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Organisational Culture

Organisational Culture

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1

2004 OD Network Conference
San Juan, Puerto Rico

Understanding and Developing An
Organizational Culture: A Case Study

An experiential learning opportunity

Myron Beard, Ph.D.,
First Data Corporation

&

Lizette Zuniga, Ph.D.,
LCZ Integrated Solutions, Inc.

October 4, 2004


First Data has earned respect for both financial and human
performance. During this session, we will share with you the First
Data journey in a case study format, highlighting the use of
organizational culture assessment as a tool to understand cultural
gaps and improve performance. It is our hope that this session will
provide you with an understanding of organizational culture, culture
assessment and key interventions for the benefit of improved
performance in the workplace.




2
1
MERGER INTEGRATION
UNDERSTANDING AND
DEVELOPING AN
ORGANIZATIONAL CULTURE:
A CASE STUDY

___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Goals of the Session
• Learn to use diagnostic tool to understand
organizational cultures
• Understand the role of organizational culture
assessment while integrating two or more
organizational cultures
• Identify key organizational development
interventions based on organizational diagnoses
• Uncover barriers and challenges when using
organizational culture assessment and implementing
OD interventions
• Identify techniques to deal effectively with those
challenges

___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Maximizing the Deal
•Most mergers fail to increase
shareholder value
•Value erosion is primarily an issue
of planning, focus, execution,
strategic fit and premium paid
•You can maximize the deal potential
and capture value by speedy and
effective integration planning and
execution
Problem
Cause
Solution
Merger Managers

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___________________________________
___________________________________
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___________________________________
3
Statistics are Sobering
Value Creation
– 70% of today’s mergers and
acquisitions fail to add value
• KPMG - 2001 Study of 700 firms
– Study after study of past
merger waves has shown
that two of every three deals
have not worked
• The Economist, January 9, 1999
Retention
– In the average acquisition,
40-80 percent of top
managers and engineers
are gone in 2 years.
• John Chambers, Cisco Systems
39%
30% 31%
Created Shareholder Value
No Discernable Difference
Eroded Shareholder Value
Merger Managers

___________________________________
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___________________________________
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___________________________________
Market is Skeptical
• Market Reaction
– Acquirer’s stock falls after announcement due
– 30-40% premium paid for an acquisition adds to
expectation
• Resources
– Diverted from business
– Acquisition benefits are easily replicated by
competitors
– Acquisitions demands of integration divert attention
away from competitors
• Financing Value
– Acquisitions require payment upfront
– Price paid may have little to do with achievable value
Harvard Business Review (Nov-Dec 1999)

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Conclusion:
Mergers and Acquisitions
are Risky Business!!!

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4
The First Data Growth
Challenge
Meeting the Street without
missing a beat.















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The Cultural
Challenge
Addressing Differences,
capitalizing on best
practices



___________________________________
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5

“Any merger is doomed if there is no
real effort beforehand to see whether
the two cultures have anything in
common.”
- Anne Fisher, FORTUNE,
January 24, 1995

___________________________________
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What is culture?

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“Organizational culture is
the way we do things
around here.”
- Burke & Litwin, 1995

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6
Culture is the collective values,
assumptions, beliefs and
paradigms that create the expected
and accepted behaviors of the
organization.

___________________________________
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___________________________________
___________________________________
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___________________________________
For Example…
Hierarchical vs. Empowered
Risk Avoiders vs. Risk Takers
Reactive vs. Proactive
Sales Driven vs. Profit Driven
Cautious vs. Innovative

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Culture clash: When two organizations
have different beliefs and
behaviors about:
•How to make decisions
•How to organize resources
•How to supervise people
•and so on...

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7

Examples:
Novell & Word Perfect

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Merger Integration
Cultural Analysis
Cultural
Dimension
Culture
of
Novell
Gap
Between
Cultures
Importance
of
Dimension
Impact of
Cultural Gaps
on Integration
Strategies
Culture
of Word
Perfect

___________________________________
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___________________________________
Cultural
assessment
gives you a
roadmap to
successful merger
integration.

___________________________________
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8

Organizational Culture Assessment
• How alike are we?
• How different are we?
• How different are we from HPO?
• What specific areas warrant intervention?

___________________________________
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How do you
assess
organizational
cultures?

