Text version of interview
Maybe we can start off with a brief background on yourself?
I’ve been in HR for over 20 years and with Microsoft for the last nine, particularly focusing on mergers and acquisitions and a part of our team that is dedicated to that in the past four years. I definitely get a lot of experience trying to combine cultures and it’s a passion of mine.
Let’s define what company culture is.
It’s really how people in the company believe and act. To me, this shows up in the company’s values, perks, work habits, communications, and decision making.
Why is it important?
If you don’t have a vision and a culture that matches that then things just don’t work. I am very lucky to be at Microsoft right now because we’re on a cultural journey. Culture of a company means a lot to people, and it's what we show up as every day - it’s who you are, and who you want the company to be.
How would you identify with it?
We start thinking about company culture as we become aware of a deal and we gather information on the company. When it comes down to assessing what we would call as a target company’s culture.
In the past, we used detailed tools and assessments, but now we are trying to take a more fluid approach and base it on what the deal structure is like, how deep we go and how familiar with the company we are.
All of this is done within a deal timeline, where we are trying to identify similarities and differences.
As someone looking on the outside in, it seems like Microsoft itself is changing its culture and evolving. I am curious about your perspective as someone who actually works at Microsoft.
Coming on board, our current CEO has switched it to a growth mindset and being a learning culture, versus a know-it-all culture and it is a big change. Acquisitions are a huge area where we get the opportunity to learn how other people are doing things and how we can bring that into our culture.
With an Xbox division, we were able to be a bit unique in culture, how we got things done and became really customer-obsessed. I’ve seen that customer obsession really drives the values of Microsoft towards learning what our customers want, how we deliver on that, and how we work together to bring that to life.
Does culture really change though?
I have found that intentions of learning what similarities and differences are and how we bring people along while taking the best of both are somewhat idealistic, but I do think Microsoft has done that in general and really has shifted the focus on customers.
It’s not easy, but it needs to be very intentional, from top-down and the bottom-up.
- How do managers play a role in this?
- How do we align our processes and policies around that culture?
What’s something tangible that you guys have done to prompt that change?
We have really tried to align even our total rewards approach and our conversations towards rewarding people on the impact they make and how they work together.
I have seen a drastic difference in the last five years of the conversations that happen with managers and employees and people being open to admit when they are doing well and where they need to improve and not being punished for that.
At what stage of an M&A process are you thinking about company culture?
You typically think about it when you get to a strategic approval that we are going to move forward with the deal, when we get the approval to negotiate or when we know we are going to get an LOI signed.
That when I start diving deeper into known information about the company and here you can get even a high-level list about what’s similar and what’s different, so you can start forming opinions that you can use once you get to deeper culture conversations.
How does your perspective of a company’s culture differ from corp dev’s perspective when you are approaching potential targets?
It plays a role in how we are structuring the deal. We have moved to limited structures where people are on their own.
We have really driven some of the growth of our games by acquiring studios and leaving them in this limited model, which means they are on their own terms and conditions and they are able to support and continue their own cultures.
The culture drives the game and we really want to protect that and use that to foster their innovation. I think corp dev takes that into consideration when they are thinking about structuring the deal or the negotiations.
How do you find an alignment between the folks that are more on the front end of the deal and get them to start thinking more thoroughly about culture?
We are constantly having conversations about what we are trying to accomplish with a deal and we talk about deal value drivers and talent. No matter what style of deal we want to do, they are aware of that and they are aware of challenges that go into those structures.
They also participate when we have some of the cultural conversations, usually from the start, and feed us information on what leaders are thinking and how that’s working in the deal structure.
How do you assess the company’s culture?
If it's a fully integrated deal we like to have the company come to us, talk about themselves, who they are, their values, their talent, their culture, and then we talk about ours.
We start having a conversation around what’s unknown and forming similarities and differences that we need to work through.
We try to use the information we gather to frame engagement from our side, which helps us find a way to engage with employees, be it communication, integration, what is really needed so that we can form integration plans.
Tactically, what type of questions do you actually ask companies to get that assessment understanding of their culture?
The templated questions we give them in advance include questions like how would they describe their culture and what’s valued. If there is something that we find that stands out we ask them to tell more about that. We go into their leadership, how their leaders work together, which brings really good insights into the hierarchy, and how they are making decisions together.
We ask questions around communication, such as how they inform their teams, is communication verbal or written or whether they have weekly meetings.
We also ask questions about physical space, why do people work for them and why do they stay?
Who are you asking these questions to?
Typically the leadership team and those in the tent at the time, because we are often having those conversations when everything is still confidential.
What are some of the early signs of risk or a bad fit?
In our fluid approach, we are looking for gaps, similarities, and differences so that we can use that for framing employee engagement and how we bring people along.
Then we look at whether there will be challenges of integrations, where are those differences. We get insights into leadership styles and their patterns throughout the diligence process and whether that is something we can help them with.
