Culture Clash or Cash
By George Anderson
It’s safe to say that Ralph Waldo Emerson’s observation that “culture, with us, ends in headache” had nothing to do with large retailer merger and acquisition activity.
It does, however, speak to the condition many executives find themselves in when trying to take previously autonomous groups and forge them into a new organization with a single,
shared mission and a strategy to achieve it.
The cultural aspects of mergers are often overlooked, say experts, and in many cases that proves problematic if not fatal when attempting to bring companies together.
According to Mitchell Marks, an industrial-organizational psychologist and a professor at San Francisco State University, “CEOs who have made acquisitions say that, with 20-20
hindsight, what they would manage more aggressively is culture.”
A St. Louis Post-Dispatch report on the Federated/May merger asked industry experts about the cultures of the two companies and what it would take for a single new identity
to be created.
Howard Davidowitz, chairman of Davidowitz & Associates, said the two company’s cultures going into the merger were “totally different.”
“I think the challenge is going to be astronomical,” he added. “But I think at the end of the day, Federated is as good at this as anybody you are going to get.”
Prof. Marks believes Federated’s CEO Terry Lundgren and the rest of management need to, “Give people a compelling vision. Why is working for the new Federated going to be better
than the old May? On a business level, what’s in it for me as an employee?”
Jim Sluzewski, a spokesperson Federated Department Stores, said, “It’s not so much May does it this way or Federated does it this way. It’s more what’s the Macy’s way. What we
have said all along is this is a company coming together, and when a company doubles in size, there is going to be change.”
Moderator’s Comment: How important is corporate culture in a company’s business performance? What are the keys to creating a single culture in merger
George Anderson – Moderator