
Imagine that It’s My Company merges with It’s My Life.
It’s My Company is a corporation that builds widgets, and It’s My Life is a up-and-coming retailer which sells gadgets.
How do you take two different cultures, work groups, and services and blend them into one efficient money-making machine?
Alas, change is more difficult for some than others. The new culture may not work for all. Holding "let's all get along" workshops may not be the solution. Sometimes, two does not fold easily into one.
Glenn Carroll, the Laurence W. Lane Professor of Organizations at the Stanford Graduate School of Business, managers need to make it clear to workers that, if they do not fit in, they may wish to look elsewhere for opportunities. In other words, they might encourage a employee to leave on his or her own accord.
"Although the implication of this finding for managerial policy is straightforward, it should be treated with caution—it is based on specific assumptions in a theoretical model. It is also only one of several effective demographic factors to merge the cultures; other options might be more attractive," Caroll says.
His book, Culture and Demography in Organizations, provides further details. . A merger can fail for any number of reasons, but cultural differences are increasingly thought to be a major cause of post-merger dysfunction, according to Carroll.
Examples abound of merged organizations that failed to come together culturally, the Stanford Graduate School of Business reports. There's the merger of Compaq and Digital Equipment Corp. that was unsuccessful largely due to a culture clash that pitted Compaq's high-volume, fast-to-market strategic focus against DEC's more convoluted and lengthy sales cycles. Indeed, the business challenges created by the culturally troublesome merger are viewed as a reason that Compaq lost its position as the No. 1 computer maker to Dell, its longtime competitor.
"These problems can linger on for years after the merger has been completed," he says. "Failing to successfully integrate the cultures is a very serious thing."
Talk about integrating two corporate cultures typically revolves around "cultural content"—the norms, beliefs, and values that lead to general descriptions of the firms such as bureaucratic, entrepreneurial, free-wheeling, or conservative. The predicted success or failure of any given merger is based upon an analysis that takes this cultural content into consideration.
"The problem is that people can make up any number of stories that can justify any type of merger," he says. "You'll hear that a merger will be successful because two organizations are very similar in their cultural content. Another merger will be hailed as a good one because the organizations' cultures are so different, and will therefore complement each other."
Carroll and his co-author, J. Richard Harrison of the University of Texas Dallas,, reasoned that it would make sense to analyze cultural integration by looking at the demographics of the merging organizations. Demography is the study of population dynamics.
Carroll and Harrison developed a demographic model of culture that encompasses a host of factors, including the growth rates of the firms, the selectivity of the hiring processes, the type and extent of socialization that occurs once employees are members of the organization, the rates of employee turnover, and the degree of alienation felt by employees.
Hiring selectivity refers to how carefully management selects new workers who fit into the culture. Selectivity can include personality testing as well as extensive interviewing by multiple employees—both peers and management—before a candidate is hired.
Socialization refers to how employees are indoctrinated into the new corporate culture. This can involve the pressure exerted by colleagues on each other to adapt to the new organization—or socialization by management, which can include such things as incentive bonuses, training classes, and corporate retreats.
Finally, alienation is the degree to which employees who don't fit in come to leave of their own volition. Either peers or management could ignore the employee in question, or give him or her difficult or unpleasant assignments until the employee simply quits.
Although the success of post-merger cultural integration is influenced by many demographic processes, the strongest effects seen in the Harrison-Carroll model are associated with hiring selectivity, management-based socialization, and alienation. Although alienation was found to be a strong factor, Carroll says it wasn't the only one.
"The demographic way of thinking about mergers and acquisitions could be very useful to firms considering such a step," he says. . "It provides a whole new set of insights."
Credit line: Information and material for this blog provided by Stanford University Graduate
School of Business
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