Cultural integration issues were the second most important contributing factor to deal failure according to the document. The document also states that cultural integration is indirectly linked to other causes of deal failure such as delayed integration. Additionally, statistics show that up to one third of mergers fail within 5 years, and as many as 80% never live up to their full expectations. While successful cultural integration is critical for deal success, many companies do not have a specific approach for assessing and integrating culture during an acquisition. Reasons for unsuccessful cultural integration include a lack of leadership support, cultural risks not being identified, and a lack of competencies and skills.

1. Virgilijus Dadonas
Post-merger cultural integration
Knowing How Culture Plays
M&A

2. Top contributing factors to deal failure (in order of importance):
• Integration took longer than expected
• Cultural integration issues
• Inconsistent communication of synergy objectives
• Insufficient attention to people (workforce) issues
• Poor (misinformed) strategy
• Risks not identified during due diligence
• Insufficient execution competence (capabilities)
• Hidden leadership conflicts
• Too high price paid for target
• Failure to implement an appropriate organizational structure
In addition to being cited directly as a leading cause of deal failure, cultural
integration is also linked as an underlying, indirect driver to a number of other
immediate causes of deal failure, including delayed integration or
implementation
2
Statistics indicate that up to one third of mergers fail within 5 years, and as
many as 80% never live up to their full expectations

3. 3
The Cultural Paradox
Impact of culture on deal
success:
• Organization distraction and
loss of productivity
• Loss of key talents
• Failure to achieve critical
milestones or synergies
• Decreased employees
engagement
• Delayed integration
Companies know it’s important but don’t know what to do
While successful cultural integration is clearly a critical element in deal success
(the wild card in making a merger work), many companies do not know how to
successfully navigate it during a transaction – they did not have a specific
approach to assessing and integrating culture in a deal
Reasons for unsuccessful cultural
integration:
• Lack of leadership support
• Cultural risks not identified during
due diligence
• Lack of consensus among leadership
on desire culture
• Lack of competencies/skills
• Inconsistent communication
• Insufficient resources

4. 4
Content
Culture
National Culture
Models of National Culture
Communication
Organizational Culture
Cultural Iceberg
Models of Organizational Culture
Subcultures and Identity
Post-Merger Cultural Integration
Cultural Due Diligence
Stress Management
Impact of Merger on Culture
Challenges of Cultural Integration

5. “Culture is deep. If you treat it as a superficial phenomenon, if you assume
that you can manipulate it and change it at will, you are sure to fail.” // Edgar
Schein
Culture

6. 6
People who share in a culture find their culture challenging to recognize. The most
insightful cultural observers often are outsiders, because cultural givens are not implicit to
them.
Culture is implicit
Culturally influenced beliefs and actions feel right to people, even while their implicit
underpinnings make it difficult for those people to understand why they act the way they
do or why other ways of acting might also be appropriate.
Culture influences how people behave and how people understand
their own actions
Its elements are long-standing, not a matter of fads. The resilience of culture is supported
by culture being implicit. It is difficult for people to recognize their own culture and how it
exerts an influence on them. The staying power of culture is that it feels right to people;
new cultural values that are imposed on people seldom replace their underlying values
and beliefs in the long-run.
Culture is resilient
Culture consists of the long-standing, largely implicit shared values,
beliefs and assumptions that influence behavior, attitudes and meaning
in a society or company

7. 7
Personality of an individual is his unique personal set of mental programs
which he does not share with any other human being. It is based upon traits
which are partly inherited with the individual's unique set of genes and partly
learned. Learned means: modified by the influence of culture as well as unique
personal experiences.
Human nature is what all human beings have in common: the human ability
to feel fear, anger, love, joy, sadness, the need to associate with others, to play
and exercise oneself, the facility to observe the environment and to talk about
it with other humans. However, what one does with these feelings, how one
expresses fear, joy, observations, etc., is modified by culture.
Specific to individuals
Specific to group
or category
Universal
Inherited and learned
Learned
Inherited

8. 8
Culture as collective
programming
• Values - broad preferences for one
state of affairs over others to which
strong emotions are attached and by
which one group distinguishes itself
from other groups. Values refer to such
preferences as freedom over equality or
equality over freedom.
• Rituals - collective activities, technically
superfluous in reaching desired ends,
but which, within a culture, are
considered as socially essential. Ways of
greeting and paying respect to others,
social and religious ceremonies are
examples.
• Heroes - persons, alive or dead, real or
imaginary, who possess characteristics
which are highly prized in a culture, and
who thus serve as models for behavior.
• Symbols - words, gestures, pictures or
objects that carry a particular meaning
which is only recognized by those who
share the words in a language or jargon
belong to this category, as do dress,
hairstyles, flags, and status symbols.
Values
Heroes
Rituals
Symbols
practices
Organizational
culture
National
culture
“What many members of a group have in
common and by which they distinguish
themselves from other groups is called
culture” / Prof. Geert Hofstede

9. 9
Culture can be defined as the inherited values, concepts, and ways of
living which are shared by people of the same social group. To make
the definition clearer, culture is divided into two kinds:
• Generic culture, which is a shared culture of all humans living on this
planet
• Local culture, which refers to symbols and schemas shared by a particular
social group
Six levels of human culture
Individual
Organizational
Occupational
National
Civilization
Universal UNIVERSAL LEVEL
INDIVIDUAL LEVEL
COLLECTIVE LEVEL
Supra-Culture
Macro-Culture
Meso-Culture
Micro-Culture

10. 10
National level culture
National cultures differ at the level of unconscious values which are acquired during
childhood and these national cultures are stable; the afterward changes that occur are
practices whereby the underlying values are left untouched.
• Regional and/or ethnic and/or religious and/or linguistic affiliation levels, as most
nations are composed of culturally different regions and/or ethnic and/or religious
and/or language groups.
• Dominant culture – is the most powerful group in society. It receives the most support
from major institutions and constitutes the major belief system. Social institutions in
the society sustain the dominant culture and give it a degree of legitimacy that is not
shared by other cultures.
• Subcultures – the cultures of groups whose values and norms of behavior differ from
the dominant culture. Members of subcultures interact frequently and share a
common world view. Subcultures share some elements of the dominant culture and
coexist within it.
• Countercultures – subcultures created as a reaction against the values of the
dominant culture. Members of the counterculture reject the dominant cultural values
and develop cultural practices that defy the norms and values of the dominant group.
Nonconformity to the dominant culture is often the mark of a counterculture.
• Ethnocentrism – judging a culture by standards of one’s own culture.

11. 11
Organizational level culture
Organizational cultures differ at the level of practices, which can be described as
external, and they are to some extent manageable. These organizational cultures differ
from one company to the other within the same country. Organizational culture can best
be thought of as the pattern of actions, words, beliefs and behaviors that members of a
business organization share.
Professional and occupational level cultures
This kind of cultures come between the national and organizational; getting into an
profession or industry requires teaching to gain social values coupled with the practices
of the organization. These cultures have symbols, heroes and rituals in common with
organizational cultures, but they also often imply holding certain values and convictions.
• Although professional/occupational levels are individuals who are collectively
considered to be a part of the in-group, they are still embedded in the organizational
cultures and, therefore, are defined as the in-group collectivism which refers to how
individuals relate to as an autonomous unit and how they attend to responsibilities
concerning their in-group. It reflects a strong sense of group, family group or
community identity.
• Social class culture – associated with educational opportunities and with a person's
profession or occupation.

12. 12
Gender level culture
Gender differences are recognized within the same culture, there is what can be called men’s
culture vs women’s culture. Men and women have the ability to perform the same tasks at the
workplace, but they have differences when it comes to responding to the symbols used in
society. The differences between men and women highly depend on the national culture.
There are ten factors to consider when collaborating with men versus women:
• Power – social status and prestige, control or dominance over people and resources.
• Achievement – personal success through demonstrating competence acc. to social
standards.
• Hedonism – please and sensuous gratification for oneself.
• Stimulation – excitement, novelty and challenge in life.
• Self-direction – independence thought and action-choosing, creation and exploration.
• Universalism – understanding, appreciation, tolerance and protection for the welfare of all
people and for nature.
• Benevolence – preservation and enhancement of the welfare of people with whom one is in
frequent personal contact.
• Tradition – respect, commitment and acceptance of the custom and ideas that traditional
culture provide the self.
• Conformity – restraint of action, inclination and impulse likely to upset or harm others and
violate social expectations or norms.
• Security – safety, harmony and stability of society, of relationship and of self.

