Doug Zopfi

Principal Consultant, Ciber Supply Chain Practice

Mergers and Acquisitions: Managing Cultural Differences (4 of 10)

In our previous blogs we discussed the challenges an organization faces in achieving organizational alignment and to what extent compensation and benefit programs should be harmonized between the two former companies.  Perhaps the most challenging aspect of creating organizational alignment centers around managing cultural fit and creating a new corporate culture for the merged companies.

Broadly defined, culture is “the way things are done around here”.  In today’s increasingly global business environment in which many cross-national merger activities are common, cultural differences are even more pronounced and are driven by ethnic, geographic differences, social norms and divergent business philosophies.  Prudent companies commit the time and resources to understand these key cultural differences and develop an appropriate strategy to manage these difference respectfully.

A critical component of corporate culture is the set of beliefs and values by which the company will operate.  Regardless of the degree of planned integration, the company must operate with a clear and consistent value system that is modeled by top leadership behavior and reflected in the words, actions and decisions they make.

In the end, there are three primary approaches to cultural integration:

  • Cultural Preservation:  While this strategy may have advantages in addressing strong market or geographical differences and is the least disruptive during the merger process, it may, in the long term, reduce standardization and retard the speed of synergistic gains sought in the merger.
  • Cultural Combination:  This strategy does create a stronger sense of unity and purpose within the company, as well as presents a common face to the customer.  It is most often applied in situations where both former companies operate in the same or similar geographic region.  Expect some level of resistance to change from those employees and leaders who prefer the status quo.
  • Cultural Creation:  Creating a new corporate culture does not happen overnight.  It requires a long lead time to plan and implement, and requires constant communication across the organization, as well as strong leadership and support.  If successful, this approach can provide the merged company with a new and fresh start with which to move forward.

Without the full focus and commitment of people at all levels of the new organization to design and address organizational alignment issues, the complete goals and objectives of the merger or acquisition may be under-achieved.  Success requires the attention and participation of the entire leadership team, not just the HR organization.

In our next series of blogs, we will examine the importance and different approaches in developing a Technology Strategy for the new company.

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