I was sitting in a bar in Germany the other week and overheard a conversation on the next table where business people were meeting. One of them exclaimed “Oh, you are a Thyssen person then!”
For those of you who don’t know, ThyssenKrupp is the result of a merger of two German steel companies, the merger was completed in 1999.Yet still nearly 25 years later, apparently it still matters whether you came from the Thyssen, or the Krupp ‘side’ of the business.
This is not uncommon. I’ve experienced it many times in our training workshops where our clients have grown by acquisition or merger.It’s a testament to the enduring loyalty to the legacy organizations, but it’s a problem if we’re trying to create a more integrated organization.
One of the top three reasons that mergers and acquisitions fail to deliver the value anticipated is a failure to integrate corporate cultures. It’s essential to break down the barriers that can be caused by different corporate cultures and ways of working in order to deliver the potential values and synergies.
Unfortunately organizations pay much more attention to the financial engineering involved than the cultural engineering. Compare the fees paid to bankers with the money spent on creating a common way of working.
With some of our clients we run “best of both” workshops to identify areas of cultural synergy and potential conflict. By identifying these upfront, honouring the legacy cultures and developing specific strategies for integrating the best from each of the past organizations, it is possible to create a more integrated way of working much more quickly.
If we don’t address this, however, the distinctions between members of the legacy organizations can persist for many decades. This may not be a problem when we are meeting in a bar, but if it creates a barrier to cooperation or reduces the sense of identification with the overall group then it can have serious consequences for business performance.
I have no idea whether this is something been experienced by ThyssenKrupp – they are not a client – but I have experienced this kind of challenges in other organizations.
In one Latin American sales conference ‘virtual teams’ event I ran for a large power engineering company, the same question arose. A graduate trainee described himself as being from one of the legacy organizations. A senior manager who was listening was horrified; the merger had happened over 30 years ago and yet still the newest members of the organization identified themselves with reference to the legacy companies.
And it’s not just about corporate cultures; the same principles apply to integrating national cultures. If we don’t have a systematic integration effort, if people don’t mix and create an affiliation with the overall organization, then this creates a host of separate and different micro-cultures that can get in the way of cooperation.
That’s not to say we should eliminate cultural differences, but we do need to great common way of working if we want to successfully integrate global mergers and acquisitions.
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