We do find insights in how they describe their technology and what they think is going to happen post-integration. We will see early signs of risk if that's not how we are thinking about it and in that case, we will know we have a lot of work to do on alignment.
Our culture is such that we don’t ask others to align to us, but instead, we learn together and try to figure out how to move forward.
What are some examples of those types of things you’d identify that need to be taken into consideration?
We look at the whole picture and try to identify whether what we see matches our vision and purpose. If we can align to that we can be more successful. It all depends on the situation and the personalities involved.
We try to build trust and get those things on the table because it makes it much easier to work through it than being surprised.
We don’t like to walk away from deals, which is why we do diligence to determine whether the tech and talent are really what the target company claims they are.
A lot of times, if the key leader leaves, then the team around him tends to leave as well. Do you ever sense a vulnerability for multiple people leaving?
Those are parts of the conversation we focus on retention efforts on and have intentional conversations.
Sometimes it frees people up once their leader leaves to take on more, so it really depends on the situation and person involved.
But, sometimes there are people that want to leave the company, they don’t want to have a boss and multiple decision-makers. That can be a challenge for sure.
Once you identify these types of risks, what’s your advice for dealing with it?
We put together a plan based on what we identified, what the team is wanting to accomplish and what they need, be that for a retention period or coaching and training leaders.
We put together a plan based on needs, engagement, and how our engineering team and the HR team that works with them wants to handle it. The plan is based on what we are trying to accomplish, what’s the issue, is it solvable, as well as on how we want to move forward.
Where does leadership fit in when you see those signs of risk and start developing that play around it?
They are involved from the beginning. We are having tons of conversations around what we are seeing and how they are going to handle it. As we work through to post-close we have integration planning and they are involved all along the way.
At the end of the day, they are responsible for it, a new person is becoming their employee and they are responsible for setting the team up for success.
You mentioned that you look at your company culture as well as the target company’s culture. Can you tell me more about that?
Microsoft has been on this cultural journey and different teams have come along who have their own team norms around how they get things done, so we will look at that team and present to them where we are at on this journey.
We will want to know what is their vision and what they are trying to accomplish, what are the things that they are juggling. We will want to know how to bring this team in that also comes with work and a pool of talent. Both sides have specific cultures, so it is important to make sure we understand each-others values.
When we do culture comparisons and look at the target company and the team coming in I am given a basic checklist of their values, who they are and what’s their team like.
We have a side-by-side comparison where we look at the implications of integrating these cultures. Based on that, we can tell leaders what we have noticed and help them bring their teams in.
You actually work with quite a few of the acquisitions that are specific to the Xbox Studios division, which is Microsoft’s gaming studios. Can you make a contrast about what’s unique or challenging when you think about culture? I would expect that the culture of a gaming studio is unique.
Our Head of Studios has done a great job keeping them individual and fostering their studios. Each studio we have acquired has been slightly different.
Microsoft has high standards and we do background checks for all our employees. As we bring in our acquisition hires we do that as part of the offer process, but for studios, we did this separately because they are a limited integration.
Background checking wasn’t something that was part of their culture, so we had to introduce them to that aspect of Microsoft. Some studios were fine about that, while for others it created a bit of angst, so we had to work through that together.
What are the things that impact a company’s culture that you wouldn’t expect to?
- Can you work remotely?
- Does everybody need to be there at a certain time?
- Do they support vacations or not?
- Is the space bright enough for creative teams?
- Do we have the technology that we need?
- Do they have the tools and resources to do their jobs?
- Some of that really does impact people.
How do you minimize the fear of being overshadowed by Microsoft's culture?
That just takes time and trust and you need to do what you say you are going to do. We try to help them see we are open to learning from them as well and help them see what they can bring to Microsoft in terms of career and resources.
Is fear something you see often?
There is a fear of the unknown because a lot of employees don’t choose, it is the leaders who make the choice. They want to know what’s in it for them and what the acquisition really means in their case.
We try to put attention to this by having leaders address those concerns by communicating with employees.
Are there other big corporation formalities that target companies might not be used to?
There’s a lot of things. All of our compliance training is a good example. We try to warn people that they are going to get inundated with emails, announcements, training and things that they have to do, because that can be very overwhelming to people.
We try to help them figure out the network within Microsoft and who they need to work with, in order to get things done, which can be stressful, especially for people coming from a smaller company.
People come with work, which is completely different from a new hire, but regardless, once they are in, even though they have work, they are in a sense new, which I believe is a challenge.
How do you accommodate and foster the target company’s culture?
It starts with learning about them and what’s important to them. Sometimes we need to find a way to fund certain aspects of their culture so that they can continue to feel like they have those connections, especially initially.
We have really been having a lot of conversations around finding a way to continue to foster the innovation that comes with those leaders and employees within a big company.
How are decisions made and how do you keep the team informed?
We are working with the leadership team, where announcements are a partnership between the target company leadership and Microsoft.
We feed the information back to try to put it into a natural cadence of what the company’s doing.
