Mergers Succeed When All Employees are on Board
Mergers are the standard recipe in a capitalistic society although the
United States experiences more buyouts and corporate mergers than any
The best advice for a successful merger is to make sure the employees
are all on board. If an employee resists change -- show him the door.
This is the advice from a new book: Culture and Demography in
Success is measured not by one employee, but by creating two completely
homogenous and harmonious organizations into one, according to one of
the book's authors Glenn Carroll.
The recommendation sounds harsh, "although the implication of this
finding for managerial policy is straightforward," Carroll said.
"It should be treated with caution -- it is based on specific
assumptions in a theoretical model. It is also only one of several
effective demographic factors to merge the cultures; other options
might be more attractive,” said Carroll, who is co-author of Culture and Demography in
Organizations -- published by Princeton University Press.
A merger can fail for any number of reasons, said Carroll, but cultural
differences are increasingly thought to be a major cause of post-merger
Examples abound of merged organizations that failed to come together
culturally. There’s the merger of Compaq and Digital Equipment
Corporation that was unsuccessful largely due to a culture clash that
pitted Compaq’s high-volume, fast-to-market strategic focus against
DEC’s more convoluted and lengthy sales cycles. Indeed, the business
challenges created by the culturally troublesome merger are viewed as a
reason that Compaq lost its position as the No.1 computer maker to
Dell, its longtime competitor.
“These problems can linger on for years after the merger has been
completed,” said Carroll.
Talk about integrating two corporate cultures typically revolves around
“cultural content” or the norms, beliefs, and values that lead to
general descriptions of the firms such as bureaucratic,
entrepreneurial, free-wheeling, or conservative. The predicted success
or failure of any given merger is based upon an analysis that takes
this cultural content into consideration.
“The problem is that people can make up any number of stories that can
justify any type of merger,” he said. “You’ll hear that a merger will
be successful because two organizations are very similar in their
cultural content. Another merger will be hailed as a good one, because
the organizations’ cultures are so different, and will therefore
complement each other.”
As a result, Carroll and his co-author, J. Richard Harrison of the
University of Texas, Dallas, reasoned that it would make sense to
analyze cultural integration by looking at the demographics of the
Demography is the study of population dynamics.
Carroll and Harrison developed a demographic model of culture that
encompasses a host of factors, including the growth rates of the firms,
the selectivity of the hiring processes, the type and extent of
socialization that occurs once employees are members of the
organization, the rates of employee turnover, and the degree of
alienation felt by employees.
Hiring selectivity refers to how carefully management selects new
workers who fit into the culture. Selectivity can include personality
testing as well as extensive interviewing by multiple employees—both
peers and management—before a candidate is hired.
Socialization refers to how employees are indoctrinated into the new
corporate culture. This can involve the pressure exerted by colleagues
on each other to adapt to the new organization—or socialization by
management, which can include such things as incentive bonuses,
training classes, and corporate retreats.
Finally, alienation is the degree to which employees who don’t fit in
come to leave of their own volition. Either peers or management could
ignore the employee in question, or give him or her difficult or
unpleasant assignments until the employee simply quits.
Although many demographic processes influence the success of
post-merger cultural integration, the strongest effects seen in the
Harrison-Carroll model are associated with hiring selectivity,
management-based socialization, and alienation, Carroll says. Although
alienation was found to be a strong factor, says Carroll, it wasn’t the
“The demographic way of thinking about mergers and acquisitions could
be very useful to firms considering such a step,” said Carroll. “It
provides a whole new set of insights.”
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