Mergers And Their Effect On Corporate Culture example essay topic

I have documented in the previous paper for this class my beef with the authors: that they have a ready-made set of excuses absolving workers of all of the blame for downward spirals in productivity - rather, it's the cold sterility of computer technology, or mergers, or globalization, or cost-cutting, or reengineering, or outsourcing, or some combination of the above that is to blame for the unraveling of the corporate culture as we know it. In the words of Charlie Brown, "Good grief". Perhaps it's because I've never been a part of a strong, warm workplace culture, but I believe that the authors underestimate the value of just coming in, doing your job, and not worrying about having a social life or friends at work, and not carrying on about awful the employment landscape is today. Those things are all nice and might be life-affirming and lend 'meaning' to a person's life, but doing the job is paramount to all of the above. (It's not politically correct to point this out.) Again, I want to reiterate a point I made in the previous paper: a job is a privilege, not a right.

There is no more "right" to a job than there is a "right" to win the lottery. I am a terribly lucky, blessed person to have the job that I have, and I work for someone who has the reputation of being an absolute monster at times. But we have gotten so carried away with assigning rights we have no business assigning, rights that the recipients have no business having ascribed to them, that we forget that responsibilities are also involved. The concept of 'rights without responsibilities' leads to anarchy, and virtual anarchy is the condition found in many factories and other places of employment today.

And the fact that so many people have conspired to legitimize the crap put forth by the two authors - from the publishers to the universities that assign "The New Corporate Cultures" as a text - makes me wonder if the world has not lost its collective head. That said, the authors do make some good points about Merger Mania (the topic of Chapter 5) and its effect on organizational cultures, but they don't offer solutions to the problems; rather, they tend to harp on the fact that the sacred employee is harmed in some way by the merger / acquisition process. But several models exist that can facilitate more winners in the merger game than shouting, 'Damn the torpedoes, full speed ahead' does. Cultural differences between the partners of a merger are one of the common reasons for the failure of the merger to succeed. The term 'corporate culture' is often used to describe issues like objectives, personal interests, behaviors, and so forth; problems with cooperation and teamwork are often blamed on the culture of a company.

But in a merger, the term 'culture' means much more than making sure that the people from both merger partners work together in a smooth fashion. The problem in mergers is that people from very different organizations and cultures are expected to work together, to discuss, and to solve complex strategic and operative tasks. It is difficult to impose a new culture that doesn't have the people's acceptance. But the development of a new, shared culture is critical to the merger's success, and it's possible to manage the process in a structured way. Mergers and acquisitions succeed and fail according to how well cultural issues and differences are addressed, and how quickly a unified culture emerges post-merger. Oliver Recklies put forth a checklist of steps to follow when considering mergers and their effect on corporate culture.

First, during the pre-merger phase, develop a strategy for cultural integration; decide if you want to go on with one of the existing cultures or if you prefer an integrated culture (which I'll touch on in a little bit). Second, analyze and describe the existing cultures, for differences and common elements can show up only in direct comparison, as can the identification of cultural barriers, communication differences, and other potential problems. Third, decide on the role that the new culture should play in the new organization; why did you choose that particular culture, and what do you want to achieve with it? Fourth, establish 'bridges' between both companies in order to achieve mutual understanding and cooperation. Fifth, establish a basis and mechanisms for the new culture, including a supporting system of rewards (and, unfortunately, sanctions). Lastly, be patient; people take time to be acquainted to a new cultural reality (2001).

When first studying the possibility of a merger, analysts undertake what is known as due diligence. A proposed merger or acquisition can be devalued or scrapped depending on conflicts over intellectual property rights, personnel or accounting discrepancies, not to mention incompatibilities in integrating information technology systems. Researching, understanding, and if possible, avoiding these risks is known as due diligence (Copeland, 2000). When undertaking a due diligence study, one should take all of the reasonable steps to ensure that both sides get what they expect and not a lot of things that were not counted on or expected. Yet one of the main obstacles to the success of many mergers - the potential compatibility or lack thereof between the cultures of the companies being merged - could also be conquered during the due diligence phase if company heads would take the time to see if they were mixing oil and water.

Instead, most players in the merger game focus instead on things like strategic business development, operations, marketing, sales, and finance. Cultural cohesion often gets short shrift. Regardless, many companies forge ahead toward Merger land without doing a complete due diligence study. But there is still hope for these companies, if they truly have an eye toward integration (as opposed to merely devouring the acquired company without regard for the consequences). While perfect integration is rarely achieved, in which both cultures form to combine one new culture, the ideal situation is to bring the best elements of both cultures into the new organization. Avoiding the complex organizational issues that mergers bring about is key to making this happen.

