Organizational Culture

The organizational level of analysis yields more than information about characteristics and circumstances than the national and identity group levels can hope to achieve. Organizational culture serves as a lens that enables proactive and strategic evolution and adaptation of an organization in the face of competitive challenges. The boundaries of an organization can and should be understood and mapped in cultural terms to reduce inherent risks and to maximize opportunities.

Consider the following examples:

  • A multinational computer and IT corporation acquires the consulting business of an auditing firm with the intention of infusing the organization with a consulting culture to realize a significant shift in its business strategy.
  • A consumer electronics organization announces a radical departure from hierarchical decision making to a culture of collaboration.
  • A multinational consumer goods manufacturer purposefully leverages the power of relationship culture of specific identity groups to strengthen the relational basis of its vast global organization.
  • A global professional services firm embarks on an enterprise-wide behavioral and attitudinal transformation towards optimal levels of inclusiveness, acting on the insight that culture impacts performance and defines its limitations. As a result, the firm realizes how the actual interactions and behaviors within the organizational system relate to the value creation process, both as invisible and unintended barriers and unconscious success factors.

That culture forms a messy and unwieldy underpinning to performance at individual and collective levels is not news to the enlightened business leaders or human resources professionals in these organizations, but all too often leads to unsuccessful or half-hearted ways to manage it. Although top leaders at the aforementioned corporations have avoided a simplistic understanding of organizational culture, many view it as little more than the mission and value statements that decorate offices, are featured on websites, and define some of the performance categories in annual appraisals.

The dangers of such a reductionist perspective are most evident in merger and acquisition integrations and in the vexing dilemmas plaguing talent management and development.

Culture contributes significantly to the failure or underperformance of most mergers and acquisitions. According to McKinsey, only 23% of acquisitions recover the cost of capital over a ten year period, and according to Business Week, most lose money. Mercer, in a study of 150 deals, found a 53% failure rate, and in a study of 115 mergers, Kearney determined that 58% did not add value. Many sources cite cultural differences between organizations as a key derailer, yet few organizations systematically and proactively use this insight to successfully integrate.

In the course of a number of client experiences, TMC has noticed that cultural similarity tends to be proclaimed by senior leaders in the beginning of merger and acquisition. In their pursuit to realize “synergies,” cultural differences are deemed either non-existent or insignificant. In the Citibank-Travelers, Daimler-Chrysler, AOL-Time Warner, P&G-Gillette, and Honeywell-Allied Signal situations, the top executives publicly announced the cultural similarities and compatibilities of their organization. The reasons for doing so are generally sound, as shareholders and investors may not take kindly to a more realistic appraisal, and from the vantage point of those top leaders,  their organizations indeed look very similar, particularly when their respective corporate cultures are presented in mission statements and values that tend to resemble each other.

It is usually further down in the organization, across the horizontal divide, at the operational level of daily interactions and experiences, where cultural differences, similarities, and synergies are negotiated. Truly facilitating cultural integration requires perspectives, tools, and approaches that take this dynamic aspect into account. This means equipping integration leaders and newly formed cross-organizational teams with shared language, awareness, knowledge, and skills to sensitively navigate their subjective acquisition experience not only as individuals, but also within and among groups.

The conventional depiction of cultural differences along objectified scales insufficiently meets this need. Observing differences alone does not enable integration or synergy; what we do on the basis of this comparison is key. On the basis of emotional and social intelligence, it requires focused attention in creating a new operational culture through a process of mutual negotiation of standards and shared support in requisite cognitive and behavioral adaptation. Success in this endeavor is based on the mindful exercise of practical skills, namely cultural due diligence, cultural dialogue, style-switching, and cultural mentoring. These rest on a perspective of culture that does not regard culture as something an organization has (organization culture as attributes or characteristics), but rather as something an organization is (organization culture as process).

In the domain of talent management, organizational culture matters and requires more refined applications. Organizations have recognized that “cultural fit” is the most reliable predictor of an employee’s success within their systems. Most frequently, though, this insight is translated into unidirectional logic: “Does the employee/candidate fit us?” In contrast, leaders who embrace and act on this insight with an expanded understanding of culture contemplate, “What can we learn from this employee, what change can this employee bring to us, and how can this be of value to us?” The failure to do so yields rejection of otherwise desirable talent or leads to systemic biases against certain behavioral characteristics or propensities at individual and group levels. It is not an accident that certain identity groups or individuals with specific personality or thinking styles characteristics often find it difficult to survive and thrive in organizations. In order to leverage diverse talent and actualize the meritocracy to which organizations aspire, a more realistic and process-oriented understanding and approach to culture is needed.

The Cultural Orientations Approach™ represents such a method. It is based on understanding organization culture from a dynamic perspective that informs the analysis of interaction and communication patterns, as well as the subjective experiences of individuals and constituent groups within a variety of organizational contexts. The Cultural Orientations Indicator®, on both individual and aggregate levels, and the non-judgmental vocabulary provided by the Cultural Orientations Model™ have proven to be highly useful and practical when applying this process oriented approach.

In an integration session of a business unit for a consumer goods organization of a recent acquisition, different use patterns of communication technologies (particularly email and instant messaging) and respective interpretations perpetuated “us versus them” dynamics that stifled teamwork and performance significantly. Revealing the different use patterns and articulating their link to the subjective experiences of (dis)respect, team spirit, and commitment was a turning point for this team and helped establish a new, shared culture with higher levels of commitment, performance and results.

Mindfully applying the four skills of cultural competence, namely (a) cultural due diligence, (b) style switching, (c) cultural dialogue, and (d) cultural mentoring provides a sound basis for managing the inherent risks and opportunities of culture at the organization level. These need to become an integral part a leader’s skill repertoire ensuring that culture is a consciously managed performance enabler.

References

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Czarniawska-Joerges, B. (1992). Exploring complex organizations: A cultural perspective. London, UK: Sage.
Deal, T. and Kennedy, A. (1982). Corporate cultures: The rites and rituals of corporate life, Harmondsworth: Penguin.
Douglas, M. (1987). How institutions think. London, UK: Routledge & Kegan Paul.
Schmitz, J. (2007). The Cultural Orientations Guide, US: Princeton Training Press.
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Sherman, A. and Hart, M. (2006) Mergers and Acquisitions from A to Z, AMACOM
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