NOT TO BE TAKEN FOR GRANTED

Date: 2015-10-07; view: 509.

Asda and Wal-Mart should be the perfect merger, given that the former has deliberately set out to copy the US retailing giant's style. But Asda is keenly aware of the pitfalls.

It had long been known that the team which was brought in to res­cue Asda from collapse in the mid-1980s had deliberately set out to copy virtually every aspect of the giant US discount group that could be replicated in the UK.

So Asda stores have “colleagues”, is not employees. They have people in the parking lots to help drivers to park. They have old-age pen­sioners wearing colourful name badges, standing at the door to say hello and ask customers if they need help. In the Leeds headquar­ters no one has an individual office, not even the chairman. Finally, store staff get actively involved in promoting individual product lines, and are rewarded when their efforts lead to tangible sales improvements.

The company's employees chant the Wal-Mart cheer before store meetings. They benefit from a share ownership scheme which is one of the most widespread in the industry. Top executives share rooms when on business trips, and pay for their coffee and tea from vending machines like the lowliest sales assistant.

Given, the similarities, there are few who really believe putting Asda into the Wal-Mart network will result in anything but success. But, says Asda's Chief Executive, Allan Leighton, this is no reason to be complacent. Fairing to bring together corporate cultures, even those as similar as Asda's and Wal-Mart's, could lead to the downfall of the most logical mergers. “When acquiring or merging with a busi­ness, getting the cultures to fit is fundamentally important,” he says. Half-way houses, where compromises are made, never work, he believes, and nor does imposing one culture on another. “A compa­ny calling their colleagues col­leagues and treating them like staff is not the answer,” he says.

Middle management comes next. “Initially, everything is done at the top of the organisation,” he says. “But most of the work is done in the middle.” If middle management is not incentivised, a deal can go horribly wrong. “It all boils down to people in the end. And what motivates people? Unless you can demonstrate very quickly that their influence in the organisation is at least the same if not better than before, then people will get concerned about it,” he says.

Third comes getting to know each other. Asda and Wal-Mart have spent the last few weeks swapping store managers and IT systems staff. “We will go out there, look and bring back,” Leighton says. “That way we will have own­ership of the changes as opposed to having them pushed on us.”

It will always be hard to deter­mine whether a merger or takeover has failed because the cultures simply did not fit. But success is more likely to elude those who do not really believe in the cultures they are trying to create. “This all comes from the heart,” says Leighton. “You do not get it from textbook management or instruction. You have to create an environment where people feel comfortable in expressing them­selves in a different way.”

From the Financial Times