(By Freek Vermeulen and Ashraf Zaman)
“While the vast majority of Pharmateam’s employees diligently obliged, albeit awkwardly,, a small proportion refused, stubbornly coming to work wearing ties. Although a small minority, they represented a broader sentiment: as one employee (who had removed his tie) stated, “For us, it represented professionalism. We were at work, not play. The tie allowed many of us to separate our work life from our private life”. Although the managing director frowned upon the tie-wearing employees, they willfully persisted.“
In September 2005, Alphahealth*, a large American healthcare company acquired the British company Pharmateam*.
Pharmateam was an ideal target. With just a few hundred employees, the company was relatively small and affordably priced, but it had a solid product portfolio, over a century of history, and healthy financials. Moreover, it was a private company so that at the right price, all the shares could be acquired quite easily and rapidly. Alphahealth expected it to be their entry point into the British market. Management proudly announced the deal as part of its strategy of foreign expansion.
However, the deal took the employees of Pharmateam by surprise. Although aware of consolidation pressures in the industry, the announcement came out of the blue. For a quintessentially English organization, suddenly becoming part of a large American multinational felt strange and eerie.
They noticed one other curious detail: the formal announcement of the take-over included a photograph of Pharmateam’s managing director shaking hands with Alphahealth’s CEO. But Alphahealth’s CEO was not wearing a tie. More puzzlingly, their own managing director was not wearing a tie either; something clearly not in keeping with their traditional ways of conduct.
Two weeks later, Alphahealth’s CEO issued a memo to Pharmateam’s employees explaining the deal and declaring respect for Pharmateam’s achievements and history. It also stated that employees no longer needed to wear a tie to work, in line with Alphahealth’s “friendly” and “approachable” culture. Alphahealth had used this approach for all its acquisitions to date, because although it wanted to avoid cultural clashes and integration troubles, it sought a common corporate culture, and taking off the tie seemed a good place to start.
While the vast majority of Pharmateam’s employees diligently obliged, albeit awkwardly,, a small proportion refused, stubbornly coming to work wearing ties. Although a small minority, they represented a broader sentiment: as one employee (who had removed his tie) stated, “For us, it represented professionalism. We were at work, not play. The tie allowed many of us to separate our work life from our private life”. Although the managing director frowned upon the tie-wearing employees, they willfully persisted.
As Alphahealth introduced further simple changes (like changing the color of the walls of Pharmateam’s offices from its traditional blue to the corporate red), several Pharmateam employees responding by putting their ties back on. In ensuing weeks, the group of tie-wearing employees kept growing.
Soon tie-wearing employees began to sit together on one side of the company’s cafeteria, while non-tie-wearing people occupied the other side. Whenever another employee would appear back in his tie, a round of cheers and applause would erupt. As one employee recalled: “Each day, we would eagerly await the arrival of the employees to see if any more had decided to join our movement by turning up to work with a tie”. In a show of solidarity, some of the female employees started to wear suits and ties as well. Some employees brought an extra tie to work to try to convince their colleagues to join them and become converts too. Before long, the majority of employees had their ties back on.
Within two years of the acquisition, Alphahealth decided to spin off Pharmateam, resulting in a management buy-out, after which the Managing Director was fired. One Pharmateam employee recalled how they had gathered around a computer screen to check out his LinkedIn profile — where he was listed as “in between jobs” — including a headshot photograph of him, wearing a tie.
Reflecting on how they had felt when asked by Alphahealth to remove their ties, and why they had resisted, that employee added: “It made clear to us that the Americans had no respect for our rich history. It was with great joy that we would remove our ties in the car park on a Friday afternoon as we get into our cars to drive home — sometimes via the pub. This small weekly moment of joy was about to be removed by our American owners who think they can come in and bully us with their ‘culture.'”
Most executives are aware of the dismal track record of mergers and acquisitions; academic studies have shown that 60-80 percent of all acquisitions fail. Most executives will also emphasize that integration problems and cultural clashes can be fierce, disruptive, and persistent. Yet, despite this widespread awareness, acquisitions still overwhelmingly fail to create value and cause major problems.
Part of that is because companies continue to underestimate the impact an acquisition can have on the individuals involved. Beyond the fact that the new employer has a different culture, habits, and processes, being acquired affects someone’s identity.
For many of us, our identity is in large part determined by our profession and our employer. One of the first things we’re asked at a party, for example, is “What do you do?” and “Who do you work for?” Having to change that answer represents a fundamental shift in our identity, and when the shift is not self-imposed, it may lead to confusion, anger, and obstruction.
Research on identity consistently shows that seemingly minor details can have big consequences. For example, in an experiment, Professors Christopher Bryan, Gabe Adams, and Benoît Monin urged people to either “don’t cheat” or “don’t be a cheater.” Using the latter phrasing (“don’t be a cheater”) would reduce the number of people cheating by more than 50 percent. In other experiments, using the noun rather than the verb eliminated cheating altogether. Although it seemed a trivial change in wording, it had such a big effect because “don’t be a cheat” alludes to a person’s self-image and identity, where a verb does not.
Similarly, seemingly trivial changes in the way people are expected to dress or behave when at work can have a profound impact on their feelings of identity — and the extent to which they perceive that their identity is under threat. We express the invisible values and beliefs that comprise identity through observable practices. As in the case of Alphahealth and Pharmateam, even a practice that seems of little consequence can become a symbol of identity — or resistance.
Pharmateam’s people rallied around the humble necktie. It provides a cautionary tale of why many executives — at their peril — still underestimate the profound impact an acquisition can have on people’s self-image and identity, and why so many acquisitions still struggle to succeed.
* Not the company’s real name.
(Source: Harvard Business Review)
“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”