Why Organizational Mergers Fail

A great observation is the opportunity to validate all cultural assumptions found in a cultural analysis, rather than declaring which are right and wrong. Making such declarations will more often result from a bias of the consultant rather than an objective perspective of what is best for the merging organization. (Schein, 2010, p. 35) This would be a vital mistake for any consultant because it would reinforce the mentality of employees who are seeking to identify the winners and losers of the endeavor. (Moffat, 2010, p. 534) Such speculation fosters a survival-driven mentality and behavior that includes political dealings and strategic maneuvers that are focused on preserving individual interests rather than organizational well-being. (Moffat, 2010, p. 534)

Culture incompatibility, or “cultural clash”, (Carleton, 2004) is often the reason given for the failure of mergers. According to a study in 2007 by the Hay Group of over 200 European mergers in a three-year period, only 9 percent of senior business leaders felt as though their merger was a complete success in achieving the stated objectives. (Yaakov, 2012, p. 288) Often, the issue is that executives do not understand the cultural needs, or the importance culture plays in merging two organizations. Because it is often low on the priority list of executives, merger integration consultants are brought in to the process too late, often after the merger has happened and deep-rooted problems are established. (Buono, 2005) If at this point a cultural integration consultant were to come in and make distinctions about which cultural assumptions are right and which are wrong, it would deepen insecurities and political lines already drawn, and could possibly take an unstable and volatile situation, and push it over the edge to failure; which would be counterproductive to the desired objectives of the executives and the consultant.

References

Buono, A. F. (2005). Consulting to Integrate Mergers and Acquisitions. The Contemporary Consultant: Insights from World Experts, 229–249.

Carleton, J. R. (2004). Achieving post-merger success: a stakeholder’s guide to cultural due diligence, assessment, and integration. San Francisco: Pfeiffer.

Moffat, A., & McLean, A. (2010). Merger as conversation. Leadership & Organization Development Journal, 31(6), 534–550.

Schein, E. H. (2010). Organizational culture and leadership. San Francisco: Jossey-Bass.

Yaakov Weber, & Shlomo Yedidia Tarba. (2012). Mergers and acquisitions process: the use of corporate culture analysis. Cross Cultural Management: An International Journal, 19(3), 288–303.


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