13. 13
Generation level culture
Separates grandparents from parents from children.
Although they would fall under the cultural behaviors of their national origins because
they share common cultural, historical and social influences, the learning styles of the
generational culture are different. Therefore, when considering teaming, an organization
must take into consideration the different non-verbal communications that will be
exhibited by the different generations such as functions, proxemics, kinesics and silence.
How do you define generations? → Depends of who you ask.
1871-1889
New Worlders
1890-1908
Hard Timers
1909-1928
GI Generation
/ Good
Warriors
1929-1945
Lucky Few /
Veterans /
Traditionalists
/ Silent
1946-1964
Baby Boomers
1965-1982
Generation X /
The Slackers
1983-2001
Generation Y /
Millennials /
New Boomers
2002-
Homelander /
New Silent /
Generation Z /
Generation
Alpha

14. 14
Social culture
While the community concept is a key distinction for social culture,
there are other critical layers to take into account when trying to
understand its impact on the global workforce
• Culture is multifaceted. Customs and ideas are the most readily visible
manifestations, but underlying these are ideas, often religious or philosophical
ones, broadly shared within a group that can have a profound effect on people’s
self-understanding, their identity, or how they act.
• Culture change tends to be slow but evolving. Cultural values show substantial
resilience over time. It would be hard, however, to imagine a major national one,
for example, that has not seen substantial evolution over the last century.
• Culture is borderless. An analysis of intra-national compared with international
differences found greater variety within than between countries. One important
reason for this variety is the notion of agency – that people can and do make
independent choices. Another is that culture is not invariably exclusive. Instead,
people are simultaneously part of overlapping, sometimes even apparently
contradictory, cultures through circumstance and choice.

15. 15
Corporate culture
Corporate culture comprises the values, beliefs and practices of the
company, and is created either by design or is naturally based on the
personalities of executives
• Employees learn the corporate culture through training and by observation.
Organizational values also typically reflect unspoken, but understood, social norms
shaped by diverse influences such as internal reward structures, how senior officials
act in practice, and the national culture surrounding a given operation.
• Organizations that ignore the issues of culture and cultural integration will likely
face difficulties attracting, retaining and motivating the best employees, or outright
failure. Lack of initiatives to properly integrate corporate culture is a contributor to
the fact that 70% of M&As fail and more than 50% destroy value.
• Integrating employees from multiple societal environments into the organizational
values requires not only learning the critical differences but also finding a balance
between some parts of the corporate culture that should not change, while other
parts may need to be reconsidered and adapted to the cultures of the local
workforce.

16. National Culture

17. 17
• National culture refers to the unique norms, values, and beliefs to
which a group of people generally link. Cultures differ, for example, in
the ways they solve problems, view time, deal with the external world,
and perceive themselves and others. National culture may be very strong
and yet difficult to define. It is estimated that less than 15% of a national
culture is readily observable.
• National culture is the collective programming of the human mind. As
opposed to organizational cultures, national cultures operate at a much
deeper level, as these beliefs, norms and values are learned earlier on.
• Talking about national cultures does not mean that national cultures are
uniform. In many countries, it is possible to talk about the existence of
cultures based on region or geography.
We may not realize how culture is shaping our behavior until
we leave our own country and go someplace else

18. 18
In M&A deals differences in national cultures result in
stress and negative attitudes toward the merger and
cooperation. National cultural differences harm cross-
border M&A performance if the acquirer tries too tightly
integrate the acquired company. Forcing employees that
are strongly embedded in their own culture to integrate
with another national culture leads to
misunderstandings and misattributions of motives and
goals, which hinders smooth interactions between
employees from different national cultures.
The integration strategy applied by the acquiring firm
will dictate the amount of interactions between the
involved firms and consequently the level of cultural
clash occurring. In order to manage cultural differences
successfully, managers should pay as much attention to
cultural fit during both the pre-merger phase and during
the post-merger integration process as they do to
finance and strategic factors.
Cultural differences in M&As are especially important
for the top management level, as they are able to
influence and motivate employees, create trust. Through
the whole integration process managers have the
challenging task to create an atmosphere that supports
employees to handle national culture differences,
because national culture differences cause more stress,
negative attitudes toward merger and cooperation, than
organizational culture differences do.
The impact of cultural
differences on the
performance of M&A will
vary by:
• the integration strategy
• the degree of integration
• the extent to which the
merging firms want to
preserve their existing
national/country cultures
• the progress of cultural
integration
• managerial actions
throughout the whole
M&A process
It is not possible to expect
only one true cultural impact
on the performance of M&A.

19. “How different one culture is from another has little
meaning until those cultures are brought into contact with
one another.” // Oded Shenkar
Models of National Culture

20. 20
• At present, there are several models of national cultures that continue to
be widely referred to.
• Each model highlights different aspects of societal beliefs, norms and
values and, as such, convergence across the models has been seen as
being very limited.
• Some models have gone a step further and offered measures or numerical
indicators for various countries that have been used widely in cross-
cultural assessment.
• These models offer useful templates for comparing management
processes, HRM policies and business strategies across national borders.
• However, the diversity of cultural models represents the culture theory
jungle – a situation in which explorer must choose between competing, if
sometimes overlapping, models.
Next we summarize the most popular national culture models
briefly

21. 21
• One of the earliest models of culture that has served as a principal
foundation for several later models.
• This theory of culture based on value orientations, arguing that there are a
limited number of problems that are common to all human groups and for
which there are a limited number of solutions.
• Values in any given society are distributed in a way that creates a dominant
value system.
• Cultural dimensions:
1. Relationship with nature - beliefs about the need or responsibility to control
nature.
2. Relationship with people - beliefs about social structure.
3. Nature of human activities - beliefs about appropriate goals.
4. Relationship with time - extent to which time influences decisions.
5. Human nature - beliefs about different people nature.
Kluckhohn & Stodtbeck
Five value orientations model
Kluckhohn (1951), Kluckhohn & Stodtbeck (1961)

22. 22
Five value orientations model
Scale
Relationship with Nature
Mastery over Harmony with Subjugation
Relationship with People
Individualistic Collateral/Consensus Lineal/Hierarchical
Nature of Human Activity
Doing Becoming Being
Relationship with Time
Past Present Future
Human nature
Good Neutral Evil

23. 23
• This model focuses primarily on how cultures vary in interpersonal
communication, but also analysis personal space and time factors.
• Hall has always stressed the close relationship between culture and
communication. On this ground he defined culture as a “system” to provide,
send, store information. Hall argued that “communication is culture, and
culture is communication”.
• Cultural dimensions (factors):
1. Context - extent to which the context of a message is as important as the
message itself.
2. Space - extent to which people are comfortable sharing physical space with
others.
3. Time - extent to which people proceed towards one or multiple tasks at a time,
speed of actions and lead time.
4. Information flow - speed of message.
Hall
Four dimensions of context model
Hall (1959, …, 1990)

24. 24
Four dimensions of context model
Scale
Context
High context Low context
Time as Structure
Monochronic Polychronic
Time as Communication
Event or
Object
Context
Schedule an
Appointment

Lead Time
Speed
Space
Intimate Personal Social Public
Low High
Territoriality Territoriality
Information flow
Fast Slow
Messages Messages
Action
Decoding time Decoding time

25. 25
• The model focuses on variations in both values and personal relationships
across cultures.
• The first cultural five dimensions focus on relationships among people, while
the last two focus on time management and society's relationship with nature.
• Cultural dimensions:
1. Rules vs Relationships - relative importance of applying standardized rules and
policies across societal members; role of exceptions in rule enforcement.
2. The Individual vs the Group - extent to which people derive their identity from
within themselves or their group.
3. The range of Involvement - extent to which people's various roles are separated or
integrated.
4. The range of Emotions - extent to which people are free to express their feelings
in public.
5. How Status is viewed - manner in which respect and social status are treated to
people.
6. How people manage Time - relative focus on the past/present/future and
structuring time in daily activities.
7. Relationship with Environment - extent to which people believe they control the
environment or it controls them.
Trompenaars
Seven dimensions of culture
Trompenaars (1993), Trompenaars & Hampden-Turner (1998)

26. 26
Seven dimensions of culture
Scale
Rules versus Relationships
Universalism Particularism
the Individual versus the Group
Individualism Communitarianism
the range of Involvement
Diffuse Specific
the range of Emotions
Neutral Affective/Emotional
how Status is viewed
Achievement Ascription
Time perspective
Past Present Future
Time structure
Sequential Synchronous
Relationship with Environment
Inner-directed Outer-directed

27. 27
• It is theory of seven cultural value orientations that form three cultural value
dimensions.
• Identified ten universal human values that reflect needs, social motives and
social institutional demands: power, achievement, hedonism, stimulation, self-
direction, universalism, benevolence, tradition, conformity and security.
• To validate the theory, Schwartz presented analyses of data from 73 countries,
using two different instruments.
• Using the seven validated cultural orientations, he generated a worldwide map
of national cultures that identifies distinctive cultural regions.
• Cultural dimensions:
1. Conservatism vs Autonomy - extent to which individuals are integrated in groups.
2. Hierarchy vs Egalitarianism - extent to which equality is valued and expected.
3. Mastery vs Harmony - extent to which people seek to change the natural and
social world to advance personal or group interests.
Schwartz
Cultural value orientations model
Schwartz (1992, …, 2006)

28. 28
Cultural value orientations model
Scale
EGALITARIANISM
Social justice
Equality
EMBEDDEDNESS
Social order
Obedience
Respect for tradition
HIERARCHY
Authority
Humble
MASTER
Ambition
Daring
Cultural Dimensions
Value Systems
SELF-TRANSCENDENCE
SELF-ENHANCEMENT
OPENESSTOCHANGE
CONSERVATION

29. 29
• Based on research of the influence of cultural differences on leadership.
• The GLOBE project investigates how cultural values are related to
organizational practices, conceptions of leadership, the economic
competitiveness of societies, and the human condition of its members.
• Cultural dimensions:
1. Power distance - extent to which people expect power to be distributed equally.
2. Uncertainty avoidance - extent to which people rely on social norms, rules and
procedures to alleviate unpredictability of future events.
3. Humane orientation - degree to which people encourage and reward fairness,
altruism and generosity.
4. Institutional collectivism - degree to which society encourages and rewards
collective distribution of resources and collective action.
5. In-group collectivism - degree to which individuals express pride, loyalty and
cohesiveness in their organizations or families.
GLOBE
Global Leadership and Organizational Behavior
Effectiveness
House et al. (2004, 2007)

30. 30
Cultural dimensions:
6. Assertiveness - degree to which individuals are assertive, confrontational and
aggressive in their relationship with others.
7. Gender egalitarianism - degree to which a collective minimizes gender inequality.
8. Future orientation - extent to which people engage in future-oriented behaviors
such as planning, investing and delaying gratification.
9. Performance orientation - degree to which high performance and excellence is
encouraged and rewarded.
GLOBE
Global Leadership and Organizational Behavior
Effectiveness
House et al. (2004, 2007)
(cont.)

