Why do some mergers succeed and others fail? One of the most important factors behind the success of a merger is the compatibility of the merging companies’ cultures. It is the clash of company cultures that often leads to a failed merger. We are hoping that the Watson and Towers management teams have taken a page from their own merger consulting handbook and recognize the importance of creating, communicating and reinforcing an effective and homogeneous culture for the merged entity.
“Company Culture” is a broad term that can mean many different things. My definition of “company culture” is a set of shared assumptions about what is important, valued and permissible. On the other hand, culture also defines those things that are simply not tolerated. Sometimes these assumptions are never verbalized, but employees still understand them. In fact, one can often spot an important cultural norm by the intensity of the reaction to those who violate it. In a word, culture is what a company values, either explicitly or implicitly. It is important to note that the greater the distance between the company’s articulated values and the behaviors and attitudes it sanctions, the greater the cynicism and often resistance of the employees. Failure to “walk the talk” can seriously undermine a company’s success.
The process of merging two companies is difficult and time consuming but doable if the companies are on the same “values” page. And the more the merged company can take the “best of both” into the new culture and values structure, the more the employees will feel engaged and comfortable. Identifying and articulating the key values for the combined firm will be a critical pre-close step for Watson and Towers.
Key to this merger is the question how the two companies’ cultures are similar and how they differ. Overcoming these differences and articulating a combined vision from the start is basic to long-term success. But it is not just the merged culture and values themselves that will ultimately make the difference, but how these are put into action.
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