Organizational Issues of Mergers and Acquisitions - Part 4

A Framework for Integration

Key Principles

Successful mergers and acquisitions are not particularly rare, but the degree of success as (measured by productivity) can be enhanced by adhering to a few elementary principles. The core organization must have a solid foundation, and at the same time be flexible enough to deal with the myriad of changes that will come about as the result of merging multiple functional business units into one. It is primarily the responsibility of executive management to foster an atmosphere of cooperation and communication between the diverse departmental management teams, and even within those groups. It is also essential to structure the organization along lines that will facilitate communication and teamwork, so that the enterprise functions as a cohesive unit when viewed from a high level. Last, but not least, the organization must overcome the natural fear of change and be open to the concept of constant modifications to process, procedure, policy, and practice.

In reality, even corporations that have never engaged in a merger or acquisition, nor have any plans to do so, would be well advised to adopt this type of philosophy to gain a competitive edge in the marketplace. Success often results in complacency, and the inability or unwillingness to recognize the need for change.

To understand why success breeds failure, it is necessary to look at how organisations use their success. Success is a learning experience for organisations: it reinforces behaviours which they must practice to succeed. Correspondingly, organisations "programme" themselves around their successful strategies and processes so that they can consistently replicate their success experiences. One way in which this programming takes place, is at the informal cultural level. Corporate success produces strong cultural norms, based on the belief in the correctness of one's actions. Such strong cultures, however, are also resistant to change, and reduce the flexibility of organisational responses. (Shukla, 1994, p. 1).

Communication and Organization