Mergers And The Vanguard Group Essay

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The Director at His Best: The Right Question at the Right Time

Mergers are often advocated as a way of generating powerful organizational synergies for both newly-united organizations. But merging together two dissimilar corporate cultures can often result in profound challenges. The Vanguard Group of Investment companies is a result of a merger of several organizations and the organization initially faltered in its attempts to gain a clear sense of direction. The board of directors was divided between those loyal to Philadelphia-based Jack Bogle versus those still loyal to the Boston investment firm that made up the conglomerate. According to Jim Hill, there was constant friction between the two sides and meetings often were focused more upon one faction’s attempt to dominate the other rather than advancing the true interest of the firm.

Vanguard thus showed all the signs of not being a truly merged entity but was more like a warzone of different alliances. This was not conducive to creating a functional and profitable company. Rather than dig in and attempt to oust or oppose Bogle (given such an attempt had already failed and further enflamed the conflict), Hill took Bogle to lunch and asked him a critical question, namely where he wanted Vanguard to be in the next several years. Bogle responded that he wanted Vanguard to be...
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This idea resonated and complimented Hill’s own vision and underlined the fact that despite the many differences between the two men, there was common ground as well.
Hill emphasized the vision that the different board members shared, rather than their differences. His first instinct was not to sow more dissent but rather to validate Bogle’s role, while still attempting to move the company forward with a common vision. Moreover, he also empowered Bogle by specifically telling Bogle to go forth and realize his aim. But implied in this statement was the fact that Bogle had to work with other board members to ensure that he was able to function in an optimal manner and reach critical benchmarks.

Eventually, the board of directors, unified by that simple commitment, decided to shift all operations over to the original Vanguard organization. The Boston faction grew less powerful in terms of the strategic direction of the firm but Bogle remained true to his commitment afterward to place the firm and its objectives first, not his own egotistical needs. Hill’s willingness to take an active role to smooth the interpersonal frictions on the board is an example of how a good board member must operate. Hill was well-versed in the needs of the organization, thus he…

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