You?re a manager in a company that has recently merged. Despite aggressive
coaching to help your employees understand and embrace a new corporate
culture, you have some employees who are unwilling or unable to change
their behavior. The success of the merger hinges on the employees
from both organizations making a smooth transition to the new way
of working. What do you do?
According to a new book from Glenn Carroll, the Laurence W. Lane Professor
of Organizations at the Stanford Graduate School of Business, making
it clear to such employees that they do not fit in?and thereby encouraging
them to leave of their own accord?is an effective way to build a
homogenous and harmonious organization.
The recommendation sounds harsh. ?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,? says
Carroll, whose book Culture and Demography in Organizations was published
this year by Princeton University Press.
And the stakes are high. Although financial or strategic goals are
usually the publicly stated reasons for most mergers or acquisitions,
the success of any given one often depends heavily on the ability
of the two firms to integrate their workforces into a unified whole.
A merger can fail for any number of reasons, says Carroll, but cultural
differences are increasingly thought to be a major cause of post-merger
dysfunction.
Examples abound of merged organizations that failed to come together
culturally. 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,? says Carroll. ?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,? says Carroll. ?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.?
As a result, 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, Carroll says. Although alienation
was found to be a strong factor, says Carroll, 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,? says Carroll. ?It
provides a whole new set of insights.?
?Alice LaPlante
FOR MORE INFORMATION:
Helen K. Chang, 650-723-3358, Fax: 650-725-6750
Culture and Demography in Organizations, J. Richard Harrison and Glenn
R. Carroll, Princeton University Press, 2006.