___________________________________
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___________________________________
The Qualitative Approach:
Senior management interviews
Customer / supplier interviews
Focus groups
Annual reports
Press releases

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9

The Quantitative Approach:
Surveys
Metrics

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Pros & Cons
PROS
• Can be used for
organizational development
• Provides snapshot for
strengths & weaknesses
• Can also show sub-cultures
(business units) within larger
culture
• Can also be used for
recruitment & leadership
development
CONS
• Measures “perceptions,”
not necessarily “truth”
• Potential skewed results
– Respondents
– Timing
– Deal
• Results - as strong as
your instrument
• Generic instruments
may not be suitable

___________________________________
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___________________________________
First Data’s Approach
• Combined Approach
–Quantitative
–Qualitative
• Internally developed

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10

The CMI – Culture Merger
Integration Survey

___________________________________
___________________________________
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___________________________________
CMI Abbreviated Exercise
Refer to your
handout

___________________________________
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11
CMI Abbreviated Profile

Leadership Culture

The purpose of this profile is to diagnose an organizational culture in terms of its leadership practices.
Please circle the number that best represents the organizational culture in which you work.


Leadership Culture

LOW MID HIGH
Closely held 1 2 3 4 5 6 7 Open
Closely supervised 1 2 3 4 5 6 7 Empowered
Regulate 1 2 3 4 5 6 7 Delegate

Add your answers for your Leadership Culture Score and divide by 3: _________________

Planning Culture

The purpose of this dimension is to assess the given culture based on its approach to planning. Please
circle the number that best represents the organizational culture in which you work.


Planning Culture

LOW MID HIGH
Unknown strategy 1 2 3 4 5 6 7 Clear strategy
Tactical 1 2 3 4 5 6 7 Strategic
Reactive 1 2 3 4 5 6 7 Proactive

Add your answers for your Planning Culture Score and divide by 3: _________________

Decision Making Culture

The purpose of this domain is to facilitate understanding of the culture in terms of its ability to make
decisions and execute. Please circle the number that best represents the company in which you work.


Decision Making Culture

LOW MID HIGH
Consensus Approval 1 2 3 4 5 6 7 Streamlined Approval
Rules 1 2 3 4 5 6 7 Personal Judgment
Tradition 1 2 3 4 5 6 7 Originality

Add your answers for your Decision Making Culture Score and divide by 3: _________________
12















CMI Map
1
2
3
4
5
6
7
Leadership
Planning Decision Making
Plot your leadership, decision making and planning scores on the chart below.
13












CMI Maps
1
3
5
7
Leadership
Planning Decision Making
1
3
5
7
Leadership
Planning Decision Making
1
3
5
7
Leadership
Planning Decision Making
Planning Culture
Decision Making Culture Leadership Culture

High = 5, 6 & 7
Mid = 4
Low = 1, 2 & 3
Scale
14

The Culture Team
Designing and Delivering
Interventions

___________________________________
___________________________________
___________________________________
___________________________________
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___________________________________
___________________________________
Culture Team History
• FDC Finance – 1995
– “Making the routine routine”
• HP/Compaq – 2003
– “Adopt and go”

___________________________________
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___________________________________
Culture Team Charter

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15

Goals

___________________________________
___________________________________
___________________________________
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Selection: Key Shareholders
HR
Communications/Marketing
Operations
Organizational Development

___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Results

___________________________________
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16


Creating Interventions from
Results

___________________________________
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Interventions
• Identify quick wins (e.g. guidebook to
company)
• Focus groups to validate and expand
survey results.
• Post-close talent assessment
• Address culture differences
• Values communication
• Change management training

___________________________________
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___________________________________


17

Notes, questions, ideas, actions to take
_______________________________________________________________
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_____________________________________________________
18
Action Plan

Name: ____________________ Date: __________________________

Development Areas Interventions
Date to
begin
Date to
complete











What potential barriers may impede the success of this action plan?
_______________________________________________________________
_______________________________________________________________
________________________________________

What techniques, resources or education will help me overcome barriers?
_______________________________________________________________
_______________________________________________________________
________________________________________
19

1. Discuss your results from
the CMI with a colleague

2. Draft an intervention plan,
identifying key OD
interventions

3. List potential barriers to
implementing your action
plan

4. Identify ways to overcome
potential barriers

Notes, questions, ideas, actions to take
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________
C
o
n
f
e
r
e
n
c
e
C
h
a
l
l
e
n
g
e
!
20

L LI IZ ZE ET TT TE E Z ZU UN NI IG GA A, , P PH H. .D D. .


