against your changing.  That’s right, only one person out of ten can change (or even more significant, 10 out of 100).  These can be frightening statistics for families, churches, and organizations. 

            Why is it so difficult?  In a video slideshow, Dr. Daryl Watkins identified the 50 most popular excuses “not” to change.  The status quo offers regularity, routine, and a regiment that provides safety, security, and stability.  Or does it?  As humans, we are creatures of habit.  Those seeking change are in the minority; yet, they are the visionaries, the innovators, and the trendsetters.  Seth Godin calls them tribe leaders.  Regardless of the label, they are the ones with the courage to move forward.

How do you react when you hear colleagues using some of the excuses listed in the 50 Reasons Not to Change graphic?

Fear and anxiety are contagious.  One person in an office environment hears of a significant change and immediately begins to spread reasons why it’s wrong and why it won’t work.  Some of the “nifty 50” that Dr. Watkins mentioned are commonplace when leaders seek change.  Some of the most prevalent heard in my office are, “Why change, it’s working” and “We can’t take the chance.”  When my colleagues resist change efforts with the common excuses, I’ll usually probe the response a little deeper and often find that the underlying fear is not the change itself (process, program, etc), but rather, how it will affect their security.  Listening with empathy can quiet many fears.  I don’t push people to accept change; but rather, ask that they allow some of its influence into their lives.  Major change and complete overhauls can disrupt lives unnecessarily.  Rather, gradually allowing the change to occur while monitoring its influence has great power to dispel some of the anxiety surrounding change.

Do you ever use any of these excuses yourself?

Sheepishly, yes. My excuses and pushback against organizational change is primarily founded on job security.  As a contractor, my job is up for elimination every year.  Each time the contract is reviewed, the Air Force seeks to cancel my position and turn my responsibilities over to active duty service members.  As a result, it is difficult for me to willingly embrace change because it is more than a process change; it’s a life change.  It’s one thing to welcome change and try a new process; it is something altogether different when every year the change is trying to eliminate your job.

How can you overcome the thinking that creates those responses to change efforts?

I’ve learned that my resistance to change at work is a fear-based response to the future uncertainty of job security.  Therefore, rather than allow fear to dominate my thoughts, I’ve chosen to stand on my faith.  I understand change.  As a minister, I walk with many men through difficult marriages and life challenges.  One of the key elements in our relationship is change.  I recognize that whether the challenge is personal or professional, I must be forever changing.  

John Kotter, the foremost expert on organizational change said in his groundbreaking book, Leading Change, “By far the biggest mistake people make when trying to change organizations is to plunge ahead without establishing a high enough sense of urgency in fellow managers and employees. This error is fatal because transformations always fail to achieve their objectives when complacency levels are high.”   Complacency can kill both an organization and an individual.  Seth Godin said, “The one path that never works is the most common one: doing nothing at all.  Nothing at all feels safe and it takes very little effort.”  Seth is correct.  He knows a few things about change and leadership.  His video The Tribes We Lead speaks of the power of leadership and connection.

Do you agree with Seth Godin’s concept that change is driven by tribes?

Seth understands that one is too small a number for greatness.  In today’s media-saturated culture, ideas abound.  The challenge is communicating them to like-minded people.  Ideas, change, creativity, and innovation arouse the inner adventurer in us all.  Since the beginning of time, greatness has found a way to reach multitudes of people.  Martin Luther King Jr. did not have the Internet and yet hundreds of thousands showed up to hear him deliver his famous speech.  What he had was a passion for equality and justice.  He connected with others who believed what he believed.  Eventually, his passion became a movement.

What can you take away from this exercise to immediately use in your career?

In his book, Tribes, Seth said, “Leadership is scarce because few people are willing to go through the discomfort required to lead. This scarcity makes leadership valuable.” He goes on to say, “If you’re not uncomfortable in your work as a leader, it’s almost certain you’re not reaching your potential as a leader.” Change is never easy. Change is uncomfortable.  As leaders, we must learn to channel the anxiety that accompanies uncertainty into the energy needed to make great things happen.  This exercise has helped me understand the inevitability of change and that the accompanying fear does not have to paralyze the change effort.  Rather, it can be harnessed and used to excite followers with the possibilities that lie ahead.

