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/

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                                      Drugs: Count the Career Costs

In The Story Factor, Annette Simmons (2001) said, “Without a story, facts don’t mean anything” (p. 79). “Story,” Simmons says, “is a form of mental imprint” (p. 29).  Our culture is heavily influenced by past stories and future possibilities.  Fluid and evolving, society’s standards are steadily dissected to ensure equal benefits and to promote our democratic system.  As a result, actions acceptable twenty-years ago are frowned upon today.  Conversely, what was appalling two decades ago is widely accepted today.  Nowhere is this truer than in the U.S. military; especially in the area of drug use.  If you had visited a typical military unit in 1983, about one in four service members would have used illegal drugs.  If you had visited the same unit in 1998, about three out of 100 service members admitted to using drugs (Rhem, n.d.).  Coupled with regulations and education in the fight against drugs, military leaders are also using stories to drive their point home.

Air Force (AF) Instruction 44-121, the Alcohol and Drug Abuse Prevention and Treatment (ADAPT) Program provides guidance to AF leaders for the identification, treatment, and management of personnel with substance abuse problems and describes AF policy regarding alcohol and drug abuse (AFMOA/SGHW).  The Department of Defense (DOD) labs test 60,000 urine samples each month and all active duty members must undergo a urinalysis at least once per year.  Every urine sample is tested for marijuana, cocaine, and amphetamines.  The Air Force is very serious about its stance on drug use.

According to AFPAM 36-2241, “Illegal or improper use of drugs by an Air Force member is a serious breach of discipline, is incompatible with service in the Air Force, and automatically places the member’s continued service in jeopardy.  The Air Force does not tolerate such conduct; therefore, drug abuse can lead to criminal prosecution resulting in punitive discharge or administrative actions, including, separation or discharge under other than honorable conditions” (p. 238).

In January 1997, the Air Force published a set of core values.  The following values exist for all members of the Air Force.  They are Integrity First, Service before self, and Excellence in all we do.  In more detail, integrity is the willingness to do what is right even when no one is looking.  It is the moral compass—the inner voice; the voice of self-control; the basis for the trust imperative in today’s military.  Service before self tells us that professional duties take precedence over personal desires.  And lastly, excellence in all we do directs us to develop a sustained passion for the continuous improvement and innovation that will propel the Air Force into a long-term, upward spiral of accomplishment and performance (DAF, 1997).

Studying the AF core values, reading the regulations against drug use, and acknowledging that others depend on your actions should engender every military member to make right decisions.  Using drugs within your first year on military active duty is careless, destructive, and immature.  Using drugs as a senior non-commissioned officer with six months left to retire is categorically one of the dumbest decisions a person can make.  

At nineteen years of service, I had a front row seat as my coworker “popped a positive” on a random urinalysis.  At 41-years old, he had submitted his retirement paperwork.  Completing nineteen years and six months in the Air Force, he was ready to settle down with his family in the local area.  Within 30 days of a producing a positive urinalysis, his retirement was denied, he faced a court-martial, and was demoted from an E7, Master Sergeant to an E4, Senior Airmen.  He was also ordered to spend three month at the Naval BRIG in Norfolk, Virginia.  When all was said and done, he was discharged from the Air Force under other-than-honorable-conditions.  The result:  No retirement ceremony.  No pension.  No benefits.  My coworker was escorted off the base and left the Air Force after twenty-years of service with nothing to show for it but a criminal record.  And for what?  Because he chose to ignore the core values and military regulations on drug use.  Because he wanted to celebrate a night with his friends and a few grams of cocaine.

My coworker’s sad story quickly made its way through the ranks.  From the lowest airmen to the highest general, everyone was told his tragic tale and the consequences of using drugs in the Air Force.  While heartbreaking, this story reinforces the zero tolerance view on drug use.  It demonstrates that drugs are incompatible with AF core values and good order and discipline.  By telling this story throughout Air Force channels, members realize that if you choose to use drugs, you will eventually get caught and be punished.  As folks ponder the lifetime costs of my coworker’s decision (retirement pay + benefits + future employment prospects), it reinforces the importance of character, integrity, and accountability. 

This incident happened a decade ago.  My coworker has moved out of state and I’ve been retired for over eight years.  My current position with Lockheed Martin has me working side-by-side with Air Force personnel at Langley AFB in Virginia—the same base from which I retired.  Recently, I overheard a Master Sergeant speaking to a young airman about the dangers and costs of doing drugs.  And wouldn’t you know he referred to a certain Master Sergeant who was caught using cocaine shortly before his retirement.  He said the man was dishonorably discharged and lost everything.  Though a few of his details were incorrect, the crux of the message was delivered: When making decisions, count the cost.  It’s a good lesson for all of us.

Legacy counts the cost.

Steve

References:

Department of the Air Force. (2003). Air Force Pamphlet 36-2241, Volume 1. Promotion Fitness

Examination Study Guide.

Department of the Air Force. (1997). Air Force Core Values. Retrieved from

http://www.peterson.af.mil/shared/media/document/AFD-090212-058.pdf

Department of the Air Force. (2011). Air Force Instruction 44-121. Alcohol and Drug Abuse

Prevention and Treatment (ADAPT) Program. Retrieved from http://www.e-publishing.af.mil/shared/media/epubs/AFI44-121.pdf

Rhem, K. T. (n.d.). American Forces Press Service: A Look at Drug Use and Testing Within the

Military. Retrieved from http://usmilitary.about.com/od/theorderlyroom/l/bldrugtests3.htm

Simmons, A. (2001). The Story Factor. Cambridge, MA. Basic Books.