Monday, May 11, 2009

Using teams to expand the business.

Continuing last week's story, AT&T Capital Corporation (ATTCC) expanded aggressively through mergers and acquisitions so that six years after introducing high performing teams, it had grown to include eleven strategic business units managing combined assets of nearly $7B. With its early acquisitions, ATTCC left the companies it bought virtually unchanged. Managers in the newly merged companies attended a roadshow that explained how the acquisition fitted into AT&T’s business strategy and how ATTCC’s high-involvement high-performance team culture contributed to its spectacular success. However, there was no direct order telling them to manage their businesses differently.

As a result, nothing much changed after the companies were acquired. As cultural differences festered over time, the situation gradually became more and more difficult to deal with. It was finally resolved several years later by changing the leaders in many of the businesses when ATTCC finally acknowledged that these managers would never voluntarily adopt the high-involvement team-based way of operating that ATTCC valued.

In its later acquisitions, ATTCC learned to be more directive. Once an acquisition was made, it was very clear in stating, “Here’s what we think the future state of this company should look like and here’s the change timetable we expect you to follow. We acquired you because we believe you have great possibilities. Here’s how we plan to explore these possibilities and this is the framework we’re going to use. We assure you we’ll keep and honor the good things you’ve done in the past and we’ll involve you in the process of working through any changes that are judged necessary in the future.”

ATTCC knew from previous experience that employees often feel that, “Everything that we did that made us good is going to be taken away from us and we won’t be given enough time to demonstrate our strengths in the new relationship.” To deal with this, ATTCC set up transition and integration teams immediately after acquisitions were completed. These teams included representatives from both organizations and began by announcing a list of the issues they planned to work through together.

Typically, these issues involved the physical consolidation of facilities, the integration of information systems, reconciling differences in policies, practices and standards, agreeing on common financial reporting formats, establishing equity in pay and benefit plans, agreeing on common job classifications, criteria and titles, dealing with uncertainty about careers and identifying positions to be eliminated.

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