cultural considerations are the key to success
Attempting to combine two workforces that already contain a diverse mix of employees is likely to create challenges for joint venture partners when these issues have not been considered in advance. For example, when the workforce is not properly integrated, employees from a JV partner or another can benefit from different contractual benefits: vacation pay, parental leave and even salary. By not addressing this up front, the joint venture risks creating a “two tier” workforce, undermining cohesion and loyalty and potentially creating friction between colleagues and endangering employee retention.
Integrate the right culture
A thoughtful diversity and inclusion strategy is at the heart of a successful joint venture. He is relevant from the general workforce to senior management, board level and management team with day-to-day responsibility for managing the joint venture.
Different JV models will structure management teams differently, depending on whether each partner sees their role as practical or as that of a financial investor. Establish each partner’s expectations from the start, set a common goal, and work to ensure a diverse and inclusive leadership team for the joint venture. It should be diverse in terms of gender, origin, culture and skills, and balanced to reflect the interests of the Joint Undertaking as a whole rather than those of the different partners. Particular care must be taken in choosing the best leader for the project.
Decisions regarding matters such as pricing, human resources and workflow should be made by the management team in accordance with the interests of the joint venture, with built-in dispute resolution mechanisms so that conflicts are handled internally. and that a united front be presented to clients and external stakeholders. Making decisions in a vacuum raises the possibility of discrimination: In a restructuring we worked on recently, a group of engineers selected for possible dismissal by the Middle East JV partner were all from the same geographic region, a risk that the European partner was aware of due to the relative sophistication of European laws on discrimination compared to those in the Middle East.
Consider which systems, practices and standards best match the needs of the joint venture, keeping in mind the requirements of local laws. Occupational health and safety laws; environmental, social and governance (ESG) considerations; and financial compliance, anti-corruption and anti-money laundering requirements differ from jurisdiction to jurisdiction. Whether you adopt either partner’s compliance policies, or a combination based on industry best practices, this needs to be resolved as part of the deal negotiations to avoid conflicts later. .
Also consider the similarities and differences between the corporate values and codes of conduct of each JV partner. How are grievances and disputes resolved within each organization, and how will they be handled by the JV? Again, ensuring that formal policies are in place before work begins will go some way in creating a unique corporate identity and ensuring a cohesive working environment.
Organizational and human issues
Bringing together a diverse team to complete a project is a challenge for any business, but can be even more difficult for a joint venture made up of people from different companies, different corporate cultures, and different backgrounds. Aligning policies can help set the tone for the joint venture and create a common goal, whether workers are employed by the joint venture or assigned or seconded by one of the joint venture partners.
Consider, for example, policies regarding parental leave, which can differ considerably between European and Middle Eastern companies. While the UAE recently improved minimum parental leave rights, new mothers are only entitled to 45 calendar days maternity leave, while European companies must provide minimum maternity leave. of 14 weeks and many offer a year or more. Such drastically different minimum benefit levels risk creating resentment in the workforce unless the joint venture deals with it.
The impact of corporate culture and the different ways of working must be taken into account. For example, are there any practices or standards regarding what people consider a typical workday? Do employees prefer to work individually or collaboratively, communicate in person or via email, and is agile working allowed or even encouraged? How do employees interact with management and the leadership team? Cultural differences may also be relevant for team building and social activities: religious demands such as prayer breaks and fasting, preferences regarding different social activities, and the way alcohol is viewed may be relevant.
For some of these issues, ensuring that there is a common understanding of the different approaches may be enough to bridge cultural differences – but in some cases it will be necessary to adopt formal policies and practices that take this into account.