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Cultural clashes could lead to quick divorce

Published on Friday, 03 Dec 2010

With Asian cross-border mergers and acquisitions expected to continue surging over the next two years, human resources departments across the region are in overdrive to make sure transitions are as smooth as possible. Still, many companies - acquirers and targets - are expected to go through the process a little bruised.

A key concern is how to align the corporate culture. Even among Western companies, this harmonising mission can be a daunting task.

Often, the cultural clash can be contained and, over time, neutralised. Sometimes results can be awful, with the corporate marriage ending in divorce, or one company imploding in an orgy of mass resignations or litigation.

"Retaining talent is critical in order to maintain business operations and customer relationships, and to keep employees focused on their jobs during a period of uncertainty and change," says a report, "Asia on the Buyside", by consultants Mercer and corporate investigators Kroll.

In another report, "Breaking Down Borders", Mercer notes that Asia is not merely a target, with regional firms busy shopping abroad as far afield as Africa and South America.

Unfortunately, some of these companies are prone to tumble and self-destruct in a social and cultural minefield. "From understanding the local legislative landscape to overcoming cultural issues, and attracting top talent, there are myriad issues that companies must consider before setting up operations overseas."

The report says companies entering new regions must carefully analyse the market, come up with a strategic workforce plan and formulate a strong and competitive rewards programme for its employees.

Another challenge is on the legal and regulatory front. "The legislative landscape differs considerably across Asia, where no country has the same labour laws, union presence or legislation. Some nations have strong unions that must be accommodated, while others have unusual tax laws to deal with." Mercer sees five major issues altering the Asian cross-border HR landscape: pay equity practices, executive remuneration, employee health care, retirement programmes and general workforce practices.

"Organisations must develop a structure and strategy that complies with local legislation and is sufficiently flexible to adapt to any reforms," it says.

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