Paperwork done, companies have merged, how about the cultures: Mergers and cultural conflicts

Crisis and emerging markets eventually end up with company mergers and acquisitions. Although the most important actions seem to be contract negotiations, the danger of product cannibalization and determination of the management team, a usually disregarded and underestimated success factor is forming the new culture of the new company.

A research from Bearing Point Consultancy shows the priority of cultural integration[1]:

Two different workforce with different values will be working together. Different values lead people to different ways of doing business. Here are some factors that can be discussed in terms of company culture:

  • What do employees understand from teamwork? Is the environment competitive? Is the competition a healthy one, or is there a hostile environment where people try to be the “only man” who is expertise in a special area? This assessment will show how fast the learning curve will be, and how fast the knowledge gap between employees will close, hence how efficient your total workforce will be.
  • What do employees understand from customer orientation? If you are famous with keeping your promises, and the other company’s employees doesn’t think that a little bit (!) exaggerating at the point of sale is a big issue, you are in a great trouble.
  • What is the power distance and hierarchy in the companies? This is a crucial question to ask especially when there is an international combination of companies. Power distance becomes higher when you go to the east, hence companies are more hierarchial and decisions are made on the top management level.
  • Consequently, how about the decision making competency of the employees? If the company is hierarchial, probably employees other than management level lack of decision making ability as they were not supposed to.
  • Again related with the hierarchial structure, how initiative are the employees? If you need a creative and innovative environment, you would clearly need somewhat empowered employees that initiates new discussions, product improvement ideas and so forth.
  • How about accountability? If one culture holds employees accountable and the other doesn’t, apparently personal conflicts will occur whenever there is a problem, as one would expect accountability and the other tries to get away with it.


[1] http://www.imaa-institute.org/docs/m&a/bearingpoint_01_avoiding%20post-merger%20blues.pdf
This is a report from Institute of Mergers, Acquisitions and Alliances website. Contains a case study and recommendations.

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