Mergers
are a fact of business life, yet it’s still not easy to encourage employees to
embrace new methods and cultures claims Elisabeth Marx
With
the number of cross-cultural mergers at a record high last year, we are now
confronted with the negative consequences and potential failures of these
deals. Many do not achieve the promised result of increased shareholder value –
the debacle of DaimlerChrysler is a well-documented case in point.
The
failure rate may be high because these mergers are characterised by a clash of
organisational and national cultures, and one could assume that the greater the
difference between the merged cultures, the greater the clash.
There
are various definitions of corporate culture – including "the way we do
things around here" attitude. Culture is a shared system of values and
meanings and produces the glue of an organisation as the basis for
communication and understanding. If this glue or internal integration is
jeopardised, organisational performance will be greatly reduced.
In
order to be successful, organisations have to deal with the clash or shock of
integrating the unfamiliar or "alien" in international mergers. To
individuals who work abroad, cross-cultural mergers seem to go through similar
phases of adaptation, starting with the honeymoon phase at the announcement of
the merger, which is particularly present at top management level. This is
followed by a period of "culture shock", where general helplessness
and disorientation prevail and the fear of job losses produces stress and
negative emotions.
Lower
down the hierarchy, employees ask themselves:
–
Is my job safe, or will I be replaced by someone from another organisation?
–
Will I have to change my working style dramatically in order to survive?
–
Can I actually work closely with the people from organisation X?
Eventually
– and this entirely depends on how the integration process is handled –
employees will start developing a more realistic attitude in the "recovery
phase", where they will hopefully be able to take a different perspective
and integrate the new values into their own value system. This process is
completed in the adaptation phase, which is characterised by a consolidation of
the new culture.
The
table above summarises the culture shock in mergers. The clash of values,
behaviour and expectations is evident in all mergers, but is more obvious in
international mergers.
One
of the first publicly noted differences between Daimler-Benz and Chrysler
concerned their respective attitudes towards pay and benefits. As the Wall
Street Journal observed (26 May 1998), there were huge differences in executive
packages between German and American CEOs.
Germans,
it suggested, are more concerned with equality in pay and focus on salary
differentials, whereas US companies are not really concerned with this issue,
being more individualist in focus. Looking at cultural dimensions, this may
reflect the higher individualism in the US versus the more collectivistic
approach in Germany. The table gives some idea as to how different these
business cultures are.
What
are the solutions and how can some of the major problems in international
mergers be overcome? The following steps represent an ideal-case scenario:
Step
1: Cultural audits
Pre-merger
preparation should not focus solely on the economic/financial analysis and the
business case, but also on the cultural compatibility of the two organisations.
Cultural audits, focusing on values, performance parameters and attitudes,
allow you to predict how successful the integration and ultimate business
performance of the new, merged organisation will be. They also give clear
signposts for faster integration.
Step
2: Integration
Teams
working on the so-called "softer" issues of the merger may enable you
to buffer some of the performance problems that are the by-product of every
merger, due to anxiety over jobs, disorientation, paranoid speculation (who’s
going to win) and the typical "us and them" attitude. Integration
teams have to target the psychological effects of mergers on most employees.
Step
3: Management audits
These
provide an impartial recommendation and solve the problem of senior executive
positions with objective assessment and advice by external consultants.
Step
4: Individual work (self-management)
Employees
in any company should start early with proactive career planning, and should
anticipate and prepare themselves for mergers to happen in the first place.
Further
Reading
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We
have five copies of Elisabeth Marx’s Breaking Through Culture Shock: how to
succeed in international business, published by Nicholas Brealey Publishing, to
give away to the first five readers to send an e-mail to [email protected]
A
new, updated, paperback edition of the book, priced at £12.99, is now available
from all good bookshops or can be ordered direct from the publisher (tel: +44
(0) 207 430 0224 or e-mail: [email protected])
