Corporate Culture Redefined: How to Navigate Mergers

DaimlerChrysler AG may soon be just Daimler AG, signaling a separation from the company's pre-Cerberus days -- before the private equity firm bought the U.S. Chrysler division for $6 billion -- and its future as a company not dependent on "the volatile North American market." In the wake of so many failed mergers, analysts are wondering why companies keep failing in the M&A arena. From Business Week's "When Big Deals Go Bad -- And Why" to the Wall Street Journal's "Human Due Diligence" (subscription required), experts name a number of factors, citing failure to integrate corporate cultures and structures as one of the most prevalent.

In an era of globalization, understanding the challenges inherent in changing corporate culture is essential to success. All the strategic planning and reengineering in the world are meaningless if the people within an organization aren't on board with the company's goals. As Financial Executive Magazine notes, however, the whole idea of corporate culture is shifting. Workers are changing jobs more frequently, forming short-term, transient commitments, and as a result, "subcultures" based on profession have evolved: the financial culture of CEOs, CFOs and others who answer to the market; the engineering culture of designers and developers; and the operating culture of manufacturers and others who run business processes.

Navigating the behavorial side of change will likely be no-less challenging. However, avoiding the pitfalls of merged companies like AOL Time Warner and DaimlerChrysler AG might require a new kind of thinking. Financial Executive offers this insight:

What practical value can organizations take away from the notion of corporate culture? First, culture matters immensely when crossing borders. Outsourcing, M & A and other deals may work on the numbers, but fail because of assumptions built into the numbers. The recent scandals over Chinese food and medicine show that even the most fundamental assumptions about another culture--such as that no one would deliberately sell poisonous industrial byproducts as food--can be naive.

Second, globalization may require a different kind of manager. "People who can make quick decisions are not what you need," says Hofstede. "In globalization, you need the opposite--people who make slow decisions, who think before they act, who don't immediately voice any opinions, who are prepared to go against established practice."

Third, attempts to address performance problems by "changing the culture" put the cart before the horse. Performance change has to happen first, and only when success rewards it does it have a chance of becoming culture. Finally, recognize that even a single company may have a number of subcultures, and the task of a contemporary manager may be less to establish a corporate culture than to help make sure that each subculture can contribute its own strengths to the overall organization.