The value corporate culture
Most competitive global organizations have succeeded in outdoing their rivals through mergers and acquisitions. However, not all organizations that come together succeed in achieving the anticipated goals. The main reason for such failures is a conflict and lack of consistency in the two firms’firms’ corporate cultures. When two organizations come together, both organizations need to combine the strengths of their organizational culture. Similarly, they should jointly alleviate the bottlenecks involved in each of the two organizations. A lot of mergers often result in a conflict of interests, which ultimately lead to the failure in performance, productivity, and general competitiveness. As a senior consultant in Deloitte consulting firm, charged with advising the two firms which have recently merged, there are several benefits of creating a shared culture when merging the two corporations. The creation of a shared culture is an effective strategy that concerns vital aspects of the organizational operation, including but not limited to the company’s corporate executive and leadership, human resources department, and operational management. According to Kumar and Sharma (2019), 70% of global mergers and acquisitions fail to achieve the anticipated synergies, whereas 50% experienced a drop-off in productivity within the first three quarters of the year. The main reason attributed to the failure is because the leaders often fail to recognize the pertinent role of human resources in productivity. Aligning one or more corporate culture forms to establish a shared organizational culture has multiple benefits to the company, such as enhancing effective leadership and management, achieving cost-effectiveness and cost reduction, the achievement of operation and production efficiency, and lead time reduction, and attainment of supply chain efficiency.
The Concept of Corporate Culture in the Context of Global Organizations
Corporate culture refers to a pattern of basic shared assumptions that an organization adopts and modifies as it solves its challenges of internal integration and external adaptations. It is a powerful tool for organizations since it impacts nearly all company dimensions, such as sales, recruitment procedures, and employee morale, among other vital aspects. There are four principal forms of culture that organizational leaders should strive to maintain to achieve a balanced approach to corporate culture sustainability. They include; clan culture, adhocracy, hierarchy, and market.
Clan Culture
It focusses on the people’s nature of association within the company in the sense that every member of the company feels part of a big united family (organization). Organizations that emphasize most on clan culture are characterized by a free atmosphere of cooperation and communication as well as problem sharing among members of the organization. The outcome of clan culture is a happy team of employees, which ultimately translates into satisfied customers. Most global companies face difficulties maintaining this family-style organizational culture because of their high level of diversification (XXX). Nonetheless, with the advent of social media and other forms of technology, firms can still initiate and maintain it.
Adhocracy Culture
Adhocracy culture focuses entirely on innovation as the ultimate avenue of staying at the edge of the industry. Organizations that adopt this culture emphasize on employee creativity and individuality in thinking. As such, talent is of high value to such companies. Such are companies where professional development and opportunities for capacity building through such avenues as benchmarking are highly encouraged. As the pressure to initiate new ideas mount, employees in organizations that embrace adhocracy culture often find themselves under the pressure of personal competition. Organizations that strive to maintain adhocracy culture include some of the World’sWorld’s best-known corporations, including Google Inc., Facebook, and Apple Inc.
Hierarchy Culture
Companies that adopt a hierarchy culture pursue a traditional approach to the maintenance of organizational performance. The emphasis is usually rigid, often focusing on offices’offices’ hierarchical arrangement and strict adherence to the chain of command (XXX). There is a well-established and clearly stated reporting system that employees follow in their operation. Communication, therefore, occurs alongside a particular protocol in line with the management system in place. Such organizations are usually stable but with limited room for creativity. The survival of firms that embrace this type of corporate culture in a globally competitive business environment is efficiently timed out by the most aggressive, adhocracy culture-oriented corporations.
Market Culture
The priority of market culture is corporate profitability. Every move is evaluated based on the extent to which it will contribute to the overall organizational goal. The goals are, in turn, in direct alignment with the company’s quest for corporate profitability. Such organizations tend to ignore internal satisfaction and instead focus on external success (XXX). Generally, organizations that boast sustained market culture are usually profitable and successful.
Figure 1: 4 Types of Organizational Culture (Source: Heinz, 2019).
