Corporate decision makers who seek to combine company cultures would get better results by building associations between their companies, rather than forcing their cultures to 'fit.'
Executives use mergers and acquisitions to increase shareholder value, become bigger players, or cut costs. More than half of all M&A's fail to meet key expectations, often with consequences that devastate employees, customers and stockholders. AOL Time Warner and HP/Compaq are famous examples among hundreds of lesser-known attempts.
While observers and researchers have widely studied M&A failures and published insightful lessons to learn, 1980's-style M&A practices continue to seduce time-boxed executives and the consultants and integrators they hire. Over the past twenty years or so, one factor--culture fit--has consistently made the list of top-10 issues. From a recent study by the Hewitt consulting firm:
"Cultural fit emerged as the top HR integration issue in terms of importance and complexity during an M&A deal. Despite this, 52 per cent of companies indicated that they did not believe that cultural integration would take more than six months nor had they planned for such an eventuality. However, 70 per cent had learned that cultural integration took much longer than six months in reality."
While this study would appear to advocate the need to pay greater attention to cultural integration, the most up-to-date methodologies, like this one by Booz-Allen, are weak in this area. (Click to enlarge).
Why aren't we making more progress with cultural integration? I believe decision makers are stuck repeating a pattern of incomplete assessments and naive assumptions about human nature and the predictability of combining organic systems.
Corporate decision makers--goal-oriented, like-minded, and usually merger veterans--approach each new M&A with four flawed assumptions:
- Employees are predictable and malleable
- Any risk can be mitigated or managed during the time allotted
- Initial plans and targets will play out as envisioned and committed-to
- With persistence and cunning, the goals and tactics of the small leadership group will prevail
Marriages between two people work better when allowed the time to adjust, assimilate, and learn. Courting corporations are much the same. They need time to collaborate, co-develop new products, form partnerships, and get to know each other.