L&D Best Practices: March/April 2015

Training magazine taps 2015 Training Top 125 winners and Top 10 Hall of Famers to provide their learning and development best practices in each issue. Here, we look at Microchip Technology Inc.’s strategy for cultural integration following acquisitions.

Cultural Integration

Microchip Technology Inc., headquartered in Chandler, AZ, has seen steady, significant growth over the last decade. In 2005, the global company’s market capitalization was roughly $5.3 billion; as of early 2015, it is $8.7 billion. Strategic acquisitions have enabled a good portion of this growth, and in conjunction with organic growth, acquisitions bring many challenges.

Employees in an acquired company face inevitable, often profound changes: Will the new company be more, or less, centralized? How will communication channels shift? How will everyday decisions get made? With changes come uncertainty and stress: What will happen to my job, my manager, my department? In the transition, employees may feel wariness toward new management, while processing the loss of their former company identity and simultaneously forming new relationships with peers and customers. These are tough times.

Microchip believes that its strong company culture—driven by Guiding Values that include “Continuous Improvement Is Essential” and “Employees Are Our Greatest Strength”—is instrumental in its success. When acquiring organizations, Microchip transmits that culture to new employees through a comprehensive onboarding and integration program.

The Integration Team: Microchip’s integration program begins well before an acquisition is finalized. Microchip identifies an Integration Team, comprising people from both operations and support functions who will interact with the new group. That Integration Team receives training on working with the new employees from an acquisition, sensitizing them to the circumstances and needs of people experiencing this change. The Integration Team learns how to answer tough questions legally and honestly, while maintaining confidentiality where needed and avoiding fear-producing exchanges that end with, “Well, I know, but I can’t tell you.” Early messages are important in both communicating culture and developing trust with the newly acquired group.

“Communication Is Vital”: Before initial trainings are delivered, either the CEO or COO makes a site visit to hold a communication meeting about employees’ concerns: What reorganizations will occur? Which positions will change, and when will decisions be made? Microchip practices transparency as far as possible, helping to establish trust and demonstrating respect. Employees learn the timeframe for transitions and what their options will be. HR shares information regarding communication and support contacts, including a training advocate/coordinator for each site.

Early Trainings: Nearly as soon as people from Microchip are legally able to go onsite, trainers head over to deliver an important course: Mastering Change: Navigating an Acquisition. Both managers and individual contributors receive a specific version of this in-person training. Managers learn how to help their team members through this process, and individuals gain insight and skills to address common problems that may arise. According to Suzanne Harbster, Microchip’s senior manager of Global Organizational Learning and Development, “We treat acquired employees as we would any new hire, and we communicate that they are valued new members of our team.”

When managers at the new site decide the timing is right, trainers from Microchip Learning and Development, joined by representatives from Human Resources, return to deliver a series of courses. Two core pieces are “The Business of Microchip” and “Microchip’s Culture,” each a half-day in-person training session. 

In “The Business of Microchip,” employees are introduced to the company: its manufacturing processes, products, customer applications, and the industry. The course illuminates the company’s structure and relationships among its many functional areas, so employees understand both the big picture and their role within.

In “Microchip’s Culture,” participants learn the story of Microchip’s systemically integrated culture and Guiding Values, as described in the book, “Driving Excellence” (Jones and Sanghi, 2006). A senior leader, typically a vice president, co-facilitates this course, underscoring its importance. Both courses encourage participants to actively engage with presented ideas. Learners leave with an understanding of the business model, strategic objectives, and planning process, as well as the Guiding Values and the practices expected of both managers and employees in reinforcing the culture. Finally, participants are shown current employee survey results relative to engagement and job satisfaction. In 2014, 85 percent of Microchip’s employees rated their job satisfaction as either high or good, which the company attributes largely to its culture and supporting systems.

Microchip also encourages new employees to view an online session called “Microchip’s Story and Vision,” in which longtime CEO Steve Sanghi narrates his perspective on the company’s history and trajectory, leaving a powerful impression of how the organization views itself and those who are part of it.

Priority Needs: As standard onboarding trainings continue, Learning and Development works with the divisional vice presidents leading integration to assess priority development needs; then the department delivers existing, customized, or contracted trainings as needed. New employees learn foundational ideas through a series of core offerings, including: “Dynamic Communications,” “Personal Empowerment,” and “Team Player” (or “Team Leader”) sessions.

Leadership Training: Once structural and systemic transitions are complete, the focus shifts to identifying needs and delivering training for leaders in the new group, including “Situational Leadership II” and other core leadership courses. Eighteen months after the acquisition, these leaders are surveyed to uncover additional needs their employees may have.

Two-Way Communication: With communications fully active, the new site is introduced in the employee newsletter. Each site receives posters with the Microchip Mission, Vision, and Guiding Values, as well as annual employee survey results posters, reinforcing the culture. Acquired sites take a baseline organizational climate survey during their first year, so Organizational Development can identify any areas for additional focus to support alignment to the new culture. New sites are assessed on areas such as: Do they have information, communication, training, and practices now embedded that match the Microchip systems? If not, actions are taken to develop these systems within the typical two-year adjustment period.

Integration Debrief: Finally, the Integration Team reviews the acquisition process with focus groups including people from all levels: What went well and what could have gone better? What lessons were learned?

Outcomes: Microchip measures cultural acquisition directly with its annual employee survey, and these results reflect ongoing success: 2014 engagement results showed positive response means ranging from 81 to 87 percent on the items surveyed. The same year, employees worldwide reported that the company practices its 11 Guiding Values from 80 to 91 percent of the time (across mean values). This overall performance has improved year over year, staying near or above the company’s 80 percent goal for the last five years.

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