Culture:
A Driving Force in Successful Mergers
“The reason behind our merger talks is a strong and
abiding belief that the synergies to be derived will ultimately
benefit our shareholders, our customers and our employees”
- CEO
A strong and abiding belief is always a good way to start
a merger. However, experience has shown that mergers often
encounter difficulties in achieving the much sought after
“synergies” that gave rise to the original concept
of the merger. While due diligence is conducted on all of
the financial aspects of a merger, one major reason that so
many mergers (nearly forty percent over a three year period
post-merger) fail, lack of ‘fit’, is rarely addressed
in the pre-merger discussions. It’s only after the merger
takes place that the partners realize that the ‘fit’
or the similarity of vision, purpose and management philosophy
are so different that problems begin to develop and in the
end, the merger falls apart because some of their major differences
are irreconcilable.
The
Issue of “Fit”
The
issue of ‘fit’ refers to the unique culture or patterns
of acceptable behaviour that were developed independently by the
partners before the merger. The organization’s culture as
its called, is simply the expression of “the way we do things
around here” It could be a simple as valuing the customer
above all else, or driving for results exclusive of any other consideration.
For
example, in the present case, one merger partner’s culture
was achievement-oriented, driven by a dominate results-focused management
team while the other partner’s culture emphasized the ‘family’
atmosphere, a strong customer service orientation and a general
determination to get things done right, regardless of cost.
Imagine
if you will, a meeting of the key partners. One of the partners
wants to pursue increasing the ‘bottom-line’ and achieving
gains in productivity while the other partner talks mostly about
preserving the family atmosphere at the expense of most other considerations.
These two partners would be at loggerheads from the outset of their
meeting, each determined to pursue his or her own agenda at the
‘right’ approach to running the business. Ultimately,
if differences cannot be reconciled, the partnership or merger fails
and the partners go their separate ways, very much bruised and battered
by the experience.
Bridging The Cultural Gap
The question is this case is how to bridge the cultural differences
between these two partner organizations, building a new culture
that combines the best of both previous cultures, thereby making
to new organization better, stronger, more competitive than either
of the partner organizations could be on their own.
Adopting a cultural change strategy to create a new and more appropriate
culture requires risk and trust on both sides. The partners need
to objectively evaluate their own current cultures and together
work at building the ideal or preferred culture that will take them
to a better future as a unified and forward thinking entity.
How
to Get Started with Cultural Change?
Given the crucial role that culture plays in shaping behaviour,
one way to build a new culture is by having representatives from
both companies or organizations, list the actual ‘rules’
that currently guide their behaviour and attitudes. Once this has
been articulated, both groups can then combine their effort into
a discussion of what type of cultural change behaviour is necessary
to ensure that the best of both cultures is combined into something
new and exciting and motivating.
A certain amount of problem solving may have to occur before a new
direction can be announced. For example, some people from both organizations
may not accept the merger, and may actively resist it. Others are
much more adaptive and will want to race ahead with announcements,
pronouncements and a flurry of activity that sounds good but means
nothing to employees who have not been involved in the process.
Closing
Cultural Gaps
Top management must support a new, combined culture. It is top management’s
job to “know the way, show the way and go the way” That
is, management cannot force people to work together to build a new
culture. Instead, they need to actively encourage everyone to be
receptive to the new culture by sponsoring discussion groups, brainstorming,
building pictures and visions of the future and providing lots of
information on why the change is important.
Gaining control of the corporate culture is critical to the success
of a merger. It is also critical to the success of any organization
in today’s business environment where the status quo is no
longer acceptable. Achieving synergy is possible but like anything
of value, it takes thought work and effort and especially leadership!