Problem Statement
As seen from the four types of organizational culture, most organizations are diverse, depending on the kind of culture they emphasize on most. Nevertheless, it is highly probable for one company to reinforce multiple types of culture simultaneously, the differences in priorities notwithstanding. Therefore, it follows that the two merging organizations will probably have at least a common (shared) type of culture guiding their operations. By joining the two companies, both companies should benefit from a mutual exchange of insights to identify the strengths and limitations of either form of leadership formerly in place. In so doing, they should seek a consensus on the kind of corporate culture to adopt. The decision depends on the organizational priorities outlined in the merger agreement. However, the problem is that whenever organizations come together, there is a risk of emphasizing more on the corporate culture of one organization and a tendency to ignore the culture of the counterpart organization. There are numerous benefits of creating a shared culture when merging two organizations.
Benefits of Maintaining a Shared Culture in Corporate Merging
Effective Leadership and Management
Maintaining a shared corporate culture is a manifestation of the coordinated efforts of the leadership between the two merging organizations. With such an enabling atmosphere of organizational leadership characterized by minimum disagreements, leadership’s role cannot be disregarded. The kind of leadership and management style in place that directs merging companies to have a shared culture is likely to be democratic and inclusive. It is also a style that seeks to attain maximum efficiency and, thus, competitiveness and profitability. It may, therefore, entail a transformative leadership style. Most importantly, it is a style that places organizational priorities at the heart of decision-making and initiative-taking. Subsequently, the future days of operation are likely to be full of organizational efficiency as directed by insightful leaders and competent managers in charge of various departments.
Leadership is one of the vital attributes of corporate culture, without which it becomes difficult to define the culture of an organization—as such, having a shared corporate culture is both a product and a consequence of good leadership. Therefore, it is instructive to conclude that maintaining a corporate culture in the context of corporate merging leaders to effective leadership and management just as effective leadership and management enables leaders to initiate a shared corporate culture. For instance, leadership styles that are autocratic and dictatorial do not permit leaders to maintain a shared corporate culture since their very nature would disrupt the process (XXX). On the contrary, it is until the leadership allows the flow of insights and encourages creativity that it becomes possible to maintain a shared culture whenever two organizations come together in the form of a merger.
Cost-effectiveness and Cost Reduction
One of the reasons many organizations form a merger is to reduce operational costs by combining resources and cutting expenses. Leadership is one of the resources required, whereas the management becomes an area where the merging organizations save a vast bulk of resources. Therefore, it is a priority between the merging companies to achieve cost-efficiency by all means. Maintaining a shared corporate culture implies that organizational activities will run in a well-coordinated manner using the combined resources. However, if the two organizations are selfish, and each one wants to emphasize its own preferred corporate culture, the resulting expenditure on the resources rises, leading to a high cost of running the company.
Each one of the four cultures described above seeks to promote cost leadership in its unique way. For instance, adhocracy culture focusses on innovation while market culture aims at optimizing productivity. Both goals result in higher output per the unit input of resources (XXX). If both cultures are creatively merged and maintained in a manner that is not contradictory, chances of reducing operational costs increase. However, if one company on one side sticks on the conventional adhocracy and another on the market culture, expenses of running the company increase. The outcome is usually increased production costs.
Operational and Production Efficiency
The efficiency of operations largely depends on employees’employees’ capacity to perform their respective tasks within various departments of the company. Whenever merging to organizations together, sustaining a shared culture increases employee morale by inspiring them to be more positive and productive at work. In the same way, the level of employee turnover drops significantly. A shared clan culture and hierarchy culture shape employees’employees’ interaction in the workplace. In turn, a positive interaction increases the employees’employees’ loyalty and motivation towards corporate management and policies. Overall, employees become more corporative and are willing to perform their tasks more competently when a shared corporate culture is embraced as opposed to working in an environment of divisive operations. Healthy competition and relationships among the employees are the additional requisites to the enhanced productivity and activities at the workplace. In the global corporate context, an enriching workplace is marked with employees’employees’ understanding of their rank promotion benchmarks and supervisory and inspection procedures. With a shared organizational culture, such an environment goes a long way toward promoting fairness, hence improving the process of task performance and the quality of the end products. Apart from having a highly effective and efficient staff that assures high productivity levels, maintaining an effective market and adhocracy culture instills among employees and the management a sense of optimism and a desire to achieve the best in the industry. Ultimately, the individual optimization of performance at the department level progressively culminates into overall organizational performance, leading to the total production and operational efficiency.
Promotion of Corporate Competitiveness
Corporate competitiveness is a product of a sustained productive organizational culture that is characterized by optimum performance and productivity. Different forms of organizational culture serve as requisites to the promotion of corporate competitiveness. For instance, adhocracy culture leads to the reformulation of corporate goals, which in turn leads to the uplifting corporate targets. The working mechanisms improved, thus, promoting the performance of tasks and production in general. In turn, the customers find convenience purchasing their products from such an organization that has a sustained corporate culture regardless of individual differences between the merging companies.
