Leveraging the CN to increase the success of a merger


Just recently a client came to TMC for support in providing insights on the cultural integration of two client companies they were helping to prepare for a merger. 

TMC conducted an analysis of the Cultural Orientations Indicator® assessment results from the general employee population of both companies, while the client conducted a norms analysis and comparison of both companies. TMC aggregated both sets of findings into a comprehensive analysis to identify insights that could help focus and guide a successful cultural integration process.

The first level of analysis found that there was a high degree of similarity in work preferences between the partner organizations, with almost 1/3 of the data points having a less than 5% variance. For instance, 72% of Company A employee preferences in the Sense of Self dimension landed on the individualist orientation, with 68% of Company B employee preferences falling in the same individualist orientation – a mere 4% difference between partners. 

However, when TMC cross-referenced this similarity to the cultural norms, there showed up a distinct difference between Company A (individualist) and Company B (collectivistic) despite all the cultural preference aggregates pointing to a simpler picture. In other words, what was expected in the behavior of employees in Company B wasn’t how they actually preferred to work and certainly not how Company A preferred to work either. This was a key point that TMC recommended the clients address during the integration phase.

The second level of analysis moved into a deeper review of the insights across both organizations. At the company aggregate comparison level, for example, there was a deep dissonance, again in the Sense of Self dimension, but this time pertaining to decision-making with opposing orientations of hierarchy (in which power differentials play a significant role) and equality (with an emphasis on everyone having an equal opportunity). As this greatly affects decision-making and power balance in and across organizations, TMC strongly recommended a plan to address this deliberately and systemically.

To embed the recommended actions and strategies into the client’s plans, TMC laid out a roadmap that carried them through the merger announcement all the way to 100 days into the partnership. The recommended steps included preparing the leaders to lead; defining a picture of success of business outcomes; building a shared identity between the entities; co-creating and defining the culture; and tracking, learning and optimizing as the relationship developed. 

This path would look different for other situations, but the premise stays the same: To maximize the results of a CB M&A or IJV, both organizations have to consider the business outcomes desired and deliberately work toward those objectives with their partner so they can step into the new organizational structure together in order to realize the end goals.

Lynne Tarter