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(originally published by Booz & Company)


A Family-owned Business Goes Global

S+B: How have these differences played out in acquisition integration?
Every time we make an acquisition overseas, people in the acquired company expect us to come in with a 100-day plan, replace everybody at the top, put in our people, and then leave. But we have always believed more value is created in acquisitions by leaving the management team as it is. To our horror, we discovered that this is seen as a weakness on our part. “Don’t they know what they want to do?” people ask. “Don’t they know how to manage a global company?” It has been difficult to convince people in the acquired companies that not making changes in management is a part of our strategy.

When we acquired Novelis, we hired a third-party firm to conduct a management appraisal of the top 20 people. This helped us to get an independent perspective rather than drawing our own conclusions about who was the right person for each position, or what new roles we needed to create. This was particularly important politically since Novelis was a spin-off from a company called Alcan. Some parts of the company had ingrained Alcan practices; others did not. The regions operated independently rather than seeing themselves as part of a whole. Europeans had one view of the company, and North Americans had an entirely different view.

Then we came in and complicated matters. Explaining our Indian conglomerate’s diversified company structure was difficult because North American companies tend to be very focused. They don’t understand a diversified company with so many businesses.

S+B: Because they bring different organizational cultures together, acquisitions often raise the question of corporate values. What values are most important to you at Aditya Birla?
Caring for employees is a very strong theme in our company and in India. Unemployment has been very high for a long time, and only lately have white-collar career opportunities been an option for many people. Social relations and social standing are also very important. Part of an individual’s dignity comes from the relationship with his or her family. In that context, you can’t just tell a person, “Tomorrow morning, don’t turn up at work.” If you are a CEO of a Birla Group [subsidiary] company considering layoffs, you will have to think about whether it is the right thing to do in light of the group’s values before going to the board with a plan. We think about what a laid-off employee is going to tell his children when he has to explain why he has lost his job. A lot of my Western colleagues don’t understand this because it’s different; in the West, it is OK to hand someone a pink slip and tell them to pack and move out immediately.

There is no point in judging who is right. One must understand where the other person is coming from. These discussions are as challenging for our non-Indian colleagues as they are for us.

S+B: The Aditya Birla Group has won recognition as a great employer in India and in Asia. Beyond making employees feel good and enhancing your image externally, what do you think is the value of this reputation?
We have won awards, but we don’t chase the recognition. That’s why you’ll find that we do not participate in every survey every year. Our formal policy is to participate in one such survey every other year. Our intent is to benchmark and know where we stand. We want to know what other companies are doing and what we are doing. That helps us compare what is working for us to what works for other companies, and discern what we might need to do differently.

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