Why you can’t create a purple-footed booby

Debunking myths about corporate culture and mergers
By Kurt Browser and Ajay Chadha
|Canadian HR Reporter|Last Updated: 06/17/2002

In the Galapagos Islands, there lives a species of waterfowl called a booby.

Some boobies have red feet and some have blue feet. A group of inquisitive naturalists once mated red-footed boobies with blue-footed boobies to see what would happen. Would the boobies have one red foot and one blue foot? Or, would purple-footed boobies emerge? To the great disappointment of the naturalists, neither occurred. The hatchlings were either red-footed or blue-footed. It was Mother Nature’s way of saying there is no such thing as a merger of equals. One or the other prevails.

Business unions also tend to be either red or blue (one or the other, not both). Yet many executives believe they can successfully “blend” the best of both organizations. They attempt in fact to create a purple-footed corporate booby.

The fact is that all organizations are not the same or created equal. And for good reason. They have developed uniquely in response to specific market dynamics and opportunities. This gets us to the heart of why there is truly no such thing as a merger of equals — corporate culture.

Corporate culture can be defined as the set of entrenched behaviours that characterize how a company gets things done. Culture often becomes the scapegoat of failed mergers and acquisitions. However, while cultural differences are undeniably a challenge, culture is rarely the culprit.

It is easier to transform corporate culture following a merger or acquisition than at any other time. Investors, customers, suppliers, and employees all expect changes to occur. The marketplace is primed, the workforce is ready, and management is eager to get underway.

However, despite overwhelming evidence that cultural differences must be addressed swiftly, many executives believe it is possible to merge cultures gradually, by preaching vision and values. Let’s be very clear about this — you cannot merge two cultures by waiving a banner proclaiming common vision and values. In fact, you would be hard pressed to find groups that disagree with each other’s value statements. Values, by definition, are virtuous and noble benchmarks for behaviour. Cultural integration needs to focus on an organization’s behaviour — not the rhetoric about that behaviour.

A change in corporate culture can be achieved by focusing on the following key factors:

•Defining desired behaviours. This should begin immediately. Statements about strategic and economic benefits must be converted into straightforward behavioural examples of how people will be expected to operate in the post-deal environment.

•Deploying role models. In selecting role models what matters most is what people will do, not what they can do. Select leaders who exemplify the desired behaviours and deploy them in visible positions of authority throughout the company.

•Providing meaningful incentives. Shower the role models with recognition. This will position them as people whose behaviour should be emulated. The message will further be reinforced if other employees who engage in the desired behaviours are quickly and visibly promoted, recognized, and rewarded. This sends a signal to the rest of the company.

•Avoiding muddled messages. Avoid the deadly combinations that often exist between written policies and rewarded behaviour. (For example, claiming: “We are going to be a risk-taking organization,” while punishing failure.)

The most common mistake executives make is to use selection decisions to balance the horse-trading and displacement that began when the deal was struck. Succumbing to pressure, management’s decisions favour form over function, titles over accountability and hierarchy over role clarity.

Turtles on fence posts

Executives either attempt to take care of their own people or bend over backward to show impartiality. There is an old Chinese proverb that says “If you see a turtle on a fence post, you know someone put it there.” In the context of mergers and acquisitions, it refers to people in senior positions who didn’t win these posts on their own merit. The result is the wrong people in the wrong jobs.

A thoughtful and strategic integration strategy will help companies to avoid the pitfalls inherent in mergers and acquisitions.

Kurt Frers is the Canadian leader of PricewaterhouseCoopers’ transaction services group. He may be contacted at (416) 815-5070. Ajay Chadha is a director in the transaction services group and can be reached at (416) 814-5788. They are specialists in PricewaterhouseCoopers’ post-merger integration practice.

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