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/