Culture Club was a rock group popular in the 1980s. The group originated in the UK. However, they were able to compose and deliver music that had a broad appeal. Companies facing a merger or acquisition face this same challenge in needing a culture with a broad appeal.
Culture has been defined as the sustainable competitive advantage that an organization can control. Culture surrounds the raw competency of an organization. In other words, how the organization does what it does and how well it does it. So how is culture manufactured and where does it originate within an organization?
Boy George was the leading influence in establishing the culture of the successful group and in setting certain fashion trends. The culture of an organization is often created from the top leadership. However, surprisingly enough, it can come from other areas within the company. For example, oftentimes middle management can create the culture. This can result when top management is weak. Weak leadership can even be dangerous within leadership itself. For example, many of you will no doubt remember the Daimler-Chrysler merger.
In the beginning, this merger was described as a merger of equals. However, the companies soon realized that this was a fairy tale as the differences in the cultural perspectives drove a wedge between the two companies. There were many cultural differences between the two workforce giants. The German executives had executive assistants. The Americans did not have such a luxury. Business decisions made by the Germans went through a strict protocol. The American mid-level managers were empowered to make some decisions without kicking it up the ladder for executive approval.
The Germans smoked and drank wine with lunch and worked late hours. Alcohol and smoking were banned in the American facilities. The Americans did not miss any deadlines, but did not routinely work late hours. The Germans wanted product recalls to be associated with a particular brand, like Dodge or Plymouth, not the Daimler-Chrysler name as a whole. Boy George was known for his biting wit that often provided the group with press releases adding to their growing popularity. The Germans did not understand that the company was powerless to stop or avoid media attention, wanted or not, when events such as a recall were revealed. The German work culture was formal and structured. The Americans were more freewheeling. There was a large pay difference between the Americans and the Germans. The Americans had higher pay. However, the German executives had no problem spending elaborate amounts of money on travel, hotels, expensive meals, and wine. The Americans were budget conscious. The CEO of Daimler, Jurgen Schrempp, carried on an open affair with his secretary who was his constant companion. The Americans were more straight-laced about such things, or at least more discreet. Just as Boy George was very different in dress and activities, so too were the differences between the two CEOs. Jurgen Schrempp, the CEO of the German company Daimler was a dynamic, gutsy, and charismatic individual. His American counterpart, the CEO of Chrysler, Robert Eaton, was not. He was weak. After the merger, he often retreated to his office for days at a time. In less than two years, Schrempp and Daimler were in charge and Eaton was out. The Germans eventually took over the entire company. Do you have a Boy George on your executive suite? What plans do you have in place to control the culture?
Inevitably, when a merger occurs there will be various levels of performers and game players all waiting to either perform, play along, or who try to sabotage the culture. Let’s name these and determine how each should be handled. Those who are high performers and match the culture are definitely keepers. Low performers who fit the culture might find another position within the organization and become keepers. Low performers who do not match the culture need to be invited to leave the organization. Contrary to Culture Club’s mega hit, “I’ll Tumble 4 Ya,” not everyone will “tumble” for the new company. The one who creates the biggest dilemma are the high performers who do not fit the culture. This individual must go. Moreover, this should not be a company secret. Rather, it should be, as a colleague suggested, in the vein of a public hanging. While this choice is clear. Many leaders hang onto this type of employee about six months longer than he or she should. This can spell real trouble. In fact, the two most disastrous mistakes that leaders make are indecision and hanging onto high performers who fail to integrate into the culture. The discovery that the individual must go, usually takes about six months. How much of your profits are you willing to sacrifice for such a worker? Not convinced?
High performing cultures have a substantially higher performance rate of around 30% versus low performing cultures of 9% (or less). In addition, 95% of troubled company issues are culture related. In fact, corporate culture problems are at the core of most businesses in trouble. What can be done to prevent your culture club from meeting its demise such as the Daimler-Chrysler scenario and the breakup of Boy George and his merry team? Pick your partner carefully. Companies with like products seem to do best. Before the merger occurs, communicate fully and openly with the members of each organization about the merger. Make it a point to understand the other company’s culture including its diversity or lack thereof. Remember that diversity isn’t just about ethnicity. It’s also about gender, age, experience, lifestyles, and education. Adapt the best practices from each organization If there are to be layoffs, put a program in place to help these folks find other employment, even if it’s just a referral to a resume writing service. Not only is it the right thing to do, it will pay off in tons of good will and fewer lawsuits. Give employees a voice and let them provide innovative ways to make the merger work. Ensure that everyone at the executive level is on board and that they will champion the change. Just as music requires an integrated team of professionals like publishers, songwriters, artists, and technical talent so does changing and building culture. Strong leadership is required for such ambiguous endeavors. Creating a shared purpose helps ensure a hit.
Robert H. Good, MBA
President & CEO
The Good Group
Performance Strategies, Inc.