Managing Culture Clash in Mergers and Acquisitions

Culture clash in a merger or acquisition is a lot like breathing.  You don't notice you’re breathing, you just do it.  You may be aware of your breathing now, because I have raised it to your attention.  If someone were to approach you from behind, cup their hands firmly around your mouth and nostrils, and threaten your ability to breathe, then you would certainly pay attention to breathing.  The same holds true for culture in a corporate combination.  People don't regularly notice their corporate culture, but when thrust into a combination, employees become aware of how their ways of doing things differ from those of the other side.  When they feel threatened by a combination--often because they see themselves on the weaker side--employees not only see differences but feel a sense of vulnerability and fear over losing their accustomed way of doing business.  

Stages of Culture Clash

By their very nature, mergers produce a "we versus they" relationship, and there is a natural tendency for people to exaggerate the differences as opposed to similarities between the two companies.  What is noted first are differences in the ways the companies do business--maybe their relative emphasis on production versus marketing, or their predominantly financial versus technical orientation.  Then differences in how the companies are organized, say, their centralization versus decentralization or their differing styles of management and control, are discerned.  Finally, people ascribe these differences to competing values and philosophies--with their company seen as superior and the other as backward, bureaucratic, or just plain bad. 

Ironically, a fair amount of diversity in approaching work aids combinations by sparking productive debate and discussion of desired norms in the combined organization.  When left unmanaged, however, the clash of cultures pulls sides apart rather than joins them together. 

Despite the cacophony of a culture clash, the opportunity to proactively build a shared culture remains one of the great benefits of joining forces in a merger.  Of course, the work of building a desired culture is difficult--it requires breaking down old norms, articulating new ones, convincing people why the new way is superior to the status quo, being patient as employees experiment with bringing their on-the-job behaviors in line with espoused cultural norms, and reinforcing the new ways through rewards and recognition.  All of this takes time.  People who study culture change in organizations say it takes seven to ten years to break down the old and build the new culture.  In a merger, this time frame can be shortened considerably.  In particular, the "unfreezing" associated with a combination gives executives a head start in culture change.

Easing Culture Clash

Easing culture clash rests on acknowledging its presence, educating employees as to its dynamics, and preparing people to appreciate how initial impressions influence enduring cultural perceptions between the partners.  The overriding principle for minimizing the unintended consequences of culture clash during the early phase of contacts is to respect premerger cultures.  Employees who display a consideration for their partner's way of doing things, rather than denigrate it, are likely to gain a reciprocal sense of respect for their own culture.  When a new culture is being built--either through transformation or by selecting the best from both organizations--a tone of cross-cultural consideration helps employees to open up to different ways of doing things rather than tightly hold on to their ways.

Here are some specific ways employees can act to minimize culture clash in a combination:

  • Show respect for the other side.  Be humble.  Ask for things; don’t demand them.
  • Acknowledge potential defensiveness when you see it in dealings with people from the partner organization. 
  • Communicate a positive, upbeat outlook.  There is value to be had from this combination and the opportunity to build something more than the sum of its parts.  Celebrate the work of building a great new organization.
  • Teach people from the other side what works in your organization and learn from them what works in their organization.
  • Don’t take for granted everything you hear.  Make sure you heard what was intended—check for understanding.
  • Don’t assume people understand everything you say.  Make sure they hear what you intended.

Culture clash in a combination can never be eliminated.  But, its potential disruptiveness can be minimized.  When properly managed, cultural clash can result in a postmerger organization that can better achieve strategic and financial objectives than either partner could do on their own.  If stereotyping and the tendency to put down the other side can be kept in check, clarification of differences between the partners builds insight and awareness into one's own ways of doing things as well as into those of the partner organization.  Partners learn from one another and engage in constructive debate regarding what cultural characteristics best align with the combination's critical success factors and best support the attainment of a postmerger organization that is much more than merely the sum of its parts.



About the Author: Mitchell Lee Marks Ph.D. is a member of the faculty of the College of Business at San Francisco State University and leads the change management consulting firm Over the past 25 years, he has been involved in over 100 mergers and acquisitions as a researcher or advisor. He is the author of six books on organizational change; most recently “Joining Forces: Making One Plus One Equal Three in Mergers, Acquisitions and Alliances” with Philip H. Mirvis. Dr. Marks is a member of the Advisory Board of the M&A Leadership Council. He can be reached at [email protected].