Dr. Lizette Zuñiga is CEO of LCZ Integrated Solutions, Inc., a research and consulting firm focused on
organizational improvement and accountability. With more than 15 years of professional experience,
Dr. Zuñiga has expertise in leadership and team development, organizational culture assessment,
program evaluation, ROI and general assessment.
Lizette has served as both an internal as well as an external consultant for Fortune 500 companies.
Formerly with First Data Corporation, she led the corporate university's team in assessment and
measurement efforts. She executed a University dashboard, linking strategic business objectives to
organizational development initiatives as well as critical success factors and key measures. Lizette
executed impact studies showing the value of learning and development efforts. In her current capacity
as a performance consultant, she assists organizations by conducting various types of assessments and
surveys, including organizational culture assessment, needs assessment and leadership competency
assessment. Lizette also assesses the business impact of organizational development interventions and
facilitates leadership and team development activities. In addition, Dr. Zuñiga conducts leadership and
team development sessions to improve workplace performance.
Dr. Zuñiga’s academic contribution is extensive, including serving as an adjunct professor for a major
university, teaching Adult Learning Theory & Practice and Presentation Skills. She Lizette holds a
Master's degree in Psychology with a concentration in Cross-cultural Psychology and Psychometry
from Georgia State University, and a Ph.D. in Leadership & HRD from Barry University. She is
certified in ROI evaluation and in Myers Briggs Typology Indicator. Lizette has contributed to the
human resource development literature by publishing several articles on leadership development and
program evaluation.
Lizette was born in Miami, Florida of Cuban parents, and has a strong interest in the study of different
cultures. Her dissertation was published and presented at the 2000 Academy for Human Resource
Development was on The Role of Acculturation in Career Development Among Hispanic Managers. In
addition to spending time with family and friends, Lizette enjoys travel, exercise, dance, and hiking.
Lizette can be reached at: lcz_inc@bellsouth.net.


21
M MY YR RO ON N B BE EA AR RD D, , P PH H. .D D. .



Dr. Beard is currently the Senior Vice President in charge of Merger Integration at First Data. He was
previously head of the Organizational and Leadership Development. Prior to joining First Data, Dr.
Beard was a Senior Consultant and Merger Integration Practice Leader for RHR International, an
international management consulting firm. He has published several articles and book chapters on
mergers and acquisitions and leadership development. He maintains Colorado licensure as a
Psychologist. He has a Ph.D. in Counseling Psychology from the University of North Texas and a BS
degree in Psychology from Southern Methodist University

Dr. Beard was born in Santa Fe, New Mexico and has had a lifelong interest in the Southwest. He
collects art from Southwest artists including a storyteller collection from the pueblos of New Mexico.
He also has coached youth sports (basketball and soccer) for over 9 years. He is active with the Gold
Crown Foundation, and has served on the board of ArtReach. He is currently on the Advisory Board
to the Executive and Professional Development Program at the Daniels School of Business at the
University of Denver. He previously served on the Gifted and Talented Committee for the Littleton
School District and on the Healthcare Committee at the Denver Metro Chamber of Commerce. He
attends St. Andrews United Methodist Church in Littleton.

Dr. Beard is married to Nicki Stanton. He has two sons aged 13 and 16, currently enrolled in Littleton
Public Schools. In addition to coaching, He enjoys family activities, playing golf, reading, writing,
hiking in the mountains, exercise and travel.

Myron can be reached at: myron.beard@firstdatacorp.com

MERGER INTEGRATION

___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________
1

UNDERSTANDING AND DEVELOPING AN ORGANIZATIONAL CULTURE: A CASE STUDY

___________________________________

Goals of the Session
• Learn to use diagnostic tool to understand organizational cultures • Understand the role of organizational culture assessment while integrating two or more organizational cultures • Identify key organizational development interventions based on organizational diagnoses • Uncover barriers and challenges when using organizational culture assessment and implementing OD interventions • Identify techniques to deal effectively with those challenges

___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________

Maximizing the Deal
Problem

___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________

•Most mergers fail to increase shareholder value •Value erosion is primarily an issue of planning, focus, execution, strategic fit and premium paid •You can maximize the deal potential and capture value by speedy and effective integration planning and execution

Cause

Solution

Merger Managers

2

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