31. 31
Global Leadership and Organizational Behavior
Effectiveness
Scale
Future Orientation
Power Distance
Institutional Collectivism
Humane OrientationPerformance Orientation
Family Collectivism
Gender Egalitarianism
Assertiveness
Uncertainty Avoidance
7
6
5
4
3
2
1
0

32. 32
• The most widely used model of cultural differences.
• Hofstede’s model based on the assumption that different cultures can be
distinguished based on differences in what they value → value dimensions.
• Cultural dimensions:
1. Power Distance - related to the different solutions to the basic problem of human
inequality.
2. Uncertainty Avoidance - related to the level of stress in a society in the face of an
unknown future.
3. Individualism vs Collectivism - related to the integration of individuals into
primary groups.
4. Masculinity vs Femininity - related to the division of emotional roles between
women and men.
5. Long Term vs Short Term Orientation - related to the choice of focus for people's
efforts: the future or the present and past.
6. Indulgence vs Restraint - related to the gratification versus control of basic
human desires related to enjoying life.
Hofstede
Six value dimensions model
Hofstede (1980), Hofstede & Bond (1991), Hofstede & Minkov (2010)

33. 33
Six value dimensions model
Scale
Individualism versus Collectivism (IDV)
Individualism: Preference for a loosely-knit social
framework in which individuals are expected to take
care of only themselves and their immediate families
Collectivism: Preference for a tightly-knit framework in
society in which individuals can expect their relatives or
members of a particular in-group to look after them in
exchange for unquestioning loyalty
Uncertainty Avoidance Index (UAI)
High: Maintain rigid codes of belief and behaviour and
are intolerant of unorthodox behavior and ideas
Low: Maintain a more relaxed attitude in which practice
counts more than principles
Power Distance Index (PDI)
High: Accept a hierarchical order in which everybody
has a place and which needs no further justification
Low: Strive to equalize the distribution of power and
demand justification for inequalities of power
- a higher degree of the Index indicates that hierarchy is clearly
established and executed in society, without doubt or reason
- a lower degree in this index shows more acceptance of
differing thoughts/ideas
- refers to an individual’s independence from organizations
or collectivity

34. 34
Six value dimensions model
Scale
Indulgence versus Restraint (IND)
Indulgence: Allow relatively free gratification of basic
and natural human drives related to enjoying life and
having fun
Restraint: Suppress gratification of needs and regulates
it by means of strict social norms
Long-Term versus Short-Term Orientation (LTO)
Long-Term: Pragmatic approach, encourage thrift and
efforts in modern education as a way to prepare for the
future
Short-Term: Preference to maintain time-honored
traditions and norms while viewing societal change with
suspicion
Masculinity versus Femininity (MAS)
Masculinity: Preference in society for achievement,
heroism, assertiveness and material rewards for success
Femininity: Preference for cooperation, modesty,
caring for the weak and quality of life
- measures the extent to which members of a society tend to
endorse goals characterized by social gender roles/values
- associates the connection of the past with the
current and future actions/challenges
- measures happiness, whether or not simple joys are fulfilled
See Indexes: http://www.geerthofstede.eu/dimension-data-matrix
(cont.)

35. 35
• This is the latest cultural model to gain world-wide recognition.
• It is expanded concept of the Hall’s monochronic (attending to one thing at a
time) and polychronic (attending to multiple things at the same time) cultures.
• Lewis’s model provides an easy-to-read overview of cultural differences and
acts as a guide to interpreting and adapting to different cultural behaviors.
• Cultural dimensions:
1. Linear-active - refers to societies where people are task-oriented, highly organized,
prefer doing one thing at a time, tend to be logical, efficient and precise → focus
on jobs.
2. Reactive - refers to societies where people prefer to listen most od the time, in
order to establish both their own and the other’s position → focus on listening to
react.
3. Multi-active - refers to societies where people seek harmony, like to do many
things at a time, speak and listen at the same time→ focus on building
relationships.
Lewis
Behaviour/communication dimensions model
Lewis (1996)

36. 36
Behaviour/Communication dimensions model
Scale
ReactiveLinear-Active
Multi-Active
Interconnection satisfactory respect oriented
accommodating compromisers
target oriented
decisive planners
people oriented
communicative interrelators
mediators

37. 37
• Theory of Actions (Parsons & Shils (1951))
1. Affectivity (need gratification) versus affective neutrality (restraint of impulses).
2. Self-orientation versus collectivity-orientation.
3. Universalism (applying general standards) versus particularism (taking particular
relationships into account).
4. Ascription (judging others by who they are) versus achievement (judging others by what
they do).
5. Specificity (limiting relations to others to specific spheres) versus diffuseness (no prior
limitations to nature of relations).
• Group-Grid Theory (Douglas (1970, 1973))
1. Group – indicating how clearly defined an individual's social position is as inside or outside a
bounded social group.
2. Grid – indicating how clearly defined an individual's social role is within networks of social
privileges, claims, and obligations.
• Cultural Theory of Risk (Douglas & Wildavsky (1982)) based on Group-Grid Theory
1. Hierarchical organizing (e.g. the government).
2. Egalitarian organizing (e.g. Greenpeace).
3. Individualistic organizing (e.g. the markets).
4. Fatalistic organizing (nothing will make any difference).
5. Autonomous organizing (deliberate avoidance of the coercive involvement in the other four).
Other national culture models
Conceptual dimensions

38. 38
• Standard Analytic Issues (Inkeles & Levinson (1954, 1969))
1. Relation to authority – personal behaviour adaptation and personal identity representation
in interaction with authority.
2. Concept of himself/herself (incl. masculinity/femininity) – what the person thinks he is, like to
be, would expect to become.
3. Primary dilemmas and conflicts – ways of dealing with interaction authority versus self.
• Cultural Distance approaches:
• KS-Index (Kogut & Singh (1988)) based on four Hofstede dimensions (Power distance,
Individualism/Collectivism, Masculinity/Femininity, Uncertainty avoidance).
• 10 common assumptions on culture distance (Shenkar (2001), Tung & Verbeke (2010)) divided
from international business and management research.
• Euclidian Distance Index (Barkema and Vermeulen (1997), Drogendijk & Slangen (2006))
based on Schwartz’s dimensions of national culture.
• Psychic distance (Dow & Karunaratna (2006)) based on objective data/measures: relative
distance of languages, differences in educational level, industrial development, political
systems, religion, time zones, and whether the countries in question have previous colonial
ties.
Other national culture models
Conceptual dimensions
(cont.)

39. 39
• As is evident from review above, there are many different ways to represent
cultural differences.
• However, all of the models have important factors to contribute to our understanding
of culture as it relates to management practices, therefore, the most productive
approach is to integrate and adapt the various models based on their utility for better
understanding business and management in cross-cultural settings.
• These five relatively distinct common themes that collectively represent the principal
differences between cultures are:
1. Distribution of power and authority in society = Hierarchy and Power type
cultures.
2. Centrality of individuals or groups as the basis of social relationships = Structure
type cultures.
3. People's relationship with their environment = Environment type cultures.
4. Use of time = Time type cultures.
5. Mechanisms of personal and social control = Relationships/Feeling/Emotions type
cultures.
Convergence of national culture models

40. 40
National culture models
Converged dimensions
Relationships
Power
Structure
Time
Environment
Hierarchical vs
Egalitarian
Uncertainty
Avoidance
Indulgence vs
Restraint
Neutral vs Affective
Specific vs Diffuse
Masculinity vs
Femininity
Long-Term vs Short-
Term Orientation
Monochronic vs
Polychronic
Sequential vs
Synchronous
Individualism vs
Collectivism
Individualism vs
Communitarianism
Universalism vs
Particularism
Internal-Direction vs
Outer-direction
High-Context vs
Low-Context
Achievement vs
Ascription

41. 41
National culture dimensions
RelationsSmallPowerDistance
Individualism
Collectivism
LargePowerDistance
SmallPowerDistance
Masculinity
Femininity
LargePowerDistance
SmallPowerDistance
Strong Uncertainty Avoidance
Weak Uncertainty Avoidance
LargePowerDistance
StrongUncertaintyAvoidance
Individualism
Collectivism
WeakUncertaintyAvoidance
Femininity
Individualism
Collectivism
Masculinity

