Culture clash is merger no-no

Mergers can fall apart if the cultural element isn’t closely matched, says Tom Bawden

The Fourth International Corporate Identity Conference in London last week focused on the issue of corporate culture, regarded by many in the industry to be the internal manifestation of the corporate brand.

Some interesting questions were asked, with respect to the ultimate cultural crisis – the merger.

Why do merging companies so often overlook the cultural element in their marriages and to what extent are identity consultancies in a position to play the part of counsellor?

Not surprisingly, identity consultancies believe themselves best placed to manage the largely overlooked cultural dimension of a merger.

Speaking at the Landor Associates-sponsored event, Landor managing director Adrian Day called for cultural considerations to become a designated category.

He argued that they should be placed at the top of the agenda, at the very beginning of the merger process, alongside the financial and strategic factors.

Identity groups are well qualified to look after the cultural aspect of a merger, because their work is largely concerned with corporate/brand culture, he said.

Most people in the business sector agree that cultural issues are not adequately managed in a merger and that they need to be given much greater prominence.

“My research has shown that, in any merger, one company emerges as a dominant force, and that needs to be borne in mind,” says University of Strathclyde business professor Andy Lowe.

Less clear is who should take responsibility for managing the culture.

“The difficulties in a merger cannot be underestimated. Each group has a perception of themselves which is generally different from its reality and a perception of the other, which is also different from that reality,” says BT design manager David Mercer, who attended the conference.

The proposed merger between BT and US telecommunications company MCI collapsed late last year after months of uncertainty (DW 5 December 1997).

Mercer believes identity groups are well equipped to look after the branding side of any merger, but their skills are not broad enough to look after culture across the board.

“Culture is much broader than the brand. It encompasses human resources, management process, the ethos of the organisations, their language – a whole range of things. It cuts across the entire organisational structure, of which the brand and design are just a part,” says Mercer.

“For example, many US firms tend to have an autocratic top level, while in the UK, middle-management tends to be relatively more powerful. I don’t believe design consultancies have enough leverage to resolve these kind of cultural issues,” he adds.

Wolff Olins director Jonathan Knowles agrees with Mercer. “We haven’t done any pre-merger screenings for companies looking at the cultural fit, but we have looked at brand fit,” says Knowles. Wolff Olins was working up the identity for Concert, the name for the merger of BT and MCI.

Knowles says as the importance of the brand continues to rise up clients’ list of priorities, brand-screening is accounting for an increasing proportion of Wolff Olins’ work. He would like to see identity groups involved earlier in the merger process “crafting the emotional rationale on to the strategic rationale”.

But he concedes the need for identity consultancies to “talk the language of business”.

“Until they learn to do that, it is unlikely they will be employed in this [harder business] capacity,” says Knowles.

Meanwhile, a Halifax spokeswoman agrees cultural considerations cannot be underestimated. However, the company will not appoint a consultancy – design or otherwise – to manage the cultural side of its proposed merger with building society Birmingham Midshires, should that go ahead.

BT’s Mercer thinks there is a gap in the market for groups specialising in merger culture.

“Someone has got to oil the troubled waters which inevitably occur at some stage [in the merger process], although I can’t think who would be qualified to carry out such a broad task. Perhaps some kind of management consultancy, with an identity capability attached,” says Mercer.

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