Sustaining a uniform clan culture between the two merging organizations, on the other hand, promotes unity, corporation, collaboration, and communication, leading to an effective human resource department. The outcomes of such a culture are employee retention and a general desire for employees to work with the company. Besides reducing employee turnover, employees share skills and ideas while continually gaining experience that serves a long term purpose of enhancing and sustaining corporate competitiveness. Market culture leads to the production of high-quality products and the fulfillment of market demands; hence, it attracts and retains more customers than rivals. As such, a shared marketing culture increases overall quality, which translates to a vast consumer base. It is only when the company has a steady customer base that it can boast organizational competitiveness.
Lead Time Reduction
Lead time is the latency duration between the initiation of a task and its completion. For instance, the lead time between the placement of an order for a new car from the manufacturer and its delivery to the customer can be one to three months. The duration can even be shorter or longer, depending on several particularities. One such determinant is the nature of organizational culture in place, which determines the values placed upon the timely delivery of products to the customers. Two merging organizations that accept to adopt a market culture of efficiency would focus on delivering the car in an as short time as possible. On the other hand, a market culture that emphasizes hierarchical aspects of management would probably delay the delivery process because of the need to have the specific staff to clear off the order. If two organizations, each with a rigid emphasis on the different corporate culture, merges and fail to embrace a shared culture, the lad times will increase. However, if the two companies, regardless of their differences, agree to adopt a shared corporate culture that emphasizes productivity and profitability, then the lead times will significantly reduce. Lead time reduction serves more vital roles that go beyond short term profitability of the company and the satisfaction of the customers. It leads to the sustainability of corporate competitiveness in the long run (XXX). In turn, the organization becomes well established in the industry as customers’ trust also increases.
Supply Chain Efficiency
The efficiency of a supply chain is determined by the company’s ability to get the right product to the required place on time and at the least possible cost. Since the customers are the product’s ultimate consumers, their convenience is a measure of an effective and efficient supply chain. An efficient supply chain is a determinant of an enabling organizational culture. Since it is a complex process that begins with the supplier and ends with the product being received by the end consumer, organizational culture matters significantly in determining its efficiency. If the two merging companies initiate and sustain a shared corporate culture, it becomes easier to make the best use of human, financial, physical, and technological resources. Otherwise, a different organizational culture between the two merging companies exposes the company to the risk of losses in terms of time wastage.
A company that has a shared culture attracts stakeholders who aspire to do business with it. Subsequently, it becomes easier to get the best suppliers, customers, and partnering organizations. Most importantly, the organization finds it more comfortable to outperform its rival firms in the industry. If a merger occurs without the benefit of a shared culture, parallel operations are likely to occur between the two companies, leading to probable losses in terms of resources (XXXX). Therefore, the two firms must consider having a streamlined corporate culture for the benefit of winning the confidence of other stakeholders in the supply chain.
Conclusion
Organizations must realize the value of corporate culture as a set of shared values, which should be reflected in how an organization runs in its diverse spheres. Organizations that fail to create a shared culture when merging fail to attain their targets and consequently experience losses that have long-term implications. Leaders should, therefore, be aware of each of the four forms of corporate culture, namely, clan culture, adhocracy culture, market culture, and hierarchy culture. It is possible to have multiple types of culture, guiding the organization in different aspects of its operation simultaneously. Nonetheless, there should be deliberate attempts to eliminate the differences in the way two merging companies previously approached pertinent issues to establish a shared culture, which comes with numerous benefits. Significant aspects of focus should be employee recruitment and retention, financial resources management, and the management of other resources, administration, and leadership processes involving the decision-making procedure approach to change integration, supply chain management, and responses to pertinent customer concerns, among other issues. Establishing a shared corporate culture that incorporates one or more dimensions of organizational culture to develop a shared corporate culture has various benefits in the short run and the long run. Significant benefits include the Enhancement of effective leadership and management, attainment of cost-effectiveness and cost reduction, the achievement of operation and production efficiency, lead time reduction, and realization of supply chain efficiency. Therefore, organizations merging should have a shared corporate culture to achieve their set goals and ultimately achieve corporate profitability and competitiveness, which are the priorities of most for-profit global companies.