42. Communication is made possible through symbols,
which can be either sounds or gestures.
Communication

43. 43
• Language can be defined as a shared communication system allowing
exchange of information between two individuals.
• From this definition, it can be concluded that language is directly bonded to
culture, as it reflects people’s mutual norms, values and beliefs and how they
interact within a community and their surroundings → language is central to
national identity.
• Within a cross-cultural environment, language can be addressed as a barrier
for communication for two main issues:
– translation problems - it can be very problematic when a word or statement is
not fully understood by a person, as it will result in misunderstandings
– ’linguistic imperialism’ - a person or group of persons want imperatively the
collaboration process to be in their own language
Language

44. 44
Non-verbal communication can be defined as human actions and attributes that have
socially shared meaning that are intentionally sent or interpreted as intentional, are
consciously sent or consciously received and have the potential for feedback from the
receiver.
• Functions. Replacing spoken messages with gestures. This can be a way to communicate with
someone who does not speak your language or serve a utilitarian purpose. Signs and symbols can
be used to direct attention to things that they designate. Symbols are however not necessarily
universal, what is acceptable in one culture could well be offensive in another.
• Proxemics. This refers to the amount of personal space we allow between us and others.
• Kinesics. This describes gestures, body movements, facial expressions and eye contacts. All these
behaviors are ways that people communicate differently in different cultures. These so-called kinesics
again are not universal and can be easily misunderstood.
• Silence. This is a form of communication. In some cultures, it means fearful of communicating, in
some, a lack of attention, or agreement.
• Haptics. Form of interaction involving touch. Use of touch to communicate varies from culture to
culture.
• Clothing and physical appearance. The cloth really act as communicator when it comes to culture.
This has a lot of meaning in different culture and can be used to convey cultural heritage.
Non-verbal communication

45. Organizational Culture
When we say “culture” in the context of cross-border M&A, it specifically
means the organizational culture differences of the merging companies.
But it is not enough to know what differences are – the most important
part is understanding why these differences exist.

46. 46
• The configurations and managing of organizations are affected by the
national cultures; nevertheless, organizational cultures have their own
characteristics and dimensions.
• Corporate culture refers to the common set of values, traditions, and
beliefs that influences organizational behavior; it is a long-term driver of
results.
• We define organizational culture as the way in which members of an
organization relate:
• to each other
• to their work
• to the outside world
Two elements determine the strength of corporate culture
The number of
employees who accept,
reject or share in the
basic beliefs, values and
assumptions
The number of
shared beliefs, values
and assumptions

47. 47
Organizational
culture
Creating
organizational culture
An organization’s culture, particularly
during its early years, is inevitably tied to
the personalities, background, and values
of its stakeholders, as well as their vision
for the future of the organization. The way
they want to do business determines the
organization’s rules, the structure set up,
and the people they hire to work with
them.
The industry characteristics and demands
act as a force to create a certain
orientation culture.
Maintaining
organizational culture
Organization’s culture is shaped as it faces
external and internal challenges and learns
how to deal with them. When the
organization’s way of doing business provides
a successful adaptation to environmental
challenges and ensures success, those values
are retained. These values and ways of doing
business are taught to new members as ‘the
way to do business’.
Stakeholders’
preferences
Industry
demands
Advance values,
goals,
assumptions
Members of
organization
External
stakeholders
Environment /
Market
Leadership
Policies &
Procedures

48. 48
• Organizational culture starts with a vision/mission statement that provides
the members with a purpose
• Vision articulates the organization´s purpose
• Values offer a set of guidelines on behaviors and mindsets needed to achieve
that vision
• Whatever the organization´s values are they must be reinforced in review
criteria and promotion policies, and baked into operating principles of daily
life of the company
• So, norms are defined as an established behavior pattern as part of a culture
• And practices make an organization differ to another
• Through it, culture gives organization a sense of identity and determines,
through the organization's legends, rituals, beliefs, meanings, values, norms
and language, the way in which ‘things are done’.
• However, a successful organizational culture demands people stick with the
culture they like, and involves the right culture carriers who reinforce the
culture that organization already has.

49. 49
Cultural Iceberg
culture has visible and invisible
aspects
however, culture is not static
Three levels of culture identifies how visible
the culture is to an observer:
• Artifacts – visible organizational structure and
processes, building layouts, behavior, physical
settings that reflects who we are/want to be
• Espoused Values – what we say we stand for,
i.e. vision and mission statements, strategies,
goals, philosophies
• Enacted Values – what our behavior says we
stand for, i.e. policies, procedures that
demonstrate what really matters
• Underlying Assumptions – shared, usually
taken for granted values and beliefs about the
world, what success is, what matters, who
matters, and why
Artifacts
Underlying
assumptions
Espoused
values
Impact
Formative factors:
• our Core Values – way of seeing the world
and deciding what matters to us
• our Interpretations – what that means in
our personal and professional lives, and
• our observable Behaviors – how we
ultimately act
Schein (1992)

50. 50
• Culture is the most difficult organizational attribute to change, outlasting
organizational products, services, founders and leadership and all other
physical attributes of the organization.
• The two main reasons why cultures develop in organizations is due to external
adaptation and internal integration
• External adaptation reflects an evolutionary approach to organizational culture
and suggests that cultures develop and persist because they help organizations to
survive and flourish; if the culture is valuable, then it holds the potential for
generating sustained competitive advantages
• Internal integration is an important function since social structures are required
for organization to exist; organizational practices are learned through socialization
at the workplace, and work environment reinforces culture on a daily basis by
encouraging employees to exercise cultural values
• Organizational culture is shaped by multiple factors: external environment,
industry, size and nature of organization’s workforce, technologies in use, the
organization’s history and ownership.
according to Schein…

51. 51
The culture is dynamic – it
adapts and changes in
response to various
influences and conditions,
and is shaped by and
overlaps with other
cultures
External survival factors
• Vision/mission, strategy, goals
• Means: structure, systems, processes
• Measurements: evaluation and
correction
Internal integration factors
• Common language and concepts
• Group boundaries and identity
• Nature of authority and relationships
• Allocation of rewords and status
Deep underlying assumptions
• Relationships with nature
• The nature of reality and truth
• The nature of human nature
• The nature of human relationships
• The nature of time and space
• The unknowable and uncontrollable
Orientation
• Process vs Result
• Open vs Closed System
• Tight vs Loose Control
• Profession vs Parochial Units
• Job vs Employee
• Pragmatic vs Normative
Culture re-structuring
Diagnose current
culture
Develop plan to engage
people in desired
change of behavior

52. 52
Benefits
• Initially, strong culture was conceived as a consistent set of beliefs, values,
assumptions and practices embraced by members of the organization
• Strong culture has core values which are intensely held and widely shared; it increases
behavioral consistency, enhances control and coordination, improves goals alignment
between company and employees
• Homogeneity among the value structures of organizational actors can be a source of
job satisfaction, commitment, job proficiency and long tenure
Disadvantages
• One limitation of strong culture is the difficulty to change it, therefore, it may hinder
efforts at change
• The internalized controls associated with a strong culture result in individuals placing
unconstrained demands with themselves and acting as a barrier to adaptation and
change
• A strong culture contribute to a displacement of goals or sub-goals formation. This
means that behavioral ways of doing things become important and overshadow the
original purpose of organization
A strong culture may act as an asset or
a liability for the organization
Strongculture

53. “Organizational culture is the way we do things in order
to succeed.” // William Schneider
Models of Organizational Culture

54. 54
Cultural web
model
• The Paradigm - what the organization is
about, what it does, its mission, its values
• Stories - build up about people and events,
and convey a message about what is valued
within the organization
• Symbols - include organizational logos and
designs, but also extend to symbols of power
such as parking spaces and executive
washrooms
• Power structures - who makes the
decisions, how widely spread is power, and
on what is power based?
• Organizational structures - reporting lines,
hierarchies, and the way that work flows
through the business
• Control systems - the processes in place to
monitor what is going on, staff reviewing
systems
• Rituals & Routines – communication flows,
procedures, management meetings, reports
and so on
Johnson (1988), Johnson & Scholes (1992 )
Stories Symbols
Rituals &
Routines
Control
systems
Organizational
structures
Power
structures
The Paradigm

55. 55
Organizational
Culture Profile
(OCP) model
• Innovative culture is flexible, adaptable, and
experiment with new ideas; these organizations
are characterized by a flat hierarchy and titles
and other status distinctions tend to be
downplayed
• Aggressive culture values competitiveness and
outperforming competitors; by emphasizing this,
it often falls short in corporate social
responsibility
• Outcome-oriented culture emphasizes
achievement, results and action as important
values
• Stable culture is predictable, rule-oriented and
bureaucratic, aiming to coordinate and align
individual effort for greatest levels of efficiency
• People-oriented culture values fairness,
supportiveness, and respect for individual rights
– ‘people are their greatest asset’
• Team-oriented culture is collaborative,
emphasize cooperation among employees,
capable of helping each other when needed
• Detail-oriented culture emphasizes precision
and pays attention to details
• Service culture trains employees to serve the
customers well and resolve customer problems in
ways they see fit
• Safety culture exists in jobs that are safety
sensitive
O’Reilly, Chatman & Caldwell (1991)
Innovative
AggressiveDetail
oriented
Team
oriented
Outcome
oriented
People
oriented
Stable
OCP
Service
Safety

