For Joseph A. Cutillo, the big picture is just a starting point. He zooms in on the brushstrokes that create it, too. So when it comes to making acquisitions, he looks beyond the books of business to consider how people are impacted by the change.
“People grossly underestimate cultural clashes,” says the president and CEO of Inland Pipe Rehabilitation LLC. “If the culture is diametrically opposed to your culture, even though both businesses are good, it’s going to be a hell of a lot harder to make that successful in the long run.”
Since stepping into the position in October 2008, Cutillo has made one successful acquisition, with another slated to close soon. He continues to actively pursue other additions to grow the underground structure reconstruction company, which had 2008 revenue in excess of $107 million.
But he doesn’t let his expansion strategy fog the human factor. His priority is helping his 445 employees assimilate to the changes.
Smart Business spoke with Cutillo about bringing acquired employees on board as quickly as possible.
Address people’s concerns. [The biggest challenge is] getting through the emotions. An acquisition sometimes is like a death. You can’t deny that people are going to be shocked or may be upset or angry or concerned. The key to success is getting them through those stages as fast as possible.
You have to understand what emotions the acquired company is going to go through. First, the simple thing of: Do I have a job? Second, I’m on this team that I maybe have been competitive with. What are they going to expect from me?
The beauty of an acquisition is there is a high level of expectation from the company that’s being acquired that changes will happen. Because people are expecting the worst, you can usually capitalize on that. You create an excitement out of it versus a worry. The longer you wait, they assume that there’s not going to be any change, and then if you start making changes, you actually have a backlash.
I always use the analogy when I go in with a new team, I say, ‘This isn’t [like] you’ve been sold out to the enemy. You’ve been traded to another team in the NFL or the American League. You’re still a great player. You just wear a different jersey.’
To make an acquisition successful, you have to go in very, very rapidly. We generally meet with the entire team the very first day of the acquisition. Talk to them about their future. Let those that are staying know they have jobs. Let them know what their bonuses are going to be, what the expectations of the company are of them, and then bring them on board and assimilate them as quick as possible so they are part of that.
We will generally have the highest level of the organization participate in those so we can answer as many questions and get as much out in the open and make decisions quickly if there are concerns.
One of the things we’re working on right now for an acquisition [that] we’re getting ready to close is a welcome package in a box. It’s going to be everything from shirts and hats and coffee cups to policies, procedures, handbooks, benefit packages. You get through all of that as quickly as possible.
Get buy-in on changes. At the same time, you’ve got to make sure that you don’t come in as a conquering nation. One of the biggest challenges as the acquirer is making sure the organization doesn’t come in and lose the things that are actually done better, and then we back-adopt those into our culture.
They’ve got to feel that they were bought for a reason. It’s important that we articulate that to them and they’re excited that they’re part of the team, not scared.
What we have to do early on in communication with the business being acquired is we say, ‘Look, there are things we bought you for that you are doing better than us. And there are processes and procedures that we are doing that are better than what you’re doing. We are going to put those in place and we’re going to also steal shamelessly the stuff you do better, so you should be proud of that.’
We have members from that regional team participating in the due diligence. It enables the team to come back and say, ‘What these guys are doing for maintenance is a hell of a lot better than what we’re doing.’ Our organization will accept it because we’ve recognized it; it’s not being forced on them.
We’ll also split crews. So we’ll take people from the acquisition and we’ll put them with teams from our company to work in a given area together. It’s not just a matter of telling them, ‘This is the way to do it,’ but they can physically be involved and see firsthand that it’s better. If people see it work better, they’ll adapt to it much quicker than if you tell them in a meeting room and just ask them to go out and do it.
Provide ongoing support. We don’t make an acquisition that’s going to sit out there as an island. We’ve set up a geographic regional structure so that we have a regional vice president. We’ll generally put in a project manager or two from our other business. We’re not overbearing on them, but we have our checks and balances in place.
We try not to set them free completely. They’ll always report in, in some way, shape or form. If you let them run on their own, they will do things that you don’t want them to, and it’s more difficult to correct after it’s done than beforehand. That’s why we went to the regional structure, so that we could tuck these acquisitions in and still have that local overarching support.
We try to put processes around it as much as possible, but there is a human side at the end of the day. There’s some coaching that will take place. There are more one-on-one conversations that will take place [with struggling employees.] Don’t prolong it. Get 80 percent of the way there as quick as possible and you’ll be able to work through the other pieces.
How to reach: Inland Pipe Rehabilitation LLC, (313) 899-3014 or www.inlandpiperehab.com