Culture remix – realizing the best of both worlds

The vast majority of corporate reorganizations take place far away from public gaze. However, reorganizations that are the product of mergers and acquisitions (M&A) are often a spectator sport. Investors and pundits enthusiastically urge executives to quickly integrate business processes in order to find elusive synergies that will increase shareholder value.

Doug Parker, CEO of American Airlines, understands this all too well. Having successfully led the mergers of US Air and America West–and subsequently American Airlines and USAIR, you could say that M&A is his specialty.

Beyond making the planes fly on-time, Doug argues that a critical factor in a merger’s success is to create a new and effective culture that builds on the strengths of both organizations and is one that establishes new, effective working relationships and norms of behavior for all. His observation holds true for garden variety reorganizations as well as wholesale mergers.

Doug points to three key leadership elements for successfully bringing cultures together into something new and better:

1.    Over communicate. Merging organizations are forced to change and everyone knows that change is hard. The uncertainty created by M&A feeds on existing employee fears and can quickly becoming toxic. Executives must communicate, communicate, communicate!

2.    Show you care. Executives have to get into the boat and show the organization that “we are in this together.”   To show he was all-in, Parker gave up his employment contract that protected him from fickle investors. Viewed from within the organization, that contract looked like a backdoor that protected him from failure. Putting himself in the same position as others communicated his confidence in the merger and the shared sacrifice he was asking of employees.

3.    Relationships matter. Successful integrations are built on a lifetime of relationships. Reorganizations mix the pot, bringing people and teams together that may have interacted in the past. Mergers also require the support of suppliers and vendors who need to trust the direction of the management team. That trust is earned long before the deal in interactions big and small. Relationship investments made now may cycle back years later to be the critical element of success.

Watch my interview with Doug Parker to hear how you can begin preparing for that next big reorganization today.

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