56. 56
Outside focused
model
• Work-hard, play-hard culture has rapid
feedback/reward and low risk resulting in
stress coming from quantity of work rather
than uncertainty; high-speed action leading to
high-speed recreation
• Tough-guy / macho / stars culture has
rapid feedback/reward and high risk, resulting
in stress coming from high risk and potential
loss/gain of reward; focus on the present
rather than the longer-term future
• Process culture has slow feedback/reward
and low risk, resulting in low stress, plodding
work, comfort and security; stress comes from
internal politics and stupidity of the system,
development of bureaucracies and other ways
of maintaining the status quo; focus on
security of the past and of the future
• Bet-Your-Company culture has slow
feedback/reward and high risk, resulting in
stress coming from high risk and delay before
knowing if actions have paid off; the long view
is taken, but then much work is put into
making sure things happen as planned
LowDegreeRisk
Slow Feedback Speed
Fast Feedback Speed
HighDegreeRisk
Work hard/
Play hard
Tough-Guy /
Macho /
Stars
Process
Bet-Your-
Company
Deal & Kennedy (1982, 2000)

57. 57
Organizational
ideologies
model
• Role-oriented culture aspires to be as
rational and orderly as possible, competition
and conflicts are regulated or replaced by
agreements, rules, and procedures; while there
is a strong emphasis on hierarchy and status,
it is moderated by the commitment to
legitimacy and legality
• Task-oriented culture values highest the
achievement of a superordinate goal, and the
organization’s structure, functions and
activities are all evaluated in terms of their
contribution to this superordinate goal;
nothing is permitted to get in the way of
accomplishing the task
• Person-oriented culture seeks primarily to
serve the needs of its members, the
organization itself is just a device for it;
authority in the power-oriented sense is
discouraged, and may be assigned only on the
basis of task competence; individuals are
expected to influence each other through
example, helpfulness and caring
• Power-oriented culture attempts to
dominate its environment and conquer all
opposition, maintains absolute control over
subordinates
Harrison (1972, 1987)
HighConcentration
Low Formalization
High Formalization
LowConcentration
Role
orientation
Task/
Achievement
orientation
Power
orientation
Person/
Support
orientation

58. 58
Four power
structures model
Based on Harrison’s culture model.
• Role culture is highly autocratic and
hierarchical bureaucratic; there is a clear
defined structure, power derives from a
person’s position, and little scope exists for
expert power
• Task / Achievement culture emphasizes
accomplishment of the task; no single power
source, matrix organization, teams are formed
to solve particular problems and may develop
own objectives
• Person / People culture has minimal
structure and serve to nurture personal
growth and development; organization full of
people with similar competence, and power
lies in each group of individuals
• Power culture concentrates power among a
small group or a central figure and its control
is radiating from its center like a web; this
culture needs only a few rules and
little bureaucracy, but swift in decisions can
occur
Handy (1976, 1985, 1993)
HighConcentration
Low Formalization
High Formalization
LowConcentration
Role Task /
Achievement
Power Person /
People
Handy matched its cultural models to Robert Anthony’s hierarchy of management activity:
• Strategic management – is concerned with direction-setting, policy making and crisis handling, therefore it suits
power culture
• Tactical management – is concerned with establishing means to corporate ends, therefore suits a task culture
• Operational management – is concerned with routine activities, therefore it suits role culture

59. 59
Universal
corporate
culture model
• Cultivation culture heralds a system of
beliefs or expectations that the organization
and its people will accomplish what it deems
valuable; it trusts unquestioningly in success,
in its people and in the organization.
• Collaboration culture springs from the
family; its way to success is to put a collection
of people together, to build these people into
a team, to engender their positive affective
relationship with one another and to charge
them with fully utilizing one another as
resources.
• Control cultures prize objectivity, empiricism
and the systematic examination of externally
generated facts are highly valued; emotions,
subjectivity, and ‘soft’ concepts take
everyone’s eye off the ball and potentially get
the organization in trouble; important values
in control cultures are order and predictability,
as well as maintaining stability.
• Competence culture is based in the
achievement motive, defined as need to
compete against a standard of excellence; in a
competence culture, being superior or the
best is paramount, and the culture gains its
uniqueness by combining possibility with
rationalism.
Personal
Possibility
Actuality
Impersonal
Collaboration Control
Cultivation Competence
Schneider (1999)

60. 60
Competing values
framework (CVF)
model
• Hierarchy culture emerges in the relatively
stable environment; clear lines of decision-
making authority, standardized policies and
procedures, control and accountability
mechanisms were valued as the keys to success
• Market culture emerges when the external
environment is hostile rather than benign, the
organization is in the business of increasing
competition, success is defined in terms of
result, profit, market share and penetration
• Clan culture is a team-oriented approach
with basic assumptions that the environment
can best be managed through teamwork and
employee development, customers are best
thought of as partners, the organization is in
the business of developing a humane work
environment, and the major task of
management is to empower employees and
facilitate their participation, commitment and
loyalty
• Adhocracy culture fosters adaptability,
flexibility and creativity if uncertainty,
ambiguity and information overload are
typical; the glue that holds that organization
together is commitment to dynamism,
experimentation and innovation
InternalFocusandIntegration
Stability and Control
Flexibility and Discretion
ExternalFocusandDifferentiation
Clan
(Collaborate)
do things together
Adhocracy
(Create)
do things first
Hierarchy
(Control)
do things right
Market
(Compete)
do things first
Quinn and Rohrbaugh (1983), Cameron and Quinn
(2011)

61. 61
The 4 diversity
cultures model
• Guided Missile culture organizations are
managed mostly by objectives, employ matrix
management structure, and give the individual
a great sense of ownership and potential
satisfaction of a ‘win’
• Eiffel Tower culture is likened to typical
hardened bureaucracy where the
infrastructure’s power is directly related to the
importance and/of the position, task and
accomplishment outweigh the concerns for
relationship, and adherence to the rules and
recognition of hierarchy are extremely
important
• Family culture is built on reputation and
employs a respect not only for family, but for
anyone that has a deep roots in their
successes; managers tend to make decisions
not only on their bosses recommendations,
but also on others who have influenced their
careers and whom they honor
• Incubator culture deals with self expression;
it is the most egalitarian style of management
and is often a very loose structure with
ideation being a key performance indicator
Personal/InformalStyle
Hierarchical / Centralized
Egalitarian / Decentralized
Task/FormalStyle
Incubator
(fulfilment-
oriented)
Guided Missile
(project-
oriented)
Family
(power-
oriented)
Eiffel Tower
(role-oriented)
Trompenaars & Hampden-Turner (1998, 2004),
Trompenaars & Woolliams (2008)

62. 62
This model includes twelve norms that are
divided in three different types of cultures and
defines culture as the behavior that members
think is required in order to meet expectations
within the organization.
• Constructive culture encourages members
of the organization to cooperate and meet
the higher needs of the higher order
• Passive / defensive culture fosters
members of the organization to believe that
they need interaction in certain ways just to
secure their own position
• Aggressive / defensive culture pushes
members of the organization to protect their
status and security in forceful ways
Organizational
Culture Inventory
model
Cooke (1987)

63. 63
• Achievement – people are focused on attaining high-quality results (standard of excellence) and try to think
ahead, explore alternatives before acting to minimizing risks of failure
• Self-actualizing – people in organization try to fulfill their capabilities and talent in order to reach personal
growth, strive to acquire knowledge and experience
• Humanistic-encouraging – people help others within the organization to grow and develop; focus lies on
coaching and caring for whole team in order to move forward
• Affiliative – people strive for cooperation and maintaining good working atmosphere, share their thoughts
and feelings, are friendly and cooperative, and make others feel a part of things
• Approval – employees have a hard time taking own decisions and seek their leaders approval before applying
their ideas
• Conventional – employees focus on rules and procedures of the organization and are supposed to act
according to set standards
• Dependent – performance of employees depends on decision of superiors; they do not question orders from
the boss but instead follow blindly
• Avoidance – employees do not think about their own personal goals and only acts according to policies of the
organization
• Oppositional – people are critical and question others work; sometimes this might lead to a better product
but sometimes the user comes off as arrogant
• Power – users like to control others and focus on their own respect and influence
• Competitive – people focus on their own status, compare themselves with others and try to outperform them
• Perfectionistic – users make an effort in acquiring perfect results with focus on details using high standards as
improving their own self-worth
Organizational Culture Inventory model
(cont.)
Constructive
cultures
Passive
cultures
Aggressive
cultures

