Cultural differences between organizations, complicated by national or ethnic cultural differences are one of the primary reasons that acquisitions fail to meet their financial goals. Corporations that successfully integrate purchased businesses pay attention to cultural differences and find ways to either assess cultural fit or implement strategies to foster cultural strengths of both organizations.
When the assessment is done during prior to purchase, the acquiring team can determine if in fact the target company is a good cultural fit. Smart companies have determined that if the cultural differences are too much, integration will be too difficult and the wiser decision is to walk away from the deal.
After purchase, the acquiring company can assess which cultural differences may play havoc with the integration and plan accordingly.
The most successful cultural assessments include several elements such as:
- Assessing both companies – the acquiring and the target companies
- Agreed upon, clearly defined dimensions of organizational culture – at least within the acquiring company’s leadership
- Multiple methods and data points to provide the most comprehensive picture of the organization
- Shared results and verification of findings with employees in their respective companies
- Mutually agreed upon plans to address cultural differences between the acquiring and target companies
The two approaches that companies generally use to assess culture are to buy off-the-shelf instruments or develop their own tools in-house. A few companies may combine off-the-shelf instruments with their own. Each approach has advantages and disadvantages. Using generic, already developed tools allows for a clean comparison between companies, but this method may not capture all the important elements of an organization’s culture. When an acquiring company develops its own tools, care can be taken to ensure that the critical elements of culture as defined by the acquiring company are measured. The down side of the in-house approach is that people within a given organization may not be able to identify their own taken-for-granted assumptions about their organization’s culture; hence, the tools developed may not be assessing the right dimensions or characteristics.