Cultural Due Diligence

Vector Group is revolutionizing the concept of due diligence. Because, let’s face it, when it comes to assessing risks, lawyers and accountants do not deal with the way people behave as a business reality.

We are the first to create and effectively implement a behavior auditing process – Culture Due Diligence (CDD) <the article that started it all>– to identify and resolve the issues of culture directly and proactively. Its purpose is to eliminate or minimize culture clash, and to enhance the transfer or development of locality and commitment to the newly combined organization.

Over the last 15 years, we have managed projects to effectively merge corporate cultures, create entirely new ones or modify culture clash when things have fallen apart after a merger or acquisition.

Mesh for Success

The issue is not whether companies can be merged, but more how to go about merging two or more cultures.

Timing: It is far cheaper to avoid culture clash up front than to fix it later. But whether you’re contemplating or consummating a merger, or moving ahead in the post-merger phase, CDD can be utilized to rectify the problems and increase the probability of a successful merger, acquisition or alliance.

Cultural Due Diligence Audit Process: Our team conducts document reviews, interviews, focus groups, and situational observations to gather operational and behavioral data. Contrasting and comparing information from both organizations, we identify potential conflict and/or misunderstandings in 12 different domains of corporate culture.

12 Domains of Corporate Culture

 

Intended Direction/Results

From the top of the organization on down, we ascertain what the company intends to accomplish. We probe the business plan, the intent and purpose of the organization, its expectations, and how things are talked about, described, and communicated.

Key Measures: What the company measures, why and what happens as a result.

We track the consequences of key measures to determine the manner in which your company and its executives and staff are driven.

Key Business Drivers

What drives your business strategy? Is the focus on gaining competitive edge?  If so, how is it defined? Price? Quality? Market share? Service? Reliability?  If one company defines success in terms of total market share while another defines it as net profit margin, there is considerable room for disagreement.

Leadership/Management Practices

What is the balance between leadership and management approaches?  What fundamental values are in place concerning employees? How are people treated and why?  How does the business plan get implemented through the management system?  How are decisions made?

Organizational Processes

What formal and informal systems are in place in your organization?  What part do they play in accomplishing work day-to-day? How much flexibility is allowed? What is the relationship between political reality and business reality?

Infrastructure

How is your company organized?  What is the nature of the reporting relationships?  How do the staff systems interface with the line systems?  What is the relationship between groups and units in the organization?

Supervisory Practices

We examine the nature of the interaction between the employee and the immediate supervisor. This relationship is one of the primary tome-setters for the company’s culture.

Work Practices

How is the actual work performed? Is the emphasis on individual responsibility or group responsibility?  What degree of control, if any, does the individual worker have on the workflow, quality, rate, tools utilized, and supplies needed?

Technology Utilization

How current is the technology being utilized for both internal and external systems and equipment? What are people’s expectations concerning technological support and  resources?

Physical Environment

How do the workplace settings differ?  Open work spaces versus private offices; high security versus open access; furniture; buildings and surrounding grounds – all have a bearing on how people feel about their work and the company they work for.

Perceptions / Expectations

How do people expect things to happen? What do they think is important?

Cultural indicators / Artifacts

How do people dress and refer to each other?  What is the match between formal work hours and actual hours spent working? What is the nature of company-sponsored activities? <return to Cultural Assessment Considerations>

When it comes to deciding whether to spend staff time and energy on internal issues – or, satisfying customers, beating competitors, and generating profit – the answer is obvious. Cultural Due Diligence – it’s simply a matter of good business! Read more