64. 64
Denison’s cultures
assessment
model
The Denison model serves as the foundation for
the cultural development activities, and is based
on four cultural traits (every divided to 3 sub-
measures) of effective organization integrated
into a common framework what allows to
measure these traits simultaneously.
• Mission – Direction, Purpose & Blueprint:
defining a meaningful long-term direction for
the organization “Do we know where we are
going?”
• Adaptability – Pattern, Trends & Market:
translating the demand of the business
environment into action “Are we listening to
the marketplace?”
• Consistency – Systems, Structures &
Processes: defining the values, systems and
processes that are the basis of a strong
culture “Does our system create leverage?”
• Involvement – Commitment, Ownership &
Responsibility: building human capital,
ownership and responsibility “Are our people
aligned and engaged?”
Denison (1990, 1994, 1996),
Denison & Neale (1996)
External Focus
Internal Focus
Flexible
Stable

65. 65
• MISSION – the degree to which the organization is crystal clear about its business direction
• Strategic Direction and Intent – the organization’s plan to ‘make a mark’ in its industry,
articulated strategic intention convey its purpose and make clear how everyone can
contribute
• Goals and Objectives – a clear set of goals and objectives linked to the mission, vision and
strategy what provides everyone a clear direction in their work
• Vision – shared view of a desired future status that embodies core values and captures the
hearts and minds of the organization, while providing guidance and direction
• ADAPTABILITY – the degree to which the organization understands the customers’ needs, can
change in response to changing demands, can learn new skills and technologies to support
business success
• Organizational Learning – the organization receives, translates and interprets signals from
the environment into opportunities for encouraging innovation, gaining knowledge and
developing capabilities
• Customer Focus – the organization is driven by a concern to satisfy the customer, i.e. it
understands and reacts to the customers, and anticipates their future needs
• Creating Change – the organization is able to create adaptive change, to read the business
environment, quickly react to current and anticipated future changes
Denison’s cultures assessment model
(cont.)

66. 66
• CONSISTENCY – the degree to which the organization has shared values, systems and
processes, which support achievement of the business mission and goals
• Coordination and Integration – different functions and units of organization are able to
work together well to achieve common goals, i.e. the organizational boundaries do not
interfere with getting work done
• Agreement – the organization is able to reach agreement on critical issues, including the
underlying level of agreement and ability to reconcile differences when they occur
• Core Values – members of the organization share a set of values which create a strong
sense of identity and a clear set of expectations
• INVOLVEMENT – the degree to which individuals at all levels are truly engaged in and ‘own’ the
business direction, and positioned to help the business succeed
• Empowerment – individuals have the authority and ability to manage their own work, what
creates a sense of ownership and responsibility toward the organization
• Team Orientation – value is placed on working in teams towards common goals to which
all employees feel mutual accountability
• Capability Development – the organization continually invest in the development of
employee’s skills in order to stay competitive and meet on-going business needs
Denison’s cultures assessment model
(cont.)

67. 67
Hofstede’s
8 dimensions
Multi-Focus
model
This model consists of six autonomous
dimensions or variables and two semi-
autonomous dimensions:
D1 – Means- vs Goals-oriented
D2 – Internally vs Externally driven
D3 – Easygoing vs Strict work discipline
D4 – Local vs Professional
D5 – Open vs Closed system
D6 – Employee- vs Work-oriented
Strategic windowDysfunctional window
0 50 100
Dimensions of organizational culture D1 , D2 , D3 , D4 , D5 , D6
Variable X Variable Y
0 50 100
Dimensions of organizational culture D7 , D8
Low High
Hofstede & Minkov (2010), Waisfisz (2015)
D7 – Degree of acceptance of leadership style
D8 – Degree of identification with your organization

68. 68
D1 - Organization effectiveness – Means- vs Goal-oriented (process vs result)
• Means-oriented culture places importance on how work gets done; the focus is on the way people do
work and an emphasis on avoiding risk
• Goal-oriented culture identifies with what work gets done; there is a strong focus on achieving an end
result
D2 - Customer orientation – Internally vs Externally driven (pragmatic/flexible vs
normative/rigid)
• Employees within an internally-driven culture see themselves as experts; they feel they know what is
best for the client and customer and act accordingly
• Employees working in an externally-driven culture are very customer-oriented and will do whatever
the customers wants
D3 - Control - Easygoing vs Strict work discipline (loose vs tight control)
• In an easygoing culture, the approach to work is informal, loose, unpredictable, little control and
discipline what facilitate a high level of improvisation
• In a strict culture, there is a fair amount of planning, which leads to efficiency and productivity, people
are cost-conscious, punctual and serious
D4 - Focus – Local vs Professional
• Local organizational culture allows a great amount of predictability as employees identify with their
boss and/or their teammates, are short-term directed, internally focused and there is strong social
control to act, look, and talk in a certain way
• In an organization with a professional culture, employees identify with their profession and/or the
content of the work
Hofstede’s 8 dimensions Multi-Focus Model
(cont.)

69. 69
D5 - Approachability – Open vs Closed system
• In an open system, newcomers are welcomed easily, people are inclusive and take the approach that
almost anyone will fit in the organization
• A closed system is more exclusive, where newcomers have to prove themselves
D6 - Management philosophy – Employee- vs Work-oriented
• In a culture with an employee-oriented management philosophy, leaders take responsibility for the
happiness, well-being, and satisfaction of their employees, even if this is at the expense of the work
• In a work-oriented (job-centered) culture, a focus on high task performance can come at the
expense of employees, there is heavy pressure to perform the task even if this is at the expense of
employees
D7 - Degree of acceptance of leadership style
• This dimension tells us to which degree the leadership style of respondents’ direct boss is being in
line with respondents’ preferences
D8 - Degree of identification with your organization
• This dimension shows to which degree respondents identify with the organization in its totality
Hofstede’s 8 dimensions Multi-Focus Model
(cont.)

70. Subcultures

71. 71
In practice, an organizational culture is not completely homogeneous.
Normally there exits a dominant culture, generally accepted and followed by the
majority of people.
However, in addition to this dominant culture, organization might have some
subcultures that overlap and may even disagree with each other.
Subcultures reflect common problems, situations or experience that organization faces.
• Dominant culture – expresses the core
values shared by a majority of the
organization’s members = distinctive identity
of an organization
• Subculture – shares the dominant culture’s
core values as well as other values that
characterize their own departments,
geographical units, etc.
• Counterculture – its values are in opposition
to those of the dominant culture
• Co-cultures – groups of people living within
a dominant culture who are clearly different
from the dominant culture (basis: gender,
race, ethnicity, sexual orientation, religion,
social class, generation)
Subcultures
Dominant
culture
Core
values

72. 72
• The most basic unit in the expression of cultural norms is the individual. A single
person mirrors the behavior of those around him, thus adapting to and
strengthening, the culture he finds himself in.
• Individual culture is the result of numerous aspects of a person’s life, and
reflects his own personal values, how he prefers to act, how he likes to treat others
and be treated by them.
• Individual culture can change over time as person needs to adapt his individual
behavior to suit the general orientations of those around him – he either
replicates and reinforces cultural norms, or alters and modifies them.
• Whether a person is able to adapt his individual cultural preferences depends on
whether or not those preferences are core or negotiable. Core cultural
preferences are those that a person holds very dear, whether for an ideological
reason or because he believes in their importance in his life or society.
• When a person experiences a cultural gap with another person or group around
a core cultural preference, it is normally too difficult for him to adapt or style
switch to match the preferences of those around him.
Individual / Personal culture

73. 73
• Every profession develops its own code of conduct,
professional norms; this brings pride in their profession
and loyalty to the profession – members become more
loyal to their profession than to a particular
organization.
• Professional culture differentiates the characteristics
and value systems of particular professional groups.
Professional culture
• Through personnel selection, similar education and training, on-the-job experience,
peer pressure, etc., professionals tend to adopt the value system and develop behaviour
patterns consistent with their peers; they learn to ‘walk and talk’ alike.
• The positive aspects of the professional culture are shown in strong motivation to do
well and a in a high level of professionalism.
• A negative aspect is that professionals may adopt value systems that lead to
developing a sense of personal invulnerability.
• It should be noted, that professional affiliations can create different linguistic
repertoires or codes for intra- and/or inter-group communication.
Organizational
culture
Professional
culture
Industrial culture
Market

74. 74
• Compared to professional culture, occupational culture is a broader construct as
result of similar occupational backgrounds and experiences of different groups of
organizational members.
• Occupational culture develops through social interaction, shared experience,
common training and affiliation, mutual support, associated values and norms,
and similar personal characteristics of members of a particular occupational
group.
• Occupational culture is a reduced, selective, and task-based version of culture
that includes history and traditions, etiquette and routines, rules, principles and
practices that serve to buffer practitioners from contacts with the public; a kind of
lens on the world, it highlights some aspects of the social and physical
environment and omits or minimizes others.
• Occupational culture develops distinct jargon and shapes perceptions of reality by
developing classification systems to describe experiences and concepts.
• Occupational culture may have greater influence over work styles and
perspectives than an organization’s policies and procedures, since it crosses
organizational boundaries and is often imported.
Occupational culture

75. 75
Individual identity
Individual identity is the concept a person develops about himself that evolves over the
course of his life. This may include aspects of his life that he has no control over, as well
as choices he makes in life. The person demonstrates portions of his individual identity
outwardly through what he wears and how he interacts with other people. He may also
keep some elements of his identity to himself, even when these parts are very important.
Individual identity develops over time and can evolve, sometimes drastically, depending
on what directions we take in our life.
Professional identity
Professional identity is the image a person has based on the way he performs a job or
operates within a career field. Building a professional identity often involves a mix of
education, professional training and personality. People earn degrees and professional
certifications to demonstrate knowledge, credibility and expertise in a given profession.
Personality and professional etiquette create distinction among the people in a
profession who have similar backgrounds.

