No one can change how many decisions have to be made in a merger. In effect, you are building a new organization from scratch out of mismatching parts. For executives involved in leading "cross-cultural" mergers, it will be some of the hardest work you will ever do.
You must reduce the anxiety, reduce the resistance to change, and channel the energy towards solving the real problems. But there are ways to look at and arrange these tasks successfully.
I served as CEO during the two largest "full mergers" of Illinois Banks prior to the First Chicago-NBD combination. In both these mergers we found several practices useful in reducing the anxiety and confusion that any massive change initiative entails. In particular, we followed four basic rules:
The Snowball Dance Rule
In a merger, every employee encounters an avalanche of new people. They do not know who they have to listen to or who has the power to make requests of them. To help employees feel a degree of comfort, follow the snowball dance rule in making introductions and exchanging data.
Starting with the merger manager on down, no one from the "other side" is allowed to introduce him or herself and no request for information can be made without being authorized by someone already established previously as part of the snowball chain (i.e., on the direct pipeline from the merger manager.)
The snowball rule also helps to avoid the kind of hedging or shading of data that people do when they are unsure of the purpose.
Communicate at 10 Times the Normal Rate
Following this rule takes great discipline, because the temptation to an already overburdened leadership group will be to get on with the actual work and report only decisions as they are made. This investment in over communication will pay back the slight drain on the leaders schedule many times over.
A merger newsletter, a daily update sheet or Internet page, regular mass briefings of key people, and video links are all possible vehicles. Describe the process, describe the teams, describe the reporting systems, give regular progress reports which, in many cases, will only say we are only a week or two farther along then we were before.
The content does not matter as long as people become confident that they will hear everything from you in an official way. Without any other information to fill the void, rumors will become established and the more extreme and fearful rumors will travel the fastest and the farthest.
Use the 48-Hour Kick-Out Rule
A dedicated group of senior executives publicly must be given the full- time responsibility for managing the merger with the authority to make operational, organizational, and systems decisions. The leadership group then must establish real teams that are authorized to make decisions under it's authority.
If the teams are nothing but representatives from various organizational units that can only report back to their unit head, the process will be slow and be dominated by partisan issues of the respective functional units.
The 48-hour kick-out rule is an important corollary. Under this rule, teams must forward any issues on which they have deadlocked for more than two or three days to the merger management high command.
Not only does this rule move the process faster, but it helps to maintain the kind of cohesiveness and harmony that can easily get lost when people fight over things on which no consensus is possible.
Walk-Throughs and State-of-the-World Descriptions
Use state-of-the-world descriptions and walk-throughs to combat the hidden assumption that your group is the only one changing the environment.
In a normal work environment, we all manage by exception; i.e. things are expected to occur within the same tolerances as they did previously, and the alarms go off only when those recurring tolerances are exceeded.
In a merger, people are changing the assumptions all around us in ways we will not automatically recognize.
To avoid such situations, project teams should periodically issue lists of all background assumptions they are making. The merger management group must regularly comb through these as "state-of-the-world" scenarios for differences among what the various teams are assuming.
Walk-throughs of the assumed "merger day-plus one" processes also will identify those dangerous hidden assumptions. Walk-throughs literally mean having the various parties sit in a room and walk around each piece of paper and information flow.
They must describe exactly who will get the hand-off, where the information will go, etc. Walk-throughs will quickly identify where there is a missing link.
To some extent, the high failure rate of mergers occurs because of overpaying or because the rationale for strategic fit never really made sense. But in a lot of cases, the challenge in executing a successful merger is retaining the best features of different but productive cultures, and releasing energy in positive directions.
Following these rules is not easy but ignoring them will certainly turn culture clashes into culture crashes.
