Deloitte Touche Tohmatsu Limited (Deloitte) is a London (the UK), based limited company offering professional services. Its headquarters are in New York, the United States. It provides services such as audit, tax, financial advisory, as well as consulting about enterprise risk. It operates in over 150 countries worldwide with more than 200,000 employees whose cultures are diverse. Its revenue base is estimated to be US $ 34.2 billion.
Culture acts as the uniting force among the employees of a given organization. Culture gives such an organization a sense of identity. Indeed, the culture of an organization is regarded as one of the greatest assets and is often defined clearly. Therefore, when the culture changes, there is likelihood of conflict or misunderstanding occurring not only among the staff but among all the organization’s stakeholders.
Essentially, when organizations come together either through merger or acquisitions, there is always a problem of integrating cultures of such companies. Organizations come together for mutual benefits, i.e. to acquire technologies and products as well as to increase the market access. Such organizations also come together to enhance their economies and their presence in the world. However, the majority of these organizations fail to see the impact of culture when organization comes together. They focus on profit making oblivious of the cultural change as a result of merges and acquisitions.
Deloitte is one of such firms in the world. Established in 1845 in London, the United Kingdom, the company has expanded to various parts of the world. However, it was not easy as the company had to develop strong initiatives to deal with the cultural changes as they sought new partners and merged with likeminded companies in several parts of the world. Businesses aiming at profit and ignoring culture change often lose their values and result in conflict and misunderstanding among the stakeholders. Therefore, culture becomes a barrier to successful integrations. In fact, about 30 % of world business integrations fail because of poor cultural integrations as they merge.
During the Deloitte’s merger with Andersen Company, the major problem was cultural misalignment and the conflict that arose after the merger. In fact, the cultural rifts between the two companies were obvious. For Andersen, their culture was to drive the needs of their clients above everything else. For Deloitte, both employee and client’s issues were equal. As much as it was important to consider the needs of the customers, it was equally important to consider the welfare of the employees (Burman & Evans, 2008). This resulted in conflict due to differences in opinions precipitated by culture change. There was difficulty in defining how the work should be done as the cultures of the two companies were diverse. For instance, the differences in culture between the two companies were evident as employees of the companies would feel concerned that their culture was being eroded by adopting the culture of the other company. The workers from Andersen may feel that the concerns of the company comes before individual concerns hence the company should prioritize the needs of the clients. If these differences are not handled carefully by the leaders, it may be costly for both companies. For example, an employee from Andersen may not understand why an employee from Deloitte is focusing more on employees’ issues as opposed to the needs of the clients (Adkins & Caldwell, 2004). Differences in preferences may result in poor performance, hence, affect the financial outcome.
To deal with this problem of differences in culture, Deloitte and Andersen had to come together and carry out a culture change analysis for the companies to find a middle ground. They analysed their differences and similarities while some of the factors such as quality, team work, and integrity as well as clients orientation were considered. The two companies were aligned in a number of commitments although there were some differences such as the degree of bureaucracy and diversity of market orientation (McGuire, 2003). The level of bureaucracy was a major hindrance to them when finding a middle ground in their cultural change. For instance, an employee from Deloitte may not have been used to high level of bureaucracy and wanted to complete a task quickly. Such an employee may not have known which procedure to follow and hence had a trouble completing the task. Therefore, the bureaucratic methods were the hindrance to the cultural change between the two organizations (Adkins & Caldwell, 2004). Organizations experience difficulties in integrating their culture when it comes to companies letting go some of their cultures so that they can accommodate the culture of the other company to find a common goal and purpose.
As analysed above, culture change has various dimensions in an organization. Firstly, any culture change must involve all the stakeholders. Stakeholders include people who contribute to the being and performance of the company. These include the employees, customers, management, vendors as well as the neighbourhoods (Parker, 2000). During the change their views must be considered since they will be directly or indirectly affected by the culture change. For instance, Deloitte has to involve all stakeholders either in merging, acquiring new premises or in making major decisions. This enables the entire organization to reflect on the change and adapt to it. Secondly, the organization must consider its social responsibility. The social responsibility is an integral part of the organization’s culture. An organization should encourage people to participate in the betterment of the society voluntarily. The company should also be involved in considering or funding some of the activities introduced by the locals as part of its social responsibility. In this case, Deloitte has been engaged in a number of social responsibility projects that has created positive culture change improving the performance of the company.
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Thirdly, the culture change should also consider the orientation of other entrepreneurship in a given market. Essentially, engaging other players in the market helps to create a spirit of creativity and innovativeness which betters the outcome of various projects. Deloitte has played a key role in fostering entrepreneurship attitude among its stakeholders as part of its culture. Fourthly, the culture change also focuses on the team spirit within organization. An organization is made of a team of individuals who work together for a common purpose. This team cannot be formed automatically. The leader is responsible for the development of teamwork spirit among the workers (Zhang, 2009). Team spirit is achieved through holding meetings as well as rewarding hardworking employees. Therefore, the teams should be informed about any culture change to foster and maintain such spirits.
