Mergers, Partnering, Restructuring:

Blending Cultures in the ew Company

Peg euhauser is the author oI Culture.com: Building Corporate Culture in the Connected \ork-
place," and two other books. A resident oI Austin, TX, she has a sociology background and has
been consulting Ior over 6 years.
About Culture
There are many ways oI characterizing culture:

Primary culture is what you do when no one is watching".

It's the way we do things."

It's our company's personality"

The values and belieIs oI a culture are its core, all the other elements oI a culture are negotiable and
subject to change. In a tribal society, the sacred bundle contains the core artiIacts oI the tribe. The
responsibilities oI the tribal elders are to:
. Protect the bundle
z. Teach the youngsters the lore, the signincance oI the artiIacts in the bundle
\hen communicating lore, it's best to use stories. Example: Peg tells her new employees about
the time she hired a taxi Irom Creensboro, C to the Homestead Resort in Virginia -- a $oo Iare
-- to get to an appointment when her Bight was delayed in Chicago. Message: Lon't give me ex-
cuses -- show up!)
Assessing how one culture Ieels about another: \hat do you say about them when they're not
present:"
levels oI cultural expression:

Visible Symbols

Lspoused Values

Basic Assumptions.
\hen you start challenging basic assumptions, expect a backlash. (Lxample: current news story
about health care providers harming their patients through errors is shaking them to the core.)
You can't directly change basic assumptions. They evolve slowly Irom the other aspects oI culture.
Why is Culture Important in Mergers?
Per McKenzie & Company, ,o - ;o% oI merger/partnership Iailures are due to culture clashes. It is
important to do due diligence on cultures beIore merging companies.
Some issues that happen when companies merge are:

Leadership

Luplicity

Mismatches oI culture (both ethnic and corporate)

In Built to Last, ]erry Porras and ]ames Collins identiIy a key trait oI long-lived companies: these
manage to simultaneously:

Preserve the Core

Stimulate Progress
Lon't assume that only the CLO and senior managers can work on the issues -- there's a lot oI
work to do at all levels
Three Basic Questions to Answer When Merging Cultures
. \hat worries you about this situation: (Any impending 'train wrecks' keeping you awake at
night:)
z. \hat key characteristics do you want the new culture to have:
. \hat action will you take to make it happen:
In case you aren't already worried, consider these questions:

How will your job change:

How will key leadership positions change:

\hat do the existing cultures think oI each other: \here is there agreement and respect:
\here is there dislike or distrust: \hat evidence (behaviors, stories) support your conclu-
sions:

\ithin each group, what level oI trust is there Ior leaders and peers:

How much change has each group experienced lately -- enough to burn out or too little to be
adaptable:

Lo many group members Ioresee a crisis:

\hen envisioning key characteristics oI the new culture:

\hat's the reason Ior the merger: \hat's the gain:

\hat should be the core values & belieIs oI the new organization:

Is this truly a merger, or is it really an acquisition:

II you are acquiring, which issues are negotiable and which are not:

II you are being acquired, which (Iew) issues will you hold nrm on:

Is the acquirer acting arrogantly:

Planning for Action:
There are options when combining companies:

Continue to operate them as separate entities

Assimilate (dominant company assimilates subordinate one)

Integrate (blend the two cultures)

It's important to be straight with your employees about which option you're Iollowing. II you call
it a merger and it's clearly a takeover, it violates employee trust and only adds to the conIusion. II,
Ior political or public relations reasons, you can't be explicit with employees, at least take it down a
level to tactics and explain what needs to be done. From this, the employees will ngure out what
the big direction is.
II you're in a merger situation, and management is unclear about what's happening, assume it's a
takeover (the most common scenario).
True mergers are very rare. The term merger" is oIten used as a 'politically correct' term Ior what
amounts to an acquisition or takeover.
\hen trying to merge cultures, don't expect a single weekend retreat to do the job. It takes thou-
sands oI small actions to achieve the change. You get one point Ior each activity -- regardless oI
how large or small -- and you need thousands oI points to win the game.
A paper and pencil analysis oI culture compatibility is not likely to be successIul. Instead, get peo-
ple talking (especially telling their war stories), and listen Ior the values and belieIs that underlie the
stories. It becomes evident aIter a while where culture clashes are likely.
Many clients later lament I just knew that was going to happen", but Iailed to intervene beIore it
did. Prompt action on these concerns is essential to success.
In international mergers, national culture is oIten stronger and a more signincant issue than corpo-
rate culture.
Recommended Readings
. Bridges, \illiam, Managing Transition - Making the Most oI Change, Addison-\esley, jj.
z. Collins, ]ames C. and Porras, ]erry I., Built to Last: SuccessIul Habits oI Visionary Compa-
nies, Harper Books, jj.
. Kotter, ]ohn P. and Heskett, ]ames L., Corporate Culture and PerIormance, The Free Press,
jjz.
. Kouzes, ]ames and Posner, Barry, The Leadership Challenge, ]ossey-Bass Publishers, j8;.
,. euhauser, Peg C., Culture.com: Building Corporate Culture in the Connected \orkplace,
]ohn \iley & Sons, zooo.
6. euhauser, Peg C., Tribal \arIare in Organizations, Harper Collins, j88.
;. euhauser, Peg C., Corporate Legends and Lore, McCraw-Hill, jj.
8. Prichett, Price, Making Mergers \ork, Irwin ProIessional Publishing, j8;.
j. Raelin, ]oseph A., Clash oI Cultures, Harvard Business School Press, j86.
o. Schein, Ldgar H., Organizational Culture and Leadership, ]ossey-Bass Publishers, jjz.
. Schein, Ldgar H., Corporate Culture Survival Cuide, ]ossey-Bass Publishers, jjz.
z. Scott-Morgan, Peter, The \nwritten Rules oI the Came, McCraw-Hill, jj.