Corporate Culture Education Caps M&A History at Covance Corp.
Often, the real work behind mergers and acquisitions doesn't start until long after the accountants and lawyers have crunched the numbers and signed the papers. Creating a unified corporate culture for the resulting organization is a long-term process involving leadership, communications and training.
This challenge has been faced again and again by Covance Corp., a drug development service company based in Princeton, N.J. Since it was founded in 1987 as a subsidiary of Corning, Inc. (Elmira, N.Y.), Covance has completed 11 mergers, nine of them before spinning off as an independent, publicly traded company in January 1997.
Despite rapid growth, not until 1997 did Covance craft a corporate communications strategy to turn its M&A success into a coherent company culture. Separating from Corning gave Covance an ideal opportunity to create a lasting and unifying corporate image for both internal and external audiences.
A new corporate communications department was formed as an extension of the internal communications group in place under Corning. Aggregating internal, as well as financial, media and community relations, the new department set out to measure the company's marketplace image for the first time.
Market research taken between 1995 and 1997 by both in-house and third-party groups revealed that Covance was not well known or understood in the marketplace. Worse, researchers discovered that Covance's entire industry segment was broadly perceived as commoditized and that levels of service among competitors could not be effectively differentiated.
In the summer of 1997, the chairman and 24 top company officers, including Covance's corporate vice president of communications, Beth Leahy, began meeting to define a "culture" for the company that would address its mission, vision and "operating behaviors."
"The challenge was to take these nine very different companies and get them to identify wholeheartedly with Covance from both a company and employee perspective," Leahy explains.
The corporate communications department was asked to come up with a plan to launch the new culture. "You frequently see strategy documents coming down in any number of companies that need to be translated," says Leahy. Covance operates in 17 countries, so linguistic as well as cultural translations of the leadership message were called for.
While HR was primarily responsible for conducting focus groups and training, corporate communications worked on the launch plan, developed internal communications materials, and directed outside agency efforts. The new "Covance Way" was introduced in January/February 1998.
Multi-Phase Rollout
First, the new mission/vision materials were presented to company leaders from every business unit at a multi-day senior management conference. Materials and messages were packaged into print pieces, speeches and video. "That was the first step in cascading our message through every business unit," says Simon Jackson, associate director of education and training.
Town hall meetings for employees followed, supported by an extensive array of internal and external communications efforts, including:
- Employee publications - a monthly newsletter and fax bulletins sent at least weekly carry news about company achievements in science and service;
- Chairman messages - Covance's chairman Chris Kuebler wrote two memos to employees, and appeared in a video explaining the company's achievements in the context of the "Covance Way";
- Instructional videos - a five-part series covering the "Covance Way" was shown to employees over a several-month period.
- Miscellaneous communications - for distribution to employees, the corporate communications department created posters, mouse pads, magnets and decorative rocks carrying key messages.
The company also took its new vision and values to the outside world. Covance worked with the New Jersey State Museum to arrange for display of a company-created mural that highlighted Covance's new values of "science, service, solutions." The mural was featured in the 1997 annual report and on the company's Web site (http://www.covance.com).
The communications and human resources teams led efforts to drive desired behaviors into practice. Key was the inclusion of "Covance Way" values into employee performance measurement, incentive pay and recognition programs. The company's longstanding "President's Circle" program was renamed "The Covance Way" to recognize outstanding employee achievements, Jackson says.
Originally, management planned for the completion of all communication and training by the end of 1999. Rapid acceptance by employees shaved a full year off this schedule.
To start implementing its new corporate culture strategy, Covance allocated a first-year budget of $291,000. Ongoing outsource costs run between $80,000 and $100,000 per year, in addition to the company's built-in operational efforts, she estimates.
Employee reviews conducted in 1998 indicated that the cultural effort embodying the "Covance Way" is taking hold among employees, according to Shelpuk.
Other positive indicators: nearly 800 out of some 7,000 employees (11 percent) received bonuses as a result of recognition for behaviors consistent with the new value system. About 70 others received "Covance Way" awards. (Covance, 609/452-4533)
About Covance Corp.
History: Founded in 1987 as a subsidiary of Corning, Inc. Spun off as independent public company in January 1997.
Size: Currently 7,500 employees in 17 countries.
Revenues: $732 million in 1998.
Corporate Communications Department: Currently 6 full-time staffers.
Covance Corp.'s Drug Management System is part of the Smithsonian Institute's permanent research collection on information technology innovation.