By: Rohan Kohli
Cultural synergies in your company’s growth strategy
A positive culture speaks volumes about a company, its leadership and employees, and the potential for continued success. In an era when mergers and acquisitions occur with increasing regularity, and businesses frequently debate their next moves, we should also look beyond the financials when we think about growth.
Good business is certainly about the bottom line. Two companies coming together are looking to capitalize on their strengths and, in effect, be a stronger, more profitable combined organization. It makes sense to ask the question: “Is this company going to complement us beyond the numbers?”
This question may not sound revolutionary, yet it can be the critical success factor for a merger or acquisition.
Defining the culture
At TIAA, we take great care in sustaining the culture that exists today. In fact, we are celebrating our 100th year in 2018, and for a century, our culture, values and brand helped to drive our success and create our foundation as a different kind of financial partner. Our six values – act with integrity, operate as one team, take personal accountability, deliver excellence, value our people, and put the customer first – play a role in every decision we make. We also focus on building a diverse and inclusive workplace, driving continuous improvement, being technology enabled, and identifying and managing risks proactively, all in an effort to strengthen our culture and do what is best for our employees and the customers we serve.
The investments we’ve made in who we are and how we approach doing business means our due diligence process in searching for a new partner leans heavily on the personal. In fact, it must if we are to protect our heritage and thrive moving forward. For all companies that means a serious commitment to a cultural exchange between management and peers from all business areas to demystify the culture that exists behind the public image.
Doing the homework
We believe our culture is one of the main reasons employees come to work at TIAA. We want to protect that culture in any venture that involves bringing a new company into the fold. As a mission-based company, we also have no shareholders, so we exist to serve our customers. That commitment may not be in the background of many organizations that on paper might appear to be logical partners.
Our approach starts with our senior leadership meeting with the management of the potential partner, then more conversations follow with some of our most senior managers and their direct reports. Right from the start, we want to determine if there is a cultural fit between the two organizations. The content of those discussions is important, but it is the unspoken clues – how other executives engage, their reactions, and the chemistry among their own team – that helps shed light on who they are and speaks volumes about their organization’s culture.
Overseeing compliance risk and ethics in my role, what stands out for me are companies who place great emphasis on a “speak up” culture. One major sign that an organization will fit with TIAA is hearing that their approach to ethics allows employees to report concerns anonymously. That commitment is a vote of confidence from executives which sends a clear message to their employees: they want to hear the good and the bad to make their company a better place for employees and customers.
Overseeing the integration
Once we’ve decided to move ahead, the period between the initial announcement and Legal Day 1 involves many steps, including structured sessions between department heads at each company. These peer-to-peer dialogues provide time to build relationships and dig deeper into the culture exchange. It’s also when we identify where we might handle things differently and map out a plan to look at those items more closely.
Uncovering why we approach a task differently helps to determine how we may pinpoint a possible new way to do it together. Often there exists a legitimate business reason for why one company handled an action a certain way. Each group needs to be respectful of where the other has had success in their unique approach to the same task.
Throughout these various meetings, our TIAA team is checking off a mental list of key questions about the other organization. Some of those include:
- Do they have a published statement of corporate values?
- Do they reflect their own values in how they conduct business, the way they act and communicate?
- Do they push the ethical envelope?
- How many lawsuits, charges or fines, if any, have they accumulated over a fixed period and for what types of violations? Do they feel that’s the cost of doing business or do they learn from their mistakes by addressing root causes?
- How do they approach reputational risk?
- What do vendors, legal firms, and others associated with this company, think about them?
While a holistic look at these indicators is our focus, at a high level we are seeking partners with a like culture who have a focus on strong ethical behavior.
Achieving the right fit
That fit, in essence, translates to taking the best of both companies to build a stronger combined enterprise. Everyone is on alert, mindful of any potential red flags along the way, understanding the desire to target a partner with a positive outlook, both culturally and financially. For TIAA, what’s even better is adding to those characteristics that a company brings to the table – skills and talent we may not have. It takes us, and our new addition, to the next level in the marketplace as a stronger, more unified company.
I believe organizational blending doesn’t stop when the deal closes. The homework phase on culture continues with a regular examination of our shared values. This work is a constant evolution that reiterates that a strong culture plays a major role in any long-term growth strategy. The successful merger of two companies’ strong ethical cultures ultimately can contribute positively to what many may see as only a financial transaction.
Rohan Kohli is Executive Vice President and Chief Compliance & Ethics Officer for TIAA. He is responsible for the enterprise-wide compliance risk management and ethics programs and functions. Through effective controls, his team ensures that TIAA appropriately identifies, assesses, measures, monitors, mitigates, resolves, escalates and reports on compliance and ethics risk. Rohan has over 23 years of experience within the financial services industry in executive leadership, corporate transformations, and risk management.