Cultural Differences as Barriers to Success
Successfully navigating a business’s mergers and acquisitions is an essential function yet can be a tumultuous responsibility for all parties involved. Cultural differences often present barriers to a successful merger of businesses. Factors such as communication context and power distance will play a role in influencing managers’ and employees’ expectations and relationships moving forward. To ensure these factors do not get in the way of successfully integrating the business cultures and operations of this merger and acquisition into PBI-FS, best practices must be used to mitigate and get past these barriers.
Communication context is used to refer to the differences in communication styles in various societies or cultures, and how those cultures affect workplace values (Hofstede Insights, n.d., para. 1). While PBI employees exhibit traits of low context communicators, applicant from Island Banking Services (IBS) display high context. The low context employees at PBI maintain more short-term relationships and are rule oriented and task centered. Whereas, employees at IBS maintain more close connections and long-term relationships, are less formal in written and verbal communication, maintain strong personal boundaries, and focus on personal face-to-face relationships (Hofstede Insights, n.d.). While IBS’s cultural behaviors are more understanding and less explicit as a result of the long-term relationship employees have built, PBI employees might need to give a more explicit explanation to others being hired to PBI-FS on their expected behaviors and beliefs.
Power distance refers to the “way power is distributed and the extent to which the less powerful accept that power is distributed unequally” (Rutledge, 2011, para. 1). Employees surveyed at IBS accept a high-power culture, meaning they accept being dependent upon and subordinate to the bosses (Rutledge, 2011, para. 2). However, the current culture at PBI is more of a medium power culture, meaning PBI employees are a bit less dependent upon their bosses and leaders and at times could challenge that authority. A major challenge that integrating the high-power culture of IBS employees into PBI-FS will present is that management will have to play more of a hands-on role with former IBS employees. They will rely on leadership more for direction than what PBI leadership is accustomed to. This may cause undue stress on management and employees alike.
To help mitigate any issues that might arise from the varying corporate cultures being merged into PBI-FS, several best practices should be utilized. This will help to build bridges between the cultural differences and less the time to transition to a new corporate culture at PBI-FS. First, management must develop a strategy to integrate the cultures from both businesses, and “ideally incorporate the best element of both cultures” (Recklies, 2015, General Recommendations section). This will help to develop a new identity at PBI-FS. Second, by communicate what the new culture should be and why it was decided on could help build cooperation from the employees. (Recklies, 2015, General Recommendations section). Finally, it can not be expected for changes to take hold over night. It will take time for the new culture to become a reality, so management and employees alike must be patient (Recklies, 2015, General Recommendations section).
Differences in corporate cultures may provide barriers and at times make a corporate merger difficult to accomplish. Factors like the communication context or power distance may make certain organization’s cultures seem incapable with the culture of another organization. However, by analyzing the cultures and developing a strategy for their integration, those cultures can be quite effective at building relationships and adjusting to the new atmosphere. Moreover, the by applying best practices such as combing the best of both cultures to develop a new corporate culture, an organization ultimately build cooperation amongst their employees and move towards a successful merger.
Hofstede Insights (n.d.). National culture. Retrieved from https://hi.hofstede-insights.com/national-culture
Recklies, D. (2015, July 30). Corporate culture – Do not underestimate its impact on merger success. Retrieved from https://www.themanager.org/2015/07/corporate-culture-merger-success/
Rutledge, B. (2011, September 18). Cultural differences – The power distance relationship. Retrieved from https://thearticulateceo.typepad.com/my-blog/2011/09/cultural-differences-the-power-distance-relationship.html