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Merger Problems -- No Problem

Essay by   •  December 11, 2010  •  Research Paper  •  2,116 Words (9 Pages)  •  1,492 Views

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I have documented in the previous paper for this class my beef with the authors: that they have a ready-made set of excuses absolving workers of all of the blame for downward spirals in productivity - rather, it's the cold sterility of computer technology, or mergers, or globalization, or cost-cutting, or reengineering, or outsourcing, or some combination of the above that is to blame for the unraveling of the corporate culture as we know it. In the words of Charlie Brown, "Good grief." Perhaps it's because I've never been a part of a strong, warm workplace culture, but I believe that the authors underestimate the value of just coming in, doing your job, and not worrying about having a social life or friends at work, and not carrying on about awful the employment landscape is today. Those things are all nice and might be life-affirming and lend "meaning" to a person's life, but doing the job is paramount to all of the above. (It's not politically correct to point this out.)

Again, I want to reiterate a point I made in the previous paper: a job is a privilege, not a right. There is no more "right" to a job than there is a "right" to win the lottery. I am a terribly lucky, blessed person to have the job that I have, and I work for someone who has the reputation of being an absolute monster at times. But we have gotten so carried away with assigning rights we have no business assigning, rights that the recipients have no business having ascribed to them, that we forget that responsibilities are also involved. The concept of "rights without responsibilities" leads to anarchy, and virtual anarchy is the condition found in many factories and other places of employment today. And the fact that so many people have conspired to legitimize the crap put forth by the two authors - from the publishers to the universities that assign "The New Corporate Cultures" as a text - makes me wonder if the world has not lost its collective head.

That said, the authors do make some good points about Merger Mania (the topic of Chapter 5) and its effect on organizational cultures, but they don't offer solutions to the problems; rather, they tend to harp on the fact that the sacred employee is harmed in some way by the merger/ acquisition process. But several models exist that can facilitate more winners in the merger game than shouting, "Damn the torpedoes, full speed ahead" does.

Cultural differences between the partners of a merger are one of the common reasons for the failure of the merger to succeed. The term "corporate culture" is often used to describe issues like objectives, personal interests, behaviors, and so forth; problems with cooperation and teamwork are often blamed on the culture of a company. But in a merger, the term "culture" means much more than making sure that the people from both merger partners work together in a smooth fashion. The problem in mergers is that people from very different organizations and cultures are expected to work together, to discuss, and to solve complex strategic and operative tasks. It is difficult to impose a new culture that doesn't have the people's acceptance. But the development of a new, shared culture is critical to the merger's success, and it's possible to manage the process in a structured way. Mergers and acquisitions succeed and fail according to how well cultural issues and differences are addressed, and how quickly a unified culture emerges post-merger.

Oliver Recklies put forth a checklist of steps to follow when considering mergers and their effect on corporate culture. First, during the pre-merger phase, develop a strategy for cultural integration; decide if you want to go on with one of the existing cultures or if you prefer an integrated culture (which I'll touch on in a little bit). Second, analyze and describe the existing cultures, for differences and common elements can show up only in direct comparison, as can the identification of cultural barriers, communication differences, and other potential problems. Third, decide on the role that the new culture should play in the new organization; why did you choose that particular culture, and what do you want to achieve with it? Fourth, establish "bridges" between both companies in order to achieve mutual understanding and cooperation. Fifth, establish a basis and mechanisms for the new culture, including a supporting system of rewards (and, unfortunately, sanctions). Lastly, be patient; people take time to be acquainted to a new cultural reality (2001).

When first studying the possibility of a merger, analysts undertake what is known as due diligence. A proposed merger or acquisition can be devalued or scrapped depending on conflicts over intellectual property rights, personnel or accounting discrepancies, not to mention incompatibilities in integrating information technology systems. Researching, understanding, and if possible, avoiding these risks is known as due diligence (Copeland, 2000).

When undertaking a due diligence study, one should take all of the reasonable steps to ensure that both sides get what they expect and not a lot of things that were not counted on or expected. Yet one of the main obstacles to the success of many mergers - the potential compatibility or lack thereof between the cultures of the companies being merged - could also be conquered during the due diligence phase if company heads would take the time to see if they were mixing oil and water. Instead, most players in the merger game focus instead on things like strategic business development, operations, marketing, sales, and finance. Cultural cohesion often gets short shrift.

Regardless, many companies forge ahead toward Mergerland without doing a complete due diligence study. But there is still hope for these companies, if they truly have an eye toward integration (as opposed to merely devouring the acquired company without regard for the consequences). While perfect integration is rarely achieved, in which both cultures form to combine one new culture, the ideal situation is to bring the best elements of both cultures into the new organization. Avoiding the complex organizational issues that mergers bring about is key to making this happen.

A smooth transition into the integration process, not to mention the smooth implementation of the process itself, can be determined by how well you manage the change. A merger is often called "the mother of all change management initiatives," (The L Group, n.d.) because it is truly a multi-headed monster. These "heads" include aggressive financial targets that must be achieved, short timelines in which to succeed, intensive public scrutiny (including competitors rooting you on to fail), cultural

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