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Cultural Risk Assessments helping HR save Mergers

Cultural Risk Assessments helping HR save Mergers
Did you think culture clash only happens between foreigners? Think again! Company cultures are now recognised as being a major reason behind mergers failing and businesses underperforming.


When thinking about culture clash, the clashes that come to mind are usually between the cultures of two different countries. However, this article demonstrates that culture clashes can occur between companies as well.

"Cultural clashes don't just involve different nationalities. Within the United States, mergers between American companies often come undone because of clashes between unique company cultures."

In fact, there have even been cases of clashes between management company cultures and that of the employees'. If these differences are not addressed quickly this can have severe consequences for the company. As a result, 'cultural risk assessments' are now becming a popular tool to reduce the negative impact of cultural differences.

"In order to avoid such failures and to protect their reputations, companies have increasingly turned to so-called "cultural risk assessments," (CRA) which consist of face-to-face interviews of executives and key managers by an outside consultant, along with a broad survey of the workforce.  The goal is to present corporate leaders and HR with a clear picture of their organization's culture and identify whether differences exist between how it's perceived by top managers and employees, or if it's effective in motivating managers and employees to behave ethically."

Managers often disregard the importance of company culture, as it doesn’t appear to render any profit at first sight, but this isn’t true.

" 'Corporate culture' is a broad, vague concept to many managers," says Joe Aberger, president of Pritchett, a Dallas-based firm that has advised on mergers. "It's dismissed as 'soft.' " Managers often think " 'If it's not quantitative, then I don't need to pay attention to it,' " says Murrell. "But by the time they realize culture really does matter, the merger is already foundering."

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