Our case study deals with Mass Merger. Since the 90s, together with the globalization of business, Mergers and Acquisitions have developed at an incredible pace. Thus, companies from all over the world can be lead to work together as one single corporation. Moreover, the world has become interdependent not only economically, but also culturally, that is to say one culture may influence another one or different cultures can be mixed. It is then obvious that intercultural issues have to be solved.
In this case, we are going to talk about the Aon Singapore Merger process. The Aon group is an American insurance services holding company. In the 90s, Aon acquired several insurance brokerage firms and entered an unprecedented merger process. Indeed, the group decided to get all the companies they acquired to operate together under the Aon name, in Singapore. That is why they had to face and manage intercultural issues. What are these intercultural issues in our case? At First, in the Aon merger process, they had to work out different ways of becoming one company.
At this stage, cultural misunderstandings can already take place. Indeed, each of the merging companies had its own way of doing everything. For instance, how they hired staff to how they processed a claim. What’s more, they used different computer systems. Hence, misunderstandings occurred between the way people work and think. Thus, Aon had to either take into account these things, to make the merger process as acceptable as possible, or try to transmit a totally new way of doing things and take the risk of dissatisfying the employees.
Then, they had to make information as clear as possible. This is a communication issue. The way people communicate can be different from one company to another. The way people understand orders or advice can be different between companies. One of Aon’s main objectives was to create a common communication system to avoid misunderstandings. Generally, in merger processes, people are unsatisfied at the beginning, because they have to change or adapt their way of working, doing things or even thinking. And this makes a deep part of their corporate and everyday life culture.
It is not easy to give up a cultural way of doing things for another one. Moreover, people from one merging company can have wrong and groundless judgments about people from another merging company. This is cultural bias. Cultural bias is an only to natural reaction in intercultural situations. In a situation of intercultural interaction we cannot rely on our cultural patterns and therefore feel insecure and uncomfortable. In our case study, we can appreciate that Cultural Bias is present in most of the relationships between top managers and employees or only between employees.
The Merger Committee had to decide how to work in Singapore, and of course, each of the merging companies had its own way of doing things, this being a sign of ethnocentrism. Each company would have wanted to introduce its own method, but they had to see things from another point of view, and that is, to select what is best for Aon. Referring to employees, when they attended the official launch event, some of them only stayed with their friends and did not have the chance to meet their new colleagues from the other companies.
Maybe it was because they thought that their customs are better than the other ones, a clear sign of ethnocentrism. About stereotypes, the only thing that we can appreciate is how Chinese people work. The note below the case says that since Richard Tan took a position at Aon Singapore and that they use their Chinese given names to differentiate, maybe we can call it auto-stereotypes , it’s also a bit of ethnocentrism in this way. In her report to management, Dr. Anne Marie Francesco refers to four main employee concerns such as communication, motivation, new corporate culture and teamwork.
Values of employees could be found out by applying models of cultural dimensions. We assume that AON Singapore human capital consists mostly of local employees, Asian people, American and British, and on this basis we will analyze the relevant characteristics for the communication process of this group. Taking the first concern mentioned into consideration, we can easily relate to cross-cultural researcher, Edward T. Hall’s differentiation between high-context cultures and low-context cultures.
As the report states, “The need for improved communication was emphasized over and over in the interviews. People want to understand Aon. Just giving them a copy of Aon’s mission statement is not enough. ” From this excerpt we can deduct that, to some extent, the unhappy employees came from low-context cultures, in which communication is characterized by explicit verbal messages. There is no hidden meaning behind any message and the information is transmitted directly. So just reading a mission statement does not clarify how they fit into the overall organization and current business plan.
As some of the interviewed staff mentioned, “it is the responsibility of top management to assure that all employees are getting the information that they need” and that “top management needs to take a more active role in making greater amounts of information available to all employees. ” Having read this, one might argue that in fact, top management members come from high-context cultures. This might explain the mission statement hand-outs given to employees. In high-context cultures only very little information is passed on in explicit code.
Most of the message has to be “read between the lines”, which unfortunately did not happen. Subordinates generally expect to be told what to do. This means that communication plays a great role in working conditions of employees and for the workers of AON, their tasks were apparently not clear enough. From her own personal observation, Dr. Francesco acknowledged that “the staff is working very hard and often long hours as well. ” However, most of the interviewed staff members were not feeling truly appreciated or rewarded for their efforts and thought that “management needs to give more recognition or incentives for good performance. Some complained though about the non-performers and the lack of negative feedback about them to management, thus creating an unfair situation towards those who were doing their work. This leads us to the question of what degree of individualism versus collectivism is there amongst employees in the company. The quote suggests that some people working at Aon have a tendency towards individualism. Everyone is expected to look for himself, to do his task and job properly. Even the fact that they were sincere and had the courage to mention about the non-performers indicates a characteristic of an individualist, which is speaking one’s mind.