As we get to integration, we set up teams and have onboarding where we have different categories where people can ask different questions, so we can post information.
We use old-fashioned newsletters that we email out. It is customized to the deal and the size of the company. If it’s a smaller company, we will leave it up to their leaders, whereas for larger ones we will do more communication.
During integration, what are the non-negotiables?
For us, it always goes back to the value driver and what we are trying to accomplish.
Our team steps out a little after the close, we kick off integration and stay engaged up to the point when everybody is running with it, so most of our non-negotiables are prior to closing and figuring that out.
Have you ever seen anything inappropriate you’ve had to rein back?
Nothing really inappropriate, but we had to clean some things up from a compliance standpoint. One company was giving their employees brass knuckles, so when we acquired them we needed to ask them to stop doing that.
What challenges come up when you are combining cultures?
It revolves around how you keep them together and nurture innovation. A lot of them come with the get it done mentality of the startup so another question would be is the team ready to do things at scale.
Our customer expectations are really high, so you need to wrap that up and help them understand it. Distributed decision making and the target company’s CEO having a boss is another challenge.
Accountability changes, processes are changing and governance is changing as well, and even titles and jobs change, so there is a lot of change happening.
Can you walk me through the CEO’s transformation?
It starts with up-front conversations about what’s the role like, what skill set they have and what’s the role within Microsoft. It largely varies on that person’s skill set and what they are going to be doing and is there a compelling role moving forward.
A lot of the times, we had CEO’s come in that were not only able to land the product, but there was also a growth path within the area that they were coming into, so they were able to take on more.
In other scenarios, where the CEO was just a person running the business, so they just had the transitional role but we didn’t have a defined role for them and therefore we didn’t need their skill set.
Once acquisition happens, it can be challenging for CEO’s that stay to lead their teams to get accustomed to having to keep extra people informed about what they are doing.
Did you see a situation where they just can’t handle it and things don’t work out?
Yes, we have had people leave because of that or because they wanted to go back to being a part of a startup, so they stay just to land the team.
Sometimes they don’t like the reality of it, but we do try to make things graceful and foster the relationship with them when they do decide to leave. We also had people just change roles within Microsoft.
What do you say to the people who think culture is bad or blaming culture as a scapegoat when deals don’t work out?
I would try to understand where they are coming from and try to see if they are willing to listen to why the culture is important, because many times they just don’t care.
I'd rather spend energy on people who are open to listening and learning about how it can play a role versus just dismissing it.
How does communication and leadership fit within culture? Is it all bundled together or you access them individually?
I definitely think they have their own individual pieces to it, but you need to combine them.
You need leaders to model and demonstrate the culture and really live it because otherwise, it’s not valid. What they are communicating does matter, but it needs to match up to their actions.
- What’s happening at the workplace is culture and to me, that fits into leadership communication.
- Do people do what they say they are going to do?
- How do they treat you?
- Do they encourage you to be honest even when things are tough?
- Do you have a culture where you can speak?
To me, that’s part of communication.
It seems like there is no quantitative science-based way to just assess leadership and predict the capability.
There is data and tests you can use, but to me, it comes down to what people see and live on a day-to-day basis.
However, we do qualitative measures such as surveys of employees, we have scorecards that we do which we use as a check of the state of the technology and to check whether they are hitting their targets.
We do have conversations around that to make sure everyone is aligned and that the attention is present.
How do you measure your own performance with the integration process?
We love data and feedback, and we do have conversations about what worked for them, where we do one-one-one interviews, or do surveys. We have meetings with managers, we check in with them where we ask what else they needed or what it was that they were surprised about and then we use that.
With our own teams, we have lessons learned and post-mortems where we talk about what we learned and we can apply that to the next one. We can send our own internal people to get feedback on our performance and this can be done right after a deal with the people you worked with.
For me personally, I look at whether the leaders are still engaging with me, was there trust there and were they able to clearly communicate what they needed to me.
So, let’s say I am an HR integration person getting into my first integration.What tips or advice would you give to me?
Every deal is different. Being willing to figure out that puzzle, put it together and come up with solutions that fit to what needs to happen, all aligned with value drivers.
Keeping in mind that this is a personal situation for people matters, as well. It’s important to be flexible, because sometimes just when you think you have a plan in place it changes.
What’s the craziest thing you’ve seen in M&A?
I have definitely seen culture mismatches, where you are put in a situation where all of a sudden you are doing a deal with companies from other countries, so you are trying to bring those two together, which are essentially very different cultures.
In one scenario, leaders were put off by the way our business cards look and found them to be offensive.
The meeting was awkward, because we didn’t recognize their culture. In another, the culture wasn’t open to having women in the room, so it definitely reminded me of doing my cultural research.
What can you actually do to learn about a company's culture to prepare yourself for those little nuances?
I try to understand cultural norms they have so that when we are setting things up, we at least consider and keep those things in mind. This is especially true if there is a global team I haven’t worked with and I also try to do online research by reading blogs and visiting websites.
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