Customer service is also an important dimension of culture change. An organization exists because there are customers to pay their bills. Hence, the staff must keep this in mind in their day to day activities (McGuire & Palus, 2003).
The leader should promote a tendency towards customer orientation as a key tool in the success of the organization. Indeed, the organization should hold meetings and seminars to discuss emerging issues concerning customer service and suggestions on how to improve service delivery. The organization should be transparent in governing its activities. This means that accountability is not an option not only for the leaders but also for the staff. The leaders must be honest in their financial dealings hence the employees should emulate the same. This will eventually become the culture of the organization. This is accompanied by open communication internally and externally (Burman & Evans, 2008).
Open communication fosters a culture of openness not only among the staff but to the organization’s public. With this culture, people find no need to keep secrets especially concerning matters that affect the well-being of the company. An organization’s culture that values open communication often experiences increased loyalty, hence, productivity increases since vendors, lenders and other stakeholders trust the company (Palus & Horth, 2002). The culture change should also foster supportive environment. In a culture where workers are punished for minor errors, they become more stressful and prone to make more mistakes. On the other hand, an environment where workers are encouraged, supported and given guidance makes them develop a culture and the desire to succeed in everything that has an overall influence on the company’s performance.
Leaders have a critical role in embedding the culture within the organization. They play a pivotal role in ensuring that the organization does not lose its culture simply because a merger has occurred. According to Punit Renjen, the Deloitte chairman, leaders should introduce a culture of purpose to safeguard the culture of the firm as well as ensure that the organization continues to prosper. The culture change should have a positive impact on all stakeholders of the company. Strong culture within an organization facilitates financial performance of the organization. Punit believes that despite cultural challenges that the company has experienced in the past years, cultural change should be guided by a sense of purpose. The leaders should learn to cultivate and foster the growth of positive cultures for a common goal of the organization. The leaders should align the changes in culture with the mission and values of the organization and the execution of its operations. The purpose driving the culture drives the performance of the organization. Punit believes that companies whose founders are ingrained in safeguarding the culture of the organization tend to maintain high performance of the company as opposed to organizations that are not able to withstand the cultural change (Palus & Horth, 2002).
Cultural change has a greater influence than the challenges of profit and loss. When the leader is not focused on the sense of purpose of the organization culture, he lacks a clear purpose in meeting the needs of the consumers. Therefore, culture drives the performance outcome of a company. According to Punit, the leaders should devote themselves to management of the culture change within the organization. This involves ensuring that the mission and values of the organization are well understood by the employees of the company. For example, the success of Deloitte has gradually improved as a result of the leader’s initiative to ensure that all the employees are well-versed in the objectives and goals of the organization and all its branches (Cameron & Quinn, 2001). For instance, Deloitte has 60,000 employees in the United States. To ensure that the company is successful, the leader has worked tirelessly to make the workers understand why Deloitte exists to offer such services.
The implementation of culture changes is a process that involves identifying new behaviors, beliefs and values. In most instances, if the leaders, who act as the role models do not accommodate the change, there is likelihood that other staff will find it hard to adopt such a change. Therefore, the first strategy is to act as the role model. The leader should be on the forefront in practicing what he or she preaches. The leader should recognize and reward new behavior.
Adopting a change means that the organization has to develop new capacities. For example, when Deloitte merged with Anderson in 2002, they had to develop new working relations and find a middle ground to operate (Palus & Horth, 2002) . Therefore, to implementing the change, the organization needs to find new capacities, address their differences and similarities as well as come up with grounds on which to operate. They can decide on whether to be team or customer based regarding the decisions made by the leaders.
In the case where mergers take place, the companies merging should learn how to combine their diverse cultures to achieve a common goal. This will ensure a continued effectiveness in service delivery. The organization should be ready to compete, retain, attract as well as promote the existing talent that will be vital for the implementation of culture change. The leaders should facilitate people to adapt to the changing conditions (Parker, 2000). The organizations should collaboratively increase their effectiveness in dealing with shared responsibilities. This means that the leaders should create and pursue the strategic goals of the organizations involved.
Culture change within an organization affects not only its stakeholders but also the way things are done. This is because culture defines how people behave and how they understand the outcome of their actions. As a result, when a change is introduced in an organization, it is important to create a sense of purpose and change that involves other members of the staff. Deloitte is a perfect example of the organizations that have been able to establish a global despite the challenges it have experienced in its bid for merger and expansion. The case studied in this paper is Deloitte merging with Anderson and the challenges they experienced as a result of their varied cultures. It is just one example of what companies go through as they try to partner or merge with other companies. Leaders play a major role ensuring that a change in the culture of the organization is successful. As analysed above, such a success can be achieved through regular communication and acting as a role model. Leaders also play a role in harnessing culture change within an organization to promote its effectiveness. The leader should focus on building a culture not only for financial gains but for the support of social responsibility as well.
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