Mergers and organisational culture

Now here’s a man after my own heart. Tata’s Ajoy Mukherjee reckons you should get your HR people involved as early as possible when planning a merger and that you should pay particular attention to organisational culture.

Due diligence can involve assessing the culture of the organisation that has been identified for the acquisition. Does the organisation have a compatible culture? How do management styles differ? Are there potential HR financial issues – for example, an under-funded pension plan, or post retirement issues?

One of the first critical areas that HR should be involved in is assessing the potential compatibility of cultures. This could involve reviewing an array of things such as leadership style, mission, vision and values of the organisation, team strength, performance and reward management systems, customer focus and organisational capabilities.

Spot on, but I’d go further than that. When I look at companies, I’m not just interested in the reward systems, I want to know what behaviour gets rewarded and what gets punished. That can tell you a hell of a lot about an organisation’s culture and the assumptions which underpin it. My other favourite is the question about heroes, villains and fools, which I think I nicked from Edgar Schein’s excellent book many years ago. The stories people tell in a company about who are the heroes, villains and fools tells you a lot about the culture too.

And, if you don’t tackle the cultural question soon enough, before long the people in each of the merging companies began to tell stories about the other lot, usually casting them as villains or fools rather than heroes.

As I’ve said before, organisational culture is rarely considered during the planning of a merger but almost always blamed when things go wrong afterwards. In my view and in Mr Mukherjee’s, it seems, the sooner you start looking at the company cultures, the more likely your merger is to be successful.

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