Successful Mergers Integrate Cultures

SAN DIEGO—“Research shows that two out of three mergers fail due to not taking care of cultural issues,” Fons Trompenaars, Ph.D., told attendees during a June 29, 2010 Masters Series session at the Society for Human Resource Management (SHRM) Annual Conference titled “Mastering M&A: Cross-Cultural Dimensions of Mergers and Acquisitions.”

Trompenaars, managing director of Trompenaars Hampden-Turner Intercultural Management Consulting, is the author of eight books. His latest was co-authored with Maarten Nijhoff Asser and is titled The Global M & A Tango: Cross-Cultural Dimensions of Mergers and Acquisitions (Infinite Ideas Limited, 2010).

A recognized expert on managing cultural diversity for profitability, Trompenaars works with major global corporations on opportunities presented by cultural differences.

“Many mergers and acquisitions fail because companies forget there are human beings working in this integration,” he said.

“When you start a merger and acquisition … you have to try to reconcile the differences, take corporate values as a development process, and finally work on the corporate identity of your new organization,” he said.

Integrating and redefining the culture and corporate values of any new company is essential for the integration process, and reconciling the differences builds a common platform or language for the future, he said.

This is in contrast, he said, to when one company takes over and imposes its culture on another. “It’s known as a bear hug,” he said, where one company squeezes the other company to death.

“It takes two to tango and not one who superimposes his or her idea on what needs to be the dance.”

“First, define culture,” he said, asking the audience members to turn to their neighbors and to work in groups. Many echoed his definition: “Culture is like an onion. … On the outside you have behavior, and at the core are beliefs and the basic assumptions we have.”

Create the compelling business case for the new company, he said, and then redefine its vision and mission. A business and values assessment is necessary. “You need to envision the future and have a core ideology. You need values and purpose,” he said.

Start with the business case; don’t start with the differences. “In other words … focus on sharing rather than differing. The process of jointly defining the shared bold mission is more effective than focusing on differences,” he said.

“To integrate is to combine values that are not easily joined”; redesigning the organization will be necessary, he said.

Trompenaars told the audience that when merging, companies must eventually come to a shared vision, mission, strategy and statement of new values in order to build trust that can bring economic value from those relationships.

Developing trust in global business mergers requires a lot of effort and the need to understand each other. He said that success depends on the new company’s willingness to enable people with different cultural perspectives to engage in meaningful and valuable discussions about the new business. Mergers can be successful when business dilemmas are reconciled.

“Successful mergers and acquisitions are based on getting the parties in a constructive dialogue to fulfill their joint business goals and strategies,” he said.

Aliah D. Wright is an online editor/manager for SHRM.