"Confusions and Acquisitions:
Post-merger culture shock and some remedies"

By Marc Raynaud

"They just don't want to work together! "

" It's the French - they're so stubborn! "

"The Swedes aren't playing the game "

"They just want to do things their way !"

"They just don't want to work together!" "It's the French - they're so stubborn!" "The Swedes aren't playing the game" "They just want to do things their way!" T he acquisition had been a great strategic choice. An American-owned Swedish group is bought by a young entrepreneurial French company, with exciting new prospects for the future. An wave of new French technology was set to flood formerly unhoped-for Scandinavian markets. The young, dynamic French management looked like the perfect foil for an experienced Swedish management team. An agreement to create a highly sophisticated research centre for R&D was a dazzling project for both sides. It seemed to both parties that developing a truly European strategy and structure was at last feasible.

On paper it had all seemed fine, yet why, two years on, did the bubble burst? Why had no-one anticipated that the French and Swedes would not be able to work together to achieve their new and challenging goals? How did communication between the two cultures break down so rapidly ?

The Swedes quickly perceived the French management as hierarchical and somewhat arrogant. The French, for their part, were exasperated by what they saw as the naïve, cautious, weak-willed behaviour of the Swedes - and yet both sides considered themselves "easy to work with".

At the same time language problems erupted. English had been used by both sides as the lingua franca, but as mastery of English varied enormously in both companies, communication was plagued with misunderstandings.

Administration became time-consuming. The French insisted on a great amount of detail, often with little justification or feedback, yet refused to acknowledge rules on employment conditions and trade union relations in Sweden. As delegation style on the Swedish side and hierarchy on the French clashed, contact with Top Management was blocked by middle- management and even secretaries for "political" motives.

Many Swedes simply could not adjust to the new circumstances: tight deadlines, work overload, insistent queries and criticism, exposure to formal social gatherings. Yet in contrast, the French were often "positive" about such challenges: quick decision-making under pressure, exposure to criticism, competing for attention, reaching goals, overcoming social and business obstacles. They enjoyed analyzing, discussing, questioning and arguing, and found the Swedes lackluster by comparison.

Finally, the dream of new clients and product growth was jeopardized by what the Swedes saw as a nonchalence for the customer. Shocked and dismayed by uncooperative French attitudes towards service and individual customers , the Swedes began to fear that this might threaten relationships with existing and long-established Scandinavian customers.

Does any of this sound familiar? This case illustrates that while executives call in experts to analyze market, financial and industrial product- compatibility, they don't examine corporate or national culture compatibility until disaster strikes. Lip-service is paid frequently to the importance of communications, but confusion and lack of information can breed the wildest rumours. Making the necessary, often tough "people decisions" ranks low on everyone's list of priorities at the outset.

Alliances are an excellent breeding ground for all sorts of mishaps, in particular where corporate and national cultures differ. Combining disparate cultures is a frustrating task, and further complicated when merging companies have been fierce competitors in pre-acquisition times.

But how surprising is this? How straightforward is the task of merging two very contrasting and conflicting management styles? How can national and corporate cultures be integrated when trying to merge a product-driven organization with a market-driven one. Or an organization with few hierarchical levels, where people are promoted in line with performance, with a formal, many-tiered company where promotions are based more on seniority. Developing a communication and action plan to guide people through the change period is not always a number one priority.

There is, of course, no easy formula for neutralizing cultural differences and the frictions and misunderstandings they cause. But putting a name to this phenomenon can be the first step. "Post-alliance culture shock" is now recognized by an increasing number of executives , and has led to a move towards a Bicultural Audit as a way of tackling some of the crucial issues raised above.

The Bicultural Audit: Towards "Culture-Bridging"

The Bicultural Audit approaches the resolution of post-alliance management problems by looking at how compatible are organizational values, structure, management practices and information flow with the international strategy. Once tackled, audit data give executives the opportunity to analyze the difficulties they face and to work at developing the management and communication tools they need to make their alliance a success. From our experience, the process works in three stages:

Culture Gap Identification:

Using questionnaires, interviews and/or focus groups, run in the corresponding language of the participants, the initial Audit phase identifies gaps in perception of vision, values, structure, management practices and behaviours.

Culture Gap Analysis

An analysis of this data highlights common points to build on and inconsistencies that might weaken the alliance. On the basis of this data, the management teams can begin the Culture Bridging process.

Culture Bridging

• Define an appropriate structure and plan for the reorganization,
• Identify appropriate management styles and plan their implementation,
• Reinforce internal communications,
• Get agreement on a shared list of values, expected behaviours and performance criteria which will serve as the basis for performance evaluation.

Minimizing culture shock : Some Culture Bridging Tis

• As early in the process as possible, announce the alliance explaining why, why now, and anticipated steps.Keep communications regular, frequent and clear throughout.
• Do a bicultural audit to find common ground and difference.
• Agree on and communicate an exciting new vision to focus people on the future and help them let go of the past.
• Set up bicultural task forces on pertinent topics such as R&D, Quality, Communication and Marketing.
• Provide language training, promote cross-cultural dialogue and train multicultural teams in Culture bridging skills.
• Get commitment from Top Management to participate actively in communications and training programmes from the beginning.
• Increase social contact and ensure nationality mix.
• Set and communicate acceptable performance criteria for evaluation of management perfomance.
• Promote internal transfers and short term staff exchanges internationally
• Ensure you have an international organizational structure to support your international strategy.

Alliances only succeed where new loyalties can be developed together. The price may be to give up a well-loved name, but the pay-off can be an exciting new vision and set of opportunities both partners can commit to.

Possibly some marriages should never have been attempted in the first place. But even in the best of cases, in our experience, the three most important elements for maintaining morale and gaining commitment to the new organization are: creating the appropriate structure, reinforcing internal communications and managing cultural differences.

In the above case, the organization used a Bicultural Audit to help management teams focus on the future, articulate the new vision and work strategically towards achieving some, if not all, of the ambitions which tempted them into the venture at the outset. More and more international managers are beginning to realize that investing time in communicating across cultures and building bicultural teams around shared objectives goes a long way to minimizing the dramas of such "Confusions and Acquisitions"

Marc Raynaud
MRaynaud @icmassociates.com
Marc Raynaud (France) is partner with Inter Cultural Management Associates (ICM).

ICM is a Paris-based consultancy, which since 1983 has been helping organisations manage change in a intercultural context.

Inter Cultural Management Associates

2, rue de l'Eglise ­ 92200 Neuilly sur Seine

icm@icmassociates.com

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