I see that American Airlines and USAir announced their long-rumored merger this morning. I’ve flown over a million miles on American so I know it quite well. Over the years I’ve flown USAir from time to time but it I’m certainly not as familiar with it. Why do I bring this up?
I’ve been through several corporate mergers. I was with ABC when CapCities bought it and then again when Disney bought CapCities. I was at CBS when Viacom bought it. From those experiences I learned a couple of things that I think have broader implications even if your company isn’t getting bought.
Mergers fail. A lot. In fact, studies indicate that somewhere between 50% and 85% of mergers come up short. I suppose that part of it has to do with the reason for the merger in the first place. If a company is buying another to eliminate a competitor the mission is accomplished no matter what happens to the acquired company. Part of it may be the enthusiasm for the merger blinding those involved to the potential pitfalls or wacky financing. But I think it’s primarily for another reason.
Simply put, culture. Think for a second about new immigrants to this country. They may not speak the language. They are unaware of our customs. They might not even know our laws. All of those things create resentment – look at the news and you can find many examples of it. It’s not that they’re bad people – their culture is different.
It’s no different when corporate cultures meet. There are almost always differences in management styles. How employees feel about the companies vary as much as do their benefits. Lost in the shuffle is the fact that one company is not buying another – you’re acquiring people! Those people may have been trained to have a different focus and how they measure success might not align exactly with your expectations. As with the immigrant example, helping them to learn the culture and to speak the language is an imperative.
I’ll be watching this merger with interest. I’m wondering if and how the cultural changes will manifest themselves to the flying public. If the managers are smart , the next year will be spent making sure everyone is on the same page and understands the cross-cultural changes. If they aren’t, like the vast majority of mergers, this one will fail.