Steve

A630.5.4.RB-RuggerioSteven

NASA: Exploring Internal Space

One of my close friends is a NASA engineer.  He is one of the smartest men I know and also one of the nicest.  We meet regularly as I am coaching him about marriage and making right decisions.  Throughout our conversations, he speaks frequently of the challenges inherent in his job and the interactions with his coworkers.  He’s never complained about the atmosphere or the culture though he has mentioned butting heads with very strong-minded people who can be quite unmoving and inflexible in their views.  I found that interesting while watching NASA Administrator Sean O’Keefe discuss safety culture, employee opinions, and potential management changes.

Why did NASA Administrator Sean O'Keefe address NASA employees to describe the plan to bring about proposed changes to NASA's culture?

Administrator O’Keefe held a news conference to discuss the conclusion of BSTs cultural investigation into NASA and the Columbia Accident Investigation Board.  The report exposed NASA and said it was a space agency with a non-existent safety program. It spoke of a culture that prevents free discussions and promoted employee disrespect.  O’Keefe said, “We get it,” and is now facing the challenge of reinventing a culture that contains over 45-years of deep-seated bureaucracy.

The BST report, “Assessment and Plan for Organizational Culture Change at NASA” surveyed about 40 percent of the space agency’s 19,000-member workforce.  The report showed both positive and negative elements within the NASA culture.  According to Frank Sietzen from Space Daily, the positive elements reflected what the report called “a long legacy of technical excellence and a can-do-attitude.” However, there were other elements that did not fair as well.   For instance, the report found the present-day NASA working environment "does not yet reflect the agency's espoused core values of safety, people, excellence, and integrity."

Was O’Keefe believable?

This video about the changes at NASA was the first time I’ve seen Sean O’Keefe make a presentation.  Obviously, he is highly intelligent.  He cares greatly for his company and his people. And, he wants what is best for the administration and the future of our country.  However, with all that said, he does not speak and present his heart in a believable manner.  Yes, I do believe he wants the agency to improve; but I just didn’t get the sense that he was willing to do whatever was necessary to make that happen.

Rather, I heard an air of bureaucracy with an undercurrent of timelines and expectations surrounding deliverables, i.e., programs, successful products, and better shuttles.  In short, it sounds like his passion is not for the people and what happened in them that allowed the tragedies to occur.  He said, “This is about a much broader approach of values.” He stated that safety and integrity should be evidenced in everything they do; yet, is he willing to hear news about a launch being delayed because of safety concerns?

Is it important whether he appeared to be believable?

Yes, visual believability is extremely important.  It can be the difference between the employees accepting O’Keefe’s message or writing it off as public relations damage control.  What I found even more disconcerting during the video were the audience members.  Every person listening to O’Keefe seemed distant, disengaged, uninterested, and certainly not passionate about taking steps to change the culture!  In fact, what I picked up was apathy and resignation.  They seemed not only unmoved by the director’s comments, they actually projected mannerisms that said, “It’ll never happen here.”

Normally, when speeches of this magnitude are given, they are delivered with passion and hope for a better future.  The audience normally nods in agreement and provides the non-verbal necessary to encourage the speaker of their belief in the message. That was not the case in this video.

Why did he talk about NASA values?

Everything within a company rests on the values established and modeled by leadership.  NASA uncovered an insidious problem within their culture—disrespect and lack of accountability.  When employees are afraid to bring up safety concerns for fear of being marginalized or ignored, it undermines the values of integrity and transparency.  O’Keefe promises greater accountability.  He said it’s a “We” culture not a “Them” culture and that each and every employee from this point forward will be encouraged to bring up concerns.  While every suggestion will not be followed, there will be an avenue to be heard.

What can you take away from this exercise to immediately use in your career?

In Cohn and Moran’s book, Why Are We Bad At Picking Good Leaders, they identified integrity as one of the prevailing characteristics of a good leader.  They said, “People in organizations look to the leader for guidance on how to act.  This includes deciding what is right and what is wrong.  When a leader sets the tone for what is ethically permissible, the tone is contagious.”  At NASA, leaders placed schedules, budgets, and programs over safety and ethics.  After a while, employees realized their suggestions would not be heard (or worse, they would face retaliation); therefore, they kept silent.  The tragedies surrounding the Columbia disaster and the Challenger before it, are examples of what happens when leaders ignore integrity and devalue employee insights.

Personally, I have learned many important lessons in this study. One that stands out is this: Compromises, no matter how small or how big, have consequences.  Even if you never see the immediate effect of cutting corners, the cumulative value adds up and eventually there is a payment that will come due. As a leader, be willing to make the hard decisions on the front end. The blast effect of a missed deadline is a tiny percentage of what you or someone else may face later.