76. 76
Organizational identity is defined as an
enduring, distinctive and central statement
perceived by an organization’s members to
answer questions such as
• “Who are we?”
• “What are we doing?”
• “What do we want to be in the future?”
The organizational culture is the context in which
organizational identity is developed.
Centrality means that the
statement should include features
that are important and essential to
the organization
Distinctiveness emphasizes that
the identity statement should be
able to distinguish the organization
from others and helps the
organization locate itself in a
specific classification. A distinctive
identity statement usually includes
organizational ideology,
management philosophy and
culture
Durability emphasizes the
enduring nature of organizational
identity. It implies that
organizational change is difficult to
start because the loss of
organizational identity will have
strong impact on the organization
Culture Identity Image
The members of organization express their understandings
of their organizational culture through organizational identity,
which in turn, affects the perception of others outside the
organization about the organization.
The outsiders’ perception, or organizational image, in turn,
affects the organizational identity, which again is reflected in
the central elements of the organizational culture.

77. 77
Individual
culture
socialization
Individuals have first been socialized in their
national cultures already in their childhood and
possibly later as well, in professional cultures
before socializing in the organisational culture.
However, professional and/or occupational
cultures are still expected to persist in
organizations because of professional/
occupational affiliations.
National cultures have a strong impact on an
individual’s perception and understanding,
affecting him throughout his lifetime.
Socialization refers to the process by
which the culture values of organizational
members are brought into line with the
organizational culture
National culture
• nationality
• ethnicity
• region
• gender
• religion
• generation
• educational systems
• etc.
Professional culture
• academic
• business
• banking
• legal
• medical
• engineering
• etc.
Organizational culture
• incl. subcultures
Progressive socialization that occur during a person’s life

78. Post-Merger Cultural Integration
Two out of three mergers fail due to not taking care of cultural differences.
Do you want your acquisition to work? Take culture into consideration.

79. 79
M&A insights on culture
• Financial acquirer is not always the cultural acquirer. The company providing acquisition currency (the
financial acquirer) should not necessarily impose their culture on the target. At times, an acquisition is
driven by importing the target’s culture, or “way of doing things,” such as in situations when the target
has innovative products/services or “know-how.” In these cases, the target becomes the cultural acquirer.
• Culture must support the business strategy. For instance, if a business strategy is built upon innovation,
the culture must be aligned across all enablers (i.e. processes, systems, structure) and oriented toward
instilling such an environment by encouraging and embracing creativity and invention.
• Not an overnight process. Once similarities and differences in culture are identified, aspects of these
cultures to be preserved and enhanced must be identified. Culture will need to be shaped gradually.
• Culture is an outcome, not an input. Organization culture is an outcome of good, or poor, integration.
Relentless focus on business performance backed by the right processes, systems and incentives will
create a sustainable culture. One does not have to change culture as a pre-condition to integration.
• Culture is not “good” or “bad” - it just is. An entrepreneurial culture is “loose” for some and
“undisciplined” for others. Focusing on leveraging cultural strengths to improve business performance
will ultimately create a stronger culture.
• Sub-cultures matter. Culture can prevail differently in different parts of the organization. Sub-cultures
exist based on function, demographic and/or geographic differences, but may be most pronounced in
organizations with an aggressive acquisition history. To affect change, sub-cultures must be recognized
and addressed separately yet kept in alignment with the broader organization.
• Starts at the top. Culture is a reflection of the behaviors and attitudes exhibited by the organization’s
leaders, their adherence to the strategy and their decision making. From our experience, the higher up
you go in the organization, the clearer the distinction of cultural differences.

80. 80
Culture has direct influence on the deal’s bottom
line.
While successful cultural integration is clearly a
critical element in deal success, many companies
do not know how to successfully navigate it
during a transaction. As result, the cultural
differences lead to decreased productivity,
declining market share and lower revenue –
negative effect on value of the deal.
• Leadership ownership
• Clarity of M&A logic and PMI as change
management case
• Coherent deal-making and organizational
cultures
• Early understanding of cultural similarities
and differences
• Adaptability and flexibility to change
culture for both sides of transaction
• Communication and active management
of changes to culture
• Clarity of behavioral directions
• Ineffective leadership
• Incoherent deal-making and PMI
processes
• Poorly planned or challenging integration
• Failure to recognize or reconcile
differences in organizational behavior
• Lack of awareness, tolerance or
understanding of social drivers of behavior
• Inability to drive change
• Lack of linkage between required behavior
change to business results
Time
Value
Current value
Pre-M&A expected value
Post-M&A real value
Valuecreation
Valuedestruction
M&A deal’s value leak
Culture related factors

81. Cultural due diligence is the process of analyzing a culture
with the purpose to identify and outline the cultural
strengths and weakness (and risks and opportunities) in
relation to the goals and objectives of that organization.
Cultural Due Diligence

82. 82
• M&A cultural due diligence refers to the determination of cultural compatibility in
merger or acquisition. Cultural compatibility does not necessarily equal cultural
similarity, but rather refers to whether two cultures are ‘combinable’. Pre-acquisition
cultural due diligence may enable an acquirer to determine whether and how a
combination of different cultures in the post-acquisition stage has high chances of
success.
• Recommended that an acquirer analyze its own organizational and national cultures
prior to undertaking acquisitions to identify the cultural factors that are crucial for the
future integration of cultures involved. Only then due diligence will help organization
uncover the key issues that can impede negotiations and integrations.
• Cultural due diligence is different from HR due diligence:
• HR DD - focuses primarily on historical and projected headcount, personnel turnover
patterns, profiles of senior leadership as well as their compensation packages to
resolve the inequities in the compensation plans between the two organizations and
other similar issues
• Cultural DD - focuses on the assessment of values, visions, missions and beliefs,
leadership and management styles, perceptions about the organization, management
and the way things are done in the target entity, and their compatibility with those of
the acquiring organization

83. 83
Cultural DD as diagnostic
process
• Identifies target entities using cultural fit as a criterion
during M&A strategy planning phase:
• By having ‘cultural fit’ (‘cultural compatibility’ ) as a
criterion for identifying a target entity, the acquiring
company sort out organizations that are culturally
dissimilar from the list of potential targets.
• By assessing the multiple layers of cultural ‘fit’ (e.g.
national, industry, organizational, individual) and
considering a range of response scenarios, new types of
strategic acquisitions are possible.
• Evaluates cultural compatibility between acquirer and
target organization:
• Organizational values, beliefs, vision or mission
• Corporate objectives
• Organizational policies, procedures and practices
• Understands the concerns and anxieties of the
employees in general and key talents in particular in the
target organization.
• Saves the merged organization from the potential
conflict arising out of ‘them vs us’ (=‘talk merger vs act
acquisition’ ) syndrome.
• Prepares the leaders to achieve M&A outcomes and for
a future merged entity.
Cultural assessment should:
• Provide organizational and
national cultures analysis
• Determine the degree of
cultural alignment between
organizations and come up
with a culture alignment
plan for the areas of
divergence
• Present a complete risk
assessment, signaling the
potential organizations /
people-related collisions
• Identify synergies that sign
success
Diagnose collision risks between:
• Two companies’ views at each
other today
• Two companies’ views of their
shared future
• Senior management perspective
• Functions / departments
• Companies and their customers
• Companies and their investors
• Companies and their industry
• Companies and their suppliers

84. 84
External culture indicators – formal
aspects (‘the way we saw they get
things done’):
• Vision / mission statements
• Structure
• Rituals and ceremonies
• Behavior and patterns of behavior
• Policies and procedures
• Work environment and layout
• Infrastructure and technology in use
• Social medial, website content
• Relations with external stakeholders
Identify
meaningful cultural
differences
National cultural factors
Employees may identify both with their original
culture and new culture, and experience
conflicting values: view to time, task vs
relationships orientation, leading vs following,
open vs indirect feedback, free will vs fate, labor
relations and reward philosophy, labor code,
dress code, community involvement, country-
unique cultural norms, practices, and traditions.
Industry and professional
cultural factors
Depending on different level of economical
development, its globalization, education or
political factors industries or professionals may
have different cultural features: professionalism,
attitude to unions and associations, perception
of quality, social responsibility, self-identity,
loyalty.

85. 85
Internal culture indicators – informal
aspects (‘the way they really get things
done’):
• Values, belies and assumptions
• Attitudes
• Heroes and stories
• Unconscious behaviors
• Leadership and management style
• Business drivers
• Employees’ practices and perceptions
• Organizational ability or resistance to
change
Identify
meaningful cultural
differences
Organization cultural factors
Self-image, corporate values, decision-making
process, attitude toward risk and reward,
communication process, commitment to
employees development and safety, emphasis on
people vs tasks, concerns about social
responsibility, code of conduct, leadership and
management style indicators, traditions.
Subcultures factors
Organizational structure, intercompany
hierarchies or functions may have different
subcultures: top-executives vs managers, blue
collar vs white collar job, degree of functional
importance, individual vs team oriented groups.

