Núria Cabuti: 'When a Merger Happens, Diversity and Listening Are Key' - Bertelsmann SE & Co. KGaA

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PenguinRandomHouse | Madrid, 10/12/2016

Núria Cabuti: 'When a Merger Happens, Diversity and Listening Are Key'

Nuria Cabuti at the Diversity Conference 2016

Subject: Employees
Country: Spain
Category: Project

Diversity in the workplace is not just an issue for HR departments but has relevance as a competitive factor for most corporate functions. And so, managers increasingly see employee diversity as a strategic advantage. At the Bertelsmann Diversity Conference 2016, five executives from various Bertelsmann divisions presented case studies that showed how diversity constitutes a concrete business case for their business. In the first part of our series  , Arvato UK CEO Debra Maxwell talked about the relevance of diversity to Arvato's businesses. This time, Núria Cabuti, CEO of the Spanish-language publishing group Penguin Random House Grupo Editorial, shows that diversity is far more than the promotion of women: Workforce diversity was the linchpin of the Santillana acquisition. The integration of the two publishing groups involved merging two profitable, successful companies. Cabuti relied on diversity and appreciation throughout the integration.

Why is diversity relevant to your business?

Diversity gives rise to a variety of perspectives – a very important key for the success of the Santillana integration. For us, diversity is a salient factor in various fields and is reflected, among other things, but not solely, in our workforce. For one thing, we have a very broad readership, whose needs we must anticipate and reflect. And for another, our success depends on a broader public and many, many stakeholders – in particular, they include including the author teams, agents, journalists, and of course the booksellers. At Penguin Random House Grupo Editorial, in our turn, we try to reflect this diversity in our workforce as best as possible, which I think we succeed in doing quite well. But our competition never sleeps. It has an excellent setup – and by that I primarily mean diverse, too.

With Santillana, we have successfully integrated one of our competitors over the past two years. In this integration, we benefited from the very different company cultures of the two publishing houses. We know from the experience of other M&As (mergers and acquisitions) that the disparity of company cultures and the associated goals and ways of thinking was a major reason for their failure. At Penguin Random House, we didn't want to avoid this diversity, but to use it. And one of our major learnings was: If we want to leverage diversity at all levels, we have to start at the top of the company!

So we included decision-makers from both cultures in all the major steps in the process. An integration of this size is anything but a walk in the park. People tend to be creatures of habit. But an integration is about processes of adaptation – on paper we develop new systems, structures and ideal processes to achieve this. However, they also have to be put into action and brought to life – and this is where the great difficulty lies. It requires changes in the way people behave and communicate, and a new value system for our entire workforce. Everyone has to support the breaking-open of their own, familiar corporate culture during an integration. I believe the cultural change triggered by the acquisition was good for everyone involved. It could only emerge from the new diversity. And we have found that a change can only succeed if people can question strategies and openly say what they think – in other words, if there is fertile soil for leveraging diversity.

What is your business case?

The integration of the two publishing houses Penguin Random House Grupo Editorial and Santillana Ediciones Generales was essential to our overall business success. In 2014, this acquisition, the largest in the company's history, was still ahead of us: Together, we wanted to double our size in nine countries and be number one in the Spanish-language book market! However, the acquisition took place in an environment of financial constraints and in an economically very tense environment in Spain, which implied some risks. So one thing was clear: all levels would have to pull together on both sides, otherwise it wouldn't work.

We had been in talks with Santillana for years. We used the time for intensive preparation – however, many meetings were not about investment models, as planned; most of the time we talked about HR integration and the question of how we could bring the employees of both companies on board early on and keep them on board. Did you know that four out of five mergers only become an economic success after many years? We've obviously done a lot of things right, because our hard work was very quickly reflected in hard figures: Within two years we were able to increase revenues by 70 percent, and our operating EBIT rose by 328 percent between 2013 and 2015. And neither authors nor executives in key positions have left us!

These developments were crucial for us and I largely attribute them to the fact that our team was very talented and very diverse: six men, five women, aged 36 to 61. In the extended management circle, which consisted of 21 members, eight nationalities were represented. We recruited these colleagues from a wide range hierarchical levels and, promoted two of our top talents, who were both pregnant at the time, to senior positions. Together we then ensured that our diverse perspectives were reflected in our new structures. For example, we established new, mixed sales and editorial teams and sought talent for management positions on both sides. The whole process was characterized by a cooperative management style: delegation of responsibility, expressed confidence, clear goals, and a high degree of transparency. It was a very inspiring atmosphere, which we can all be proud of. Only in this way were we able to successfully integrate the existing knowledge.

What has happened in recent years - and what still needs to change in your view?

In my experience, appreciation of diversity is not seen as key in international corporate structures and in M&As. For us, this perspective was the key to success. We faced the task of transforming uncertainty and resistance into engagement, cooperation and support. Respect for other cultures and entirely different approaches, the change in perspective, and the exemplary behavior of the managers won us the crucial backing of the workforce. For me that was very, very important! Many colleagues feel I took a "courageous approach" to the integration. From my perspective, it was perhaps a new approach - but above all a necessary one: to welcome cultural differences, to break through hierarchical understanding and entrenched structures and to only make decisions top-down in any case. Nothing else can work in today's complex world! For the next few years, I'd like to see us continue on this path and really live our new values – creativity, flexibility and diversity. Our joint new publishing house is characterized by unique personalities. They make up our "identity" as a company. We need their uniqueness – in order to become even more successful. 

What are your recommendations for better leveraging diversity? 

  • Discover the value of differentness! The advantages and potential challenges that come with a diverse workforce will strengthen your company. 
  • Listen to your employees and don't stop communicating – top-down decisions no longer work in today's working world. 
  • Our environment is changing day by day and very rapidly. Try to integrate this perspective in your actions and not to prevent change: panta rhei! 

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