Steve

A630.4.4.RB_RuggerioSteven

Better Decisions - Better Life

Decisions, decisions, decisions.  From the aural abuse of a morning alarm to sliding under the covers at night, each one of us faces a mountain of decisions every day. Some are reflexive, like blinking and breathing; whereas others are heart-wrenching and hand-wringing.  Both at home and at work, we’re wrapped in a whirlwind of individual and collective decision-making scenarios.  For instance, at home, our Shetland Sheepdog (“Sheltie”) named Cheyenne is over 15-years old.  That’s right, 105.  She sees only shadows and hears even less.  Her hips regularly give out and her bladder is even worse.  She spends her time walking gingerly, albeit aimlessly, around the back yard and through the house.  For the past three months, I’ve been wrestling with the decision of whether to “put-her-down” or let her pass away naturally?  Every day, I speak to my family, seek input from trusted pet owners, and pray for guidance.  By engaging my family in the process, it alleviates all the pressure from me.  It becomes—as it should—a family decision.  So, as of this moment, Cheyenne lives. 

Marcia Blenko argues that decision effectiveness correlates positively with employee engagement and organizational performance. How do you think that employee engagement relates to decision effectiveness?

At work, decisions rain down upon me from the moment I walk into my office.  When I bring up my email, the rain turns into a storm.  Whether at home or at work, managers and leaders are finding there is great benefit in obtaining buy-in; and results improve when employees (or family members, as shown above) are involved in the decision-making process.  In the video interview, How Companies Make Better Decisions, Marcia Blenko connects organizational effectiveness with employee engagement.  One would think this is a no-brainer but unfortunately, there are still many managers of the mindset that they make decisions and employees execute.

Blenko states clearly that “better decisions equal better financial results.”  Drawing on employee experience, fostering creativity and innovation, and providing an atmosphere where employee goals align with organization goals will always outperform a disjointed workforce operating in isolation.  Decision complexity can create a current of uncertainty.  By soliciting the inputs and valuing the expertise of employees, managers can be better equipped to steer the organization toward the future with the wisdom to know what opportunities to embrace and which ones to avoid.

What are some impediments to good decision making?

Making a decision in a complex and chaotic environment is reminiscent of the traditional game of “Pick-up Sticks.”  The game requires both physical and mental skill.  A bundle of ‘sticks’ around 8 inches long are held in a loose bunch and dropped on a table top, falling in random disarray.  Each player, in turn, must remove a stick from the pile without disturbing the remaining ones. 

Like the game, making good decisions requires both physical and mental skill as well.  Too often though, like the game, leaders try to make decisions without disturbing other divisions or work centers.  As a result, inevitably, others are disturbed and conflict ensues.  Rather than approach decisions as static, managers should address the decision from a holistic approach by collaborating and considering all arenas of the organization.

Some of the primary hurdles to good decisions are the lack of communication and clarity.  Without all the facts or only possessing half of the information, employees and managers are ill-equipped to lead and act appropriately.  Add to that mix a lack of skill, talent, commitment, and direction, and managers will spend the bulk of their time managing chaos, confusion, conflict. 

Blenko suggests that there are four elements of good decisions: quality, speed, yield, and effort. In your opinion, is there anything missing from this list?

Yes, repetition.  In their book Decisive, Chip and Dan Heath said, “Much has been written in recent years about intuitive decisions, which can be surprisingly quick and accurate.  But—and this is a critical ‘but’—intuition is only accurate in domains where it has been carefully trained.”  The axiom practice makes perfect applies in decision making as well.  Like the Heath brothers said, “Over time, routine sharpens you.”  By creating a decision making matrix, a thought process to govern one’s choices and decisions, individuals can create a default, habitual, and routine system of critical thinking and analysis.  Leaving decisions to emotions or chance can—and more than likely will—produce ineffective and inefficient results.

What can you take away from this exercise to immediately use in your career?

This video and exercise imparts two valuable truths: Create a sound decision making framework utilizing it for an array of different decisions; and, solicit ideas and involve employees, friends, and family in the decision making process as appropriate.  While many decisions can be made “off the cuff,” many—especially those involving work and emotional family moments—should be filtered through a decision matrix that includes a foundation of critical thinking parameters.  Our future is created from the decisions we make today.  We can no longer leave an uncertain future to fate and circumstance than we can make decisions in a vacuum.  Also, success rises and falls on the collaboration and commitment of managers and employees working together with a unified focus.  The same rules apply toward family decisions. 

And finally, in the case of Cheyenne; there is no easy answer.  By sharing the weight of the decision, we grieve together.

Steve