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Taking the Risk out of Culture Assessment for M&As

April 10, 2015
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To accurately understand a culture is huge; whether it’s the company you work in, or the culture of a company you are looking to acquire or join forces with in some form of an alliance. Unfortunately, despite the best intent, the Hay Group’s 2007 study of 200 M&As found that 91% of mergers failed to realize expectations because of what they termed “culture shock”. With all that “shock,” one would surmise that current techniques for assessing company culture isn’t doing the job. Here’s the thing, if you would like to take the risk out of correctly appraising the state of the culture and how it works, we believe there are some changes you would be well advised to consider this year in approaching culture assessment.

Just in case you were wondering, “No, we don’t believe the combination of interviews, surveys and task force meetings most organizations use to construct a perspective on company culture is enough to avoid exposing you to big (usually nasty) surprises.” Not that we don’t value or use surveys, or appreciate the work done in this area (Dennison’s Organization Model is a good example). But then we haven’t seen convincing proof that standard financial and IT audits or a series of “dinners and drinks” is enough due diligence either. So what should you do?

It’s time to rethink how to go about assessing a company’s culture. Here’s a condensed version of eight recommendations to get you started down that path:

  1. There is no single accurate cultural perspective on any company or business unit that is larger than a couple hundred people. In fact mid-sized and large companies have a number of subsets or sub-cultures, called tribes. Company culture is a mosaic.
  2. The culture is expressed as a story, not a profile. You’ll want to understand (and capture) the story people tell, and survey generated graphical profiles only provide a supporting role.
  3. It’s critical that you track findings within, not across, tribes, otherwise when you combine all the findings across the organization without regard for tribes you average out the differences and lose an accurate picture. E.g. if 5 people were highly motivated, and 5 were very unmotivated, combining both sets into one cultural perspective would average out (miss) the differences, and you would incorrectly interpret engagement as average, e.g. “Nothing critical here”.
  4. Before you do anything else, you need to identify and interview the individuals around which tribes form and the tribes they in effect lead. They are the “key influencers” in any culture.
  5. Interviews with key influencers are key to understanding the working definitions on 9 key constructs, and designing cultural surveys that help validate the story because of the cultural specific language and questions presented. E.g. if you don’t get the wording right, the language correct, you’re not going to get reliable metrics.
  6. It’s critical while understanding culture as a collection of tribes, which may or may not have overlapping cultures, to also appraise management vs non-management differences within tribes on the 9 key constructs (ex. “This is how it works here”). This surfaces gaps, and leads to finding the answers to “Why the gap?”, as well as the relative effect of motivational drivers such as achievement, power, affiliation, safety and/or recognition.
  7. Finding cultural unfulfilled promises and gaps is key to assessing how much repair is needed as well as the relative threat of cultural implosion. Again, you’ll find them through interviews and customized surveys.
  8. The most powerful medium for capturing a culture is video. Ultimately watching a video is the quickest way to consume relevant information and accurately understand a culture, given all the visual, auditory and cognitive channels we get to employ at once.

Check out this short video as it demonstrates some of our key findings:


 

Bottom Line: Think of understanding a culture as understanding the story, the story that sub-group members tell each other, tell their spouses when they go home at night, and their friends. If you don’t understand the defining stories that frame the culture, you don’t understand the culture. Think about it, when was the last time you’ve remembered an organization you worked in based upon survey results or a profile? Accurate assessment and avoidance of culture shock is all about accessing the story… at the tribe or sub-group level.


1 Comment. Leave new

Rodney a step up from some previous blogs. Much easier to follow and I did not realize the impact nor complete diversity in an org. It is a world new to me. I have a small business so it is easier to tell the story and repeat the story when all of the employees will fit into the lunchroom for a “spot” meeting. The graphic helps with the understanding. I learned something today. Thanks.

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