A smooth transition into the integration process, not to mention the smooth implementation of the process itself, can be determined by how well you manage the change. A merger is often called "the mother of all change management initiatives", (The L Group, n. d.) because it is truly a multi-headed monster. These "heads" include aggressive financial targets that must be achieved, short timelines in which to succeed, intensive public scrutiny (including competitors rooting you on to fail), cultural clashes, changes related to growth, restructuring, re engineering, retention problems, and politics and positioning. But in order to effectively manage this cultural upheaval, several steps can be taken for managers of merging entities, especially those in the 'acquiring' company: Address "self" issues quickly - that is, it's important that you can answer when the employees ask you, "What's in it for me?" The "me" questions are questions that employees will keep answering until they get an answer. Be sure that clear leadership is applied; avoiding the concept of 'two-headed monsters' (telling employees one thing while doing another) and taking a 'back-to-business' approach can help ease the minds of affected employees. Communicate early and often; in a situation like a merger or an acquisition, the most frightening message is silence.

Make the tough decisions. The merger / acquisition process is not unlike pulling off a bandage. It can be slow and painful, or it can be quick and painful. Either way, it's inevitable that there will be good people hurt by this process. Manage employee resistance early, instead of letting their low morale infect others on the team. There are three major causes of employee resistance, both active and passive.

If the employee is unwilling to put forth the effort to help the merger succeed, performance management in the way of goals and rewards can help. If the employee is unable to put forth the effort due to ignorance of the new rules of the game, training must be a big part of the process. If the employee doesn't know his role and what's to take place, the use of communication can overcome that hindrance (The L Group). As silly as it might sound, another important step in the establishment of a new culture can be found in the name of the new organization, which can take a key role in the process. The new name can be a symbol for the changes that come along with the merger, and it indicates how much both old companies contribute to the new one. For instance, in the Citicorp-Traveler's merger, the new name was Citigroup, which kept part of the Citicorp name and gave the impression of 'lessening' Traveler's importance to the merged entity.

Conversely, the merger between Daimler-Benz and Chrysler gave us the company known as Daimler-Chrysler; while Chrysler's name was in the new company, the new name left no question as to who was pulling the strings. Further, the Grand Metropolitan-Guinness merger spawned the name Diageo, and while that's not an actual word, the name also gives the sense that 'we are a new company, where Grand Metropolitan and Guinness are on equal footing. ' It also helps to remember that, as I stated earlier, there is rarely a perfect integration of the merged companies. Fewer than half of the companies who try to create a new culture are successful in doing so (Recklies, 2001). It's important for the dominant culture to be reinforced; this can be done through such diverse methods from the implementation of rules and policies, to the use of rewards and recognition, to the use of ceremonies and events, to the actual behavior of leadership at this time. It's necessary to coordinate all other elements that influence culture, such as reward systems and systems for performance measurement.

Organizations that want to integrate both old cultures need to ensure that neither partner gets advantages or disadvantages. In order to avoid an 'us versus them' mindset, it is advisable to form new teams with people from both organizations. Only then will everybody realize that inevitable changes are on their way. Of course, the glue that binds everything together during the merger / acquisition process is the usage of open and honest communication. Communication through the integration should be a top priority, and should be honest, proactive, two-way and consistent from all sources. Newsletters, hotlines, workshops, surveys, questionnaires and feedback analysis are all ways to keep the lines of communications open.

I have never been part of a company that was taking part in the merger / reacquisition process during my employment there. The contractor I work for was once known as Comarco before SAIC bought it in the early part of this decade. The only reason I know this is because I found some old documentation on Comarco letterhead in our library. Those are the only vestiges of Comarco's existence here; SAIC has swallowed it whole. From what I gather, the players in my department are the same people who were here during the Comarco days, so SAIC's purchase of Comarco had a negligible effect, if any, on the team. In summary, the rules for cultural implementation of a merger can be put forth in two sentences.

First, to impose an unwanted culture is a good solution in very few cases. Second, the integration of cultures is much harder to achieve, but in the long term, they promise much better results. In addition, Recklies' last entry on his checklist - patience - is equally key to the success of any merger. If the desired results don't show up immediately, that's not a reason to pull the plug on the deal. People take time to become acclimated to a new culture, and if they are high performers, there's no reason they can't help pull it off in due course; unfortunately, we are so driven by short-term success anymore that patience is often a four-letter word.

Bibliography

Copeland, Lee (2000).
Due diligence. Mergers and corporate culture. Retrieved June 5, 2005, from web Culture.
htm The L Group (n. d.) Indigestion vs. integration: Realizing the promise of a merger through effective human capital strategies. Retrieved June 5, 2005, from web The Letter/3.