Nine axioms for success in mergers

Health Progress, Jan/Feb 2003 by Arbuckle, Gerald A

Health Care Leaders Must Take Great Care with the Cultural Factors Involved

There is increasing evidence that cultural [factors are] the single largest cause of lack of projected performance, departure of key executives, and time-consuming conflicts [in mergers].

-Ernst & Young LLP, Mergers and Acquisitions1

Mergers can succeed when the people in charge acknowledge the cultural factors involved and consider them in their planning and implementation. Sadly, when mergers fail, they usually do so because these factors have been neglected.2 Between two-thirds and three-fourths of all corporate mergers and acquisitions do fail.3 Health care mergers are no exceptions; 75 percent are estimated to fail or, at best, fall short of their planned potential.4 Failures can be measured in financial terms, but it is impossible to assess the human suffering these collapses cause. For the administrators of Christian health care organizations, a significant test of their commitment to Gospel values will be the way they manage the cultural-that is, human-aspects of a merger.

In this article, I will focus on the cultural requirements of a successful merger.

The term merger is often loosely used to cover such organizational changes as joint ventures, strategic alliances, and acquisitions. Strictly speaking, however, a merger is the process whereby two (or more) organizations conduct a dialogue as equals, the intention of which is to produce a single new entity that will have its own culture and, not infrequently, its own new name. Whatever form the merger takes, some degree of culture change will be required.5 Because culture and culture change are complex realities, I will try to explain them in a series of practical axioms.

WHAT IS "CULTURE"?

Axiom 1: An understanding of the meaning of culture is the first condition for successful mergers. A culture's primary purpose is to provide us with a feeling of identity and security; the most fear a sense of being lost, and a culture keeps this fear from paralyzing us. A culture is not simply "what people do around here" but, more important, a pattern or web of meanings encased in symbols, myths, and rituals that provide people with a sense of identity and teach them how they should feel and think about, and behave toward, both themselves and others. A culture is not primarily an entity but, rather, a process in which people struggle through the use of symbols, myths, and rituals to cope with life's challenges.

Symbols evoke good and bad feeling. For me, for example, a stop sign symbolizes an auto accident I once had after I failed to stop at one; every time I see a stop sign I relive that experience. Myths-contrary to their popular meaning as narrative symbols or stories-are the emotional glue that binds people together at the deepest level of their being. No wonder, then, that people who work for health care organizations react strongly when they learn that the myths they associate with those organizations may be threatened by mergers. All cultures, including organizational cultures, have a founding myth: for Americans, it is the coming of the Pilgrims; for the French, it is the French revolution and the rise of Napoleon. Values are contained in myths and symbols; freedom, for example, is a value symbolized by the Pilgrims. When myths are lost, so also are the values associated with them. Rituals are the tip of an iceberg, the visible face of myths and symbols.

Anthropologists speak of the "culture unconscious" and describe culture as a "silent language." They mean that symbols and myths are so integral a part of our inner selves that their influence-and even their existence-are apt to escape our awareness. Symbols and myths are like jet streams in the sky: invisible but powerfully influential. Most of the time, we are unaware of the degree to which culture shapes our thoughts, emotions, and actions. People who claim to act rationally-seeking only increased efficiency or higher quality, for example-are in fact guided by rigid and pervasive myth-based traditions.

In brief, culture is not primarily what people do as members of an organization. It is what they feel about what they do. Any culture alignment plan that ignores this reality is doomed to fail.

CHANGE CAN BE FRIGHTENING

Axiom 2: Recognize that the in-depth cultural change required when organizations merge is slow; culture has in-built resistance to change.

One helpful definition of culture goes like this: Culture is about maintaining the status quo. When I work with health care leaders who are involved in planning mergers (and creating the strategies and timetables necessary to achieve them), I begin with a simple question: "Where did you sit before today's coffee break?" The leaders always respond with a blank look because they have been startled by the apparent irrelevance of my question. Then, after a moment's thought, they see what I'm getting at. "In the same seats we sat in after the break," they reply. "You are planning to change cultures-that is, change people's lives in a radical way-and yet you yourselves sit in the same seats every time we meet."