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who have recently merged/acquired ? Only 23% of all acquisitions earn their cost of capital ? On average, management grade the financial performance of their alliances as a “C minus” (on a scale of A to E) 6 Corporate culture is identified as one of the most important integration issues Source: Watson Wyatt Worldwide Mamp。 A Survey 1998 (190 CEOs, CFO, Top Executives) ? 75% are clearly disappointing or outright failures Source: Watson Wyatt Worldwide Mamp。 A 4 ‘Cultural amp。 A 3 Agenda M amp。W W W . W A T S O N W Y A T T . C O M 14 March 2020, Shanghai Kwan Chee Wei Director Human Capital Group Watson Wyatt Singapore The Importance of Cultural Integration in Mergers and Acquisitions 2 Agenda M amp。 A Statistics A Case Study WW’s Approach to Cultural Integration What is Culture? Q amp。 A Statistics A Case Study WW’s Approach to Cultural Integration What is Culture? Q amp。 People’ Issues Often Present the Biggest Challenges “The hard stuff is easy it’s the soft stuff that’s so hard to change.” Frederick Smith CEO, Federal Express 5 Watson Wyatt M amp。A Survey, November 1998 ? 50% suffer an overall dropoff in productivity in first 48 months ? 47% of acquired pany executives leave within the first year。A Survey, November 1998 Activities required for “successful” integration Downsizing Redeployment of workers Recruitment of new staff Retraining workforce Alignment of p amp。A Survey, November 1998 8 Reasons for successful integration Source: Watson Wyatt Worldwide Mamp。 A Statistics ? 1992 (Coopers amp。 A failures. ? 1997 ( Kearney) : reviewed 155 M amp。 A reported the top challenge to be integrating two anizational cultures. 10 How integration is handled will make the difference between success or failure ... ? Earlier realization of financial “deal” goals (. cost synergy, strategic initiatives) ? Protect productivity ? Maintain customer focus ? Smoother transition ? Employees are focused on their jobs and not on personal issues 11 Organizational Effectiveness Levers Career Development Performance Management Staffing Compensation, Benefits amp。 Structure Business Strategy amp。 A Statistics A Case Study WW’s Approach to Cultural Integration What is Culture? Q amp。 processes ? Policies amp。 A Statistics A Case Study WW’s Approach to Cultural Integration What is Culture? Q amp。 Learning amp。 A Statistics A Case Study WW’s Approach to Cultural Integration What is Culture? Q amp。 Development Plan Communication Plan Leadership Development Plan 31 Employee acceptance and support was enhanced through a prehensive munication plan Knowledge sharing, involvement, and munications Phase Scope Purpose Phase 1 Awareness Building This is what is happening Companywide * Link change initiatives with strategic plans * Give specific information about the process. * Announce senior management39。 and employees39。s and employees39。 Development Plan ? Identify anisational development needs ? Develop learning and development plans that link to business and strategic obj