– Alese Stroud
Leadership teams often approach a proposed merger looking for some sense of how similar the companies are in terms of culture. Culture can make or break the deal. Integrating dissimilar cultures can be expensive, time consuming and risky.
There are tools available to identify and quantify cultural difference. The TRaX50 Cultural Assessment is certainly our recommended tool.
When leadership is not yet ready for a full scale cultural assessment involving staff from both companies, investigating the areas below can provide a strong early indicator of differences.
1. Power Structure
How are decisions made at each company? Do they tend to be collaborative or hierarchical?
Management teams who are successful under one type of power structure may struggle in the other culture. The same is true for staff.
2. Internal Communications Style
How much focus does each company place on internal communications? How open and forthcoming are they with information that affects the company and staff? Do they lean toward transparency or playing things close to the vest?
Changing communications style tends to create significant stress for employees.
3. Employee / Customer Voice
How much influence do employees and customers have on the day-to-day operations of the company? What voice do employees and customers have regarding product and service offerings?
Changing the level of influence allowed to either of these two groups tends to result in attrition or at least an undercurrent of dissatisfaction.
4. Change Management Methodology
Is there an established change management infrastructure present in either or both companies? How well established and far reaching is this infrastructure?
The processes and skills necessary for a functional change management infrastructure provide a solid foundation for the changes inherent in a merger.
5. Employee Identity
How strongly do employees identify with their current company?
This is a double-edged sword culture-wise. Employees who identify too strongly with the current company will struggle with the merger where their company is not the surviving entity. Where employees do not take pride in their association with their current company, leadership needs to determine why.
These five components of culture serve as a solid conversation starter. However, there are at least 28 components of corporate culture. Any one component may identify risk and expense to the proposed merger.
Regardless of whether a merger is on the table, understanding a company’s culture is crucial in the functionality of the business. The more culture is understood; the more employees are understood. A stronger understanding of any part of a business, especially employees, is the key to company growth and prosperity.
Our research shows that company executives are rarely in alignment with their staff when responding to questions about culture. Posing the questions above to the executive team will start the conversation, but is unlikely to provide the whole picture.
Corporate Insight Strategy strongly recommends a complete cultural assessment involving all staff for both companies in the proposed merger before drawing any strong conclusions about cultural risk of a merger.