More than ever, the USA is an immigrant nation. Historic demographic norms are shifting substantially, making the current “white, non-Hispanic” category a minority demographic. New Republic states, “The waves of Hispanics and Asians and multiracial Americans reshaping the country’s population are full of young people, who by some measures already outnumber their white counterparts.” In 2014, non-Hispanic whites constituted only 53% of the country’s population, down from 70 percent in 1990. With these changing demographics in mind, the likelihood that you’ll come into contact with someone whose cultural background differs significantly from yours is certain.
Business reflects demographic changes in population, if for no other reason than because it must draw its workers from that population. More than ever, the success of business requires respect toward other cultures. To comply with legal requirements, many companies have developed diversity and inclusion (D&I) policies that recognize the major demographic differences and ignore the other, more subtle distinguishing characteristics. D&I programs emphasize respect for cultural diversity. Dr. Asim Shah states his view of cultural diversity: “To me, cultural diversity means merging different cultures; introducing good aspects of your culture to others, but also accepting the positives of a new culture.”
Nowhere is this more applicable when combining two corporate cultures through a merger or acquisition. Before integrating your company’s cultural style with another’s, you must first understand your company and conduct background research to understand the other company’s current culture. Performance of this due diligence research allows prediction of how the combined workforce will mesh. Or not.
Once you’ve developed an understanding of how the two cultures relate and their differences, it’s time to meet with key leadership of both companies to develop a transition plan. Don’t beat around the bush during this phase of the consolidation of companies: be explicit and candid regarding both your observations and expectations.
The discussion should result in an implementation plan that takes the best practices of both organizations. In that way, each company culture gives a little and the integration of a new culture should result in an improvement over both. Understand that employees of both companies will worry about how the changes will affect them. Clear and candid communication may include delivery of bad news to certain individuals; however, it will also prevent the spread of rumors that destroy morale and build resentment.
In her paper “The Role of Corporate Culture in Mergers & Acquisitions,” Christa H.S. Bowman states, “Anecdotal and survey evidence suggests that cultural incompatibility between acquirers and targets is an important reason for merger failures.” She cites the failure of “high-profile deals” between Daimler-Chrysler and Sprint-Nextel as anecdotal examples of the importance of corporate culture when combining two companies.
What is the corporate culture? Typically created by a company’s founder, the corporate culture sums up the organizational personality: “its shared beliefs, values, and behaviors.” Bowman describes corporate cultures in four ways: role-oriented, task/achievement oriented, power-oriented, and person/support oriented. Incompatible cultures bode ill for successful consolidation. Accordingly to the TalentSpace blog, “In a true merger, no one culture should win.”
If history is written by the victor, then the acquiring firm generally overwhelms the acquired firm. This “us vs. them” scenario leaves the personnel of the acquired company feeling resentful and undervalued when nothing could be further from the truth. After all, if your company acquires another, it’s because that company produces a product or provides a service that you find valuable. Be sure to communicate that through word and deed.
Cultural due diligence and internal D&I programs basically boil down to the rigorous exercise of good manners, which shows respect toward others. This show of respect involves offering all parties a voice at the table and the honest treatment of their opinions as valid and worthy of consideration. It includes all parties within the business valuing the contributions and showing respect for those contributions of people in all parts of the business, regardless of title or position.
Respect yields increased innovation, improved morale, greater employee dedication, and higher satisfaction among clients. What’s not to lose?