With the boom in mergers and acquisitions, many financial institutions are suddenly faced with a different type of exchange: the merging and integration of different corporate cultures.

Mergers amplify the downside of continuous change - stress, friction, and lack of focus.

Managing change is less a matter of dealing with the emotional elements of employees' reactions than of equipping them and their managers with the skills to cope.

However, we have found that traditional change-management techniques are inadequate to deal with the dislocations that come with a merger.

A targeted cultural-integration approach works better.

A Different Set of Problems

Managing the integration of two corporate cultures differs from traditional change management because:

* Corporate culture is pervasive, so cultural change and its effects are often difficult to define. In a me rged culture, therefore, every interaction with any part of the system can become a new experience.

* Cultural integration represents a "life change." Corporate culture embodies life and work values, some of which people may have to abandon when cultures merge.

* The threat to values creates a much more charged environment and more risk of sabotage.

* When two corporate cultures merge, polarity can arise. People can become more combative, and productivity can drop dramatically.

The Best of Both Worlds

The challenge is to help the two distinct groups work together productively.

The new culture must represent the best of both worlds, a synthesis and evolution of its predecessors. And it must be clear that the change is driven by business considerations.

There should be two overriding objectives in managing the integration.

The first is to maintain customer service at a high level from the first day of the merger, even before issues of operational process and organizational structure are fully defined.

The second is to help managers and employees understand and shape the new corporate culture.

Learning How

Training for cultural integration should include these elements:

Breaking the barriers by sensitizing participants to the issues of the cultural integration, acknowledging the emotional impact, reviewing research on cultural integration, and addressing how to deal with a merged culture.

Cognitive strategies, such as "respect other perspectives," for dealing with all cultural integration situations.

Interpersonal skills, such as "asking for input," to deal with others during cultural integration and other times of change.

The training should include samples of situations in which these strategies and skills are likely to be needed.

The process should result in the following benefits:

* Employees feel empowered to take personal responsibility for making the merged organization work.

* Managers from different cultures can collaborate to define the operating approach of a newly merged department or function.

* Managers and supervisors can motivate the "survivors" of a downsized area.

* Managers and employees accept the change and feel personally equipped to deal productively with the concept of constant change.

* Managers and supervisors can align new teams to ensure productivity from the start.

* Employees can gain the cooperation of other departments (with new players and processes) to serve the customer.

* Employees can gain the support of their management, particularly if the manager-subordinate relationship is new.

* Employees are committed to increasing the productivity of their own work teams, particularly those with people from the other organization.

* Within the new organization, service providers and their internal clients can establish new relationships.

Mr. Fern is senior vice president of MOHR Development, a division of the consulting firm Blessing/White Inc. in Stamford, Conn.

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