Identity is based in the social network to which one belongs. It could have been the problem for AON workers because due to the merger they could have felt confused and did not know anymore, where and to whom they belong to. Besides, this type of culture relationship, employee-employee, is perceived in moral terms, like a family link. AON employees, facing the inevitable need to work closely with people they don`t know for a long time, could have felt uncomfortable. Another challenge the company has to face after the merger is to cultivate a new corporate culture.
Because every human is exposed to something called uncertainty avoidance, one of the four dimensions of culture identified by Geert Hofstede, meaning “the extent to which the members of a culture feel threatened by uncertain or unknown situations. This feeling is, among other things, expressed through nervous stress and in a need for predictability: a need for written and unwritten rules. ” Singapore is ranked at the very bottom of the uncertainty avoidance index list which means it is placed in the pole of weak uncertainty avoidance.
But from the content of the case study we learn that in fact, the AON workers were extremely concerned about what will happen after the merger and even if they would have a position in the newly created firm. As mentioned before, there was a great deal of uncertainty about whom they would be working with and for. Even Richard Tan Bin Haut, senior manager of a company being acquired, wondered whether he might have to start looking for a new job soon. Such an approach causes high stress, subjective feeling of anxiety and as a consequence leads to a greater need of getting a lot of information.
This is how we can explain the employees desire to “understand and become part of the company’s own corporate culture. They had grown comfortable with their former working environments and now they need to adapt. This could be accomplished by implementing an orientation program to familiarize them with Aon and to introduce activities that promote the corporate culture on an ongoing basis. A few things that were suggested to management include making an extra effort to maintain well qualified staff by being sensitive to their needs and giving praise, recognition and occasionally small rewards for good performance.
Emphasizing rewards might be a symbol for a masculine culture nature of the employees, stressing on equity, competition among colleagues and achievements. Trompenaar’s sixth dimension deals with a culture’s attitude towards time. This dimension is about the weight past, present and future have (relatively to each other) in a culture. Applying this to the last concern Dr. Anne Marie Francesco mentioned, we could suppose employees of Aon have a future orientation because of their preoccupation and advice to management to make more explicit how individuals should work together as a team.
As you figured out by now, communication was the biggest issue in the Aon Mass-Merger case. Cross-cultural communication, to be more specific, is an exchange of meaning where the sender of the message is a member of one culture and the receiver from another. The different cultural backgrounds influence the process of understanding each other. That is because our cultural background – the values, beliefs and norms – shape our expectations and our perception of things. “People from different countries see, interpret, and evaluate events differently, and consequently act upon them differently. Based on that observation Adler identifies three main causes for misunderstandings in cross-cultural communication: misperception, misinterpretation, and misevaluation. All of these three causes might have contributed, to some degree, to the general dissatisfaction of Aon employees. The Mass Merger process expansion has made intercultural issues more visible and measurable in international companies. The latter have to deal with these issues to make merger processes as successful and receivable as possible. Indeed, culture is something people are deeply and intimately connected with.
That is why it is hard to go through adapting to certain situations. In our case study, Dr. Anne Marie Francesco wrote a report about the merger. After reading her report, Richard Tan Bin Huat, finance director of Aon Singapore, felt that the observations were mostly correct and that he had to decide what to do next. Below are a couple of solutions to the most stressed issues found in the report. Improved communication: information should be conveyed in a clearer, correct and direct way. This means going from a high context communication system to a low context communication system. Appreciation of efforts: Reward hard-working employees.
This need proves and emphasizes the individualist side of Aon Singapore’s employees. Establishing and implementing an appropriate corporate culture: make employees from the different merging companies feel as most comfortable and satisfied as possible. This would improve efficiency and productivity. Finally, streamlining departments and divisions to increase team-work: advocate coordination and cooperation. Team Members, Marta Powalisz, Mathieu Dijoux, Andrei Dumitrescu, Evrim Ozyrlmz Ak? n Tkbs, Isabel Navarro Moreno
Bibliography: Intercultural Management Course Reader by Barbara Cucka, Winter Term 2009