Link Mergers And Culture

You manage a team at a company that was recently acquired. Although you aggressively coach your employees to adapt to the new corporate culture, some are unwilling or unable to adjust.

What should you do? Ask them to leave, one expert says. "Be patient but firm," said Glenn Carroll, a Stanford Graduate School of Business organizations professor. "Give them the tools, the time and many opportunities to change. Give them honest feedback, but be prepared to show them the door if they resist."

In his recent book, "Culture and Demography in Organizations," Carroll says cultural issues during corporate mergers must be taken seriously. Financial and strategic goals are often the publicly stated reasons for most acquisitions. But executives can fail if they don't resolve cultural differences. Studies show that at least half of all mergers don't deliver on promises, and work force dysfunction is a top cause.

Carroll and Martin Wobornik, who has worked as a turnaround manager for major Austrian telecom companies, share tips:

Is combining operations necessary? Figure out if it's required for the companies to meet the merger's key objectives.

In some cases it's not. If you manage assembly line workers who have narrow job descriptions, don't worry. They may not need to speak to each other to do their jobs well.

But if a merger's success depends on interaction, you don't want people working the way they used to.

"Then you have two companies working according to different sets of goals and assumptions," Carroll said. "If workers leave each other alone, you receive no integration benefits. But if they don't understand each other and all they do is fight about which culture is better, they never get down to work."

Learn when to quit. Assess the cost of integrating the two cultures. If it's too difficult or costly, abandon the merger.

It's often hard for executives to leave mergers because of the financial incentives. "Everyone at the top makes a lot of money when the deals close," Carroll said. "It's just hard on the people left behind."

Some companies do it well. Johnson & Johnson JNJ and Cisco Systems CSCO in the 1990s cautiously evaluated target companies' cultures and walked away from deals that made sense technologically, financially and strategically, but not culturally.

"That's smart, but rare," Carroll said.

Don't downplay cultural needs. Wobornik says to treat these soft issues as seriously as you would a merger's hard aspects, which include integrating accounting, human resource and supply chain systems.

"People are your most valuable assets," he said. "You can only make them stay (so long) with financial incentives. If they're unhappy they'll leave."

Make clear, quick decisions. Get as much done as fast as possible. Resolve the ambiguity.

"If you don't have most of those decisions done within a year, you're going to have problems," Carroll said. "If you're an employee and after a year you don't know if you'll have a job, that's a lot of uncertainty to live with."