- How are decisions made: consultation, consensus, or authority?
- How is information viewed and managed?
- What is the typology of a valued employee?
Questions of this nature require the due diligence team to probe into the
normative structure, core values and assumptions, and the core philosophy of
the company itself in order to understand the company from a holistic cultural
perspective.
In addition, the culture of a company does not exist in a vacuum. It is embed-
ded in an industry, regional, professional, and national culture as well (Schneider
and Barsoux, 1997). In order to comprehend a company culture, one must be able
to understand the cultural strands that reach out and attach themselves to values,
assumptions, norms, and philosophies in the environment in which it exists.
Thus, the cultural due diligence team must assess the wider context in which the
company exists as well as the company itself. The national cultural frameworks
discussed in Chapter 6 could be a useful starting point in this respect.
Finally, the due diligence team must not only pay attention to the target’s
or potential partner’s culture, but to the culture of the company that it repre-
sents as well. Cultural assessment is not just a question of assessing the other
company’s culture; it is also a matter of both having a clear culture oneself and
understanding it. The ‘know thyself’ adage applies as much to companies as it
does to people. Only after an executive team has a clear, sophisticated under-
standing of both their own culture and that of the target/partner, can cultural
integration planning be conducted.
Undertaking a human capital audit and
selecting the management teamThere are two dimensions to the human capital audit. One dimension is preven-
tive, focused on liabilities such as pension plan obligations, outstanding griev-
ances, and employee litigation. It also includes comparing the compensation
policies, benefits, and labor contracts of both firms. The other dimension is
focused on talent identification, and in the long run it is probably more critical to
the success of the acquisition. A number of facets on this are important –ensur-
ing that the target company has the talent necessary to execute the acquisition
strategy, identifying which individuals are pivotal to sustaining the value of the
deal, and assessing any potential weaknesses in the management cadre. It is also
important to understand the motivation and incentive structure, and to high-
light any differences that may impact retention. Finally, understanding the struc-
ture of the organization means not just reporting lines but clarifying who is who.
Here are some examples of questions to consider (Chaudhuri and Tabrizi,
1999; Evans et al., 2002):
100 International Human Resource Management