86. 86
Cultural integration framework
Day 1
M&A
pre-deal
phase
M&A strategy
development
phase
Self-
identification
phase
• Acquirer’s culture self-assessment
(real culture vs desired culture)
• Cultural evaluation of potential target companies
(regarding possible conflicts in fundamental matters and degree of estimated integration
difficulties)
• ‘Blind’ cultural assessment of selected target companies before negotiation
(deal negotiation preparation)
• Detailed cultural due diligence as part of general DD process
• Cultural integration process
(cultural synergy)Socio-cultural
integration
phase
• Identification of cultural risks and potential conflicts
• Evaluation degree of cultural integration difficulty
• Cultural alignment / integration planning
(for both organizations or target company)
• Estimation of resources required for cultural alignment / integration

87. • Cultural due diligence is a tool that offers a systematic way to diagnose and
address intercultural issues in a merger or acquisition. The aim of it is to
synchronize some important elements within a culture. These elements are related
to people: how people feel and think, what actions do they completed, how
people do tasks, what rules get imposed, and what images and phrases have
significant sense.
• In cultural due diligence is necessary to examine our own cultural identities as well
as others’ cultural beliefs, traditions and values to gain a better insight of their
‘truths’. This process involves standing back of our emotional responses when we
recognize that other cultural points of view may differ entirely from our own.
• Cultural due diligence can determine the degree to which change can or cannot
occur smoothly within the companies involved in M&A due to the fact that some
cultural differences can be overcome, others cannot. This is the reason why cultural
due diligence is of central importance to the non-operational pre-merger activities.

88. “Culture is more often a course of conflict than a
synergy. Cultural differences are a nuisance at best and
often a disaster.” // Geert Hofstede
Stress Management

89. 89
• Even the best-orchestrated mergers can be threatening, unsettling and
stressful for some employees.
• Some common merger stressors include: uncertainty, insecurity and fears
concerning job loss, job changes, job transfers, compensation changes, or
power, status, and prestige changes.
• They can lead, in turn, to organizational outcomes such as absenteeism, poor
performance and higher employee turnover.
• To reduce merger stress, merger stress management plan need to be
implemented, which could include the following strategies:
• Merger stress audit – assesses of employees perceptions of the merger.
• Realistic merger previews – informs employees about what to expect once the
acquisition takes place, in order to help them through the transition.
• Individual counselling – helps employees overcome merger stress and fear and
suggested coping strategies may help alleviate negative reactions.
• Merger stress management – enables employees to share their fears and
concerns, and would be guided through methods and processes to alleviate these
dysfunctional stress responses.

90. 90
Cultural shock
Cultural shock grows out of the difficulties in
assimilating the new culture, causing difficulty in
knowing what is appropriate and what is not.
The cultural shocks appeared occurred during the
closeness operations between organizations are
reflected on three main levels:
• Conflicts at the level of structures and working
systems
• Conflicts related to the management style
• Conflicts related to exercising the power
Culture shock is often described as a
"personal disorientation" that
accompanies transition into a new
culture.
Satisfaction/Happiness
Time in new culture
Adaptation / Integration
Honeymoon Culture shock Adjustment Mastering
Experimentation
Unreality and
euphoria
Fantasia
Acceptance
of reality
Interest
Search

91. 91
• Demands – issues like workload, work
pattern and the work environment
• Control – what influence the people
have about the way they do their work
• Support – including the
encouragement, sponsorship and
resources provided by the employer,
line management and colleagues
• Relationships – including promoting
positive working to avoid conflict and
dealing with unacceptable behavior
• Role – whether employees understand
their role within the organization and
whether the organization ensures that
the person does not have conflicting
roles
• Change – how organizational change
(large or small) is managed and
communicated in the organization
Workplace stressors
Stress
Support
Control
Demands
Role
Relation-
ships
Change
Identify
the stress
risk
factors
Monitor
and
review
Record
your
findings
Evaluate
the
risks
Decide
who might
be harmed
and howWork-related
stress
management

92. 92
Merger-Emotions
syndrome
• Denial – the first employees’ react to the announced
merger; they say it must be ‘just a rumor’
• Fear – when the merger becomes a reality,
employees become fearful of the unknown
• Anger - once employees feel that they are unable to
prevent the merger from taking place, they begin to
express anger towards those who are responsible;
they feel like they have been ‘sold out’ after providing
the company with loyal service
• Sadness – employees begin to grieve the loss of
organizational identity and reminisce about ‘the good
old days’
• Acceptance – when mourning period has elapsed,
employees begin to recognize that to fight the
situation would be useless; they begin to become
hopeful about their new situation
• Relief – employees begin to realize that the situation
is not as unpromising as they had had predicted
• Interest – once people become secure with their new
positions or with the company, they begin to look for
positive factors, benefits and challenges they can
achieve through the new organization
• Liking – employees discover new opportunities that
they had not envisioned before and begin to like their
new situations
• Enjoyment – employees discover that the new
situation is working out well and feel more secure and
comfortable
Acceptance
News of the merger Commitment to the
situation
Enjoyment
Liking
Interest
Relief
Denial
Fear
Anger
Sadness
Hunsaker & Coombs (1988)

93. 93
Self-esteem
Shock
Denial
Anger
Depression
Acceptance
Experimentation
Discovery
Integration
Acquisition
Old
status
quo
Chaos
Integration
in practice
Performance
Transforming
idea discovered
Acquisition
Time
Time
Kubler-Ross’s (1970)
Weinberg (1997)
Motivation
2.
Proactive
phase
Time
1.
Alarm
3.
Mixed
feelings
4.
Frustration
5.
Reactive
phase
Geyer & Kohlhofer (2008)
1. Uninformed
optimism
pessimismoptimism
Time
2. Informed
pessimism
3. Realism
4. Informed
optimism
5. Rewarding
completion

94. 94
Effective
emotional change
management
Change curve is unavoidable and expected as
people learn and grow through the change event.
The depth and duration of disengagement can be
managed through effective management of key
human factors that helps people to move more
quickly from cultural endings to new levels of
engagement and productivity: speed of
integration, trust, communication and retaining
key people.
1. Forming - characterized with anxiety and
uncertainty as people just starting to come
together. Leader direct.
2. Storming - where conflict and competition
are at its greatest as people feel confident
and begin to address some of the more
important issues surrounding them. Leader
coaches.
3. Norming - a sense of community, cohesive
organization is established, tasks are set,
leadership is shared. Leader facilitates and
enables.
4. Performing – organization has a shared
culture. Leader delegates and oversees.
5. [Adjourning - involves completing the task
and breaking up the team.]
Productivity
Time
Change
in demand
Unwelcome
change
duration
depth
Ending Neutral zone New beginning
1. Forming
Tuckman (1965, 1977)

95. M&A, in the end, is not like war. In merger or
acquisition, both “they” and “we” want success, and
both may find it far more effectively by learning to
assimilate the culture of the enemy until there is no
enemy at all.
Impact of Merger on Culture

96. 96
Typology of cultural
integration
Cultural integration in terms of
the degree of change required by
the acquiring company and the
acquired company:
• Preservation (stand-alone) -
requires little change by
either company / easiest way
• Absorption - requires
fundamental changes in the
acquired company and little
change in the acquiring
company / easier way
• Reverse merger - requires a
high degree of changes in the
acquiring company as it
adopts the way of the
acquired company / harder
way
• Transformation - requires
more fundamental changes
for both companies / hardest
way
• Best of both – requires
substantial changes in both
companies / hard way
ABSORPTION
Acquired company conforms to
acquirer
Cultural assimilation
• Imposes acquirer’s preferences
• Fast-paced timeline
TRANSFORMATION
Both companies find new ways to
operate
Cultural transformation
• Develops new culture and values
• Gradual shift to strategic control
PRESERVATION
Acquired company retains
independence
Cultural autonomy
• Protects advanced qualities
• Management at arm’s length
REVERSE MERGER
Exceptional case of acquired
company ruling
Cultural assimilation
• Adopts acquired company’s
values, practices and norms
BEST OF BOTH
Additive from both sides
Cultural integration
• Sum greater than parts
• Collaboration and
transferred capabilities
Acquiring company
Degree of change
Acquiredcompany
Degreeofchange
low high
lowhigh
Mirvis & Marks (1992)

97. 97
The acquiring company accepts the acquired company’s cultural differences unequivocally. The
acquiring company allows the acquired one to operate as an autonomous business unit but usually
intervenes to maintain financial control by integrating reporting systems and procedures. The strategy
used by the acquirer in this type of acquisition is non-interference.
Open Marriage (autonomy or semi-autonomy)
The acquirer sees its role as being to dominate and redesign the acquired organization. These types of
acquisitions implement wide-scale and radical changes in the acquired company. Their success
depends on the acquiring company’s ability to displace and replace the acquired company’s culture. In
essence, this is a ‘win/lose’ situation.
Traditional / Redesign Marriage (absorb and assimilate)
It relies on an integration of operations in which the equality of both organizations is recognized. The
essence of the collaborative marriage is shared learning. In contrast to traditional marriages, which
centre around destroying and displacing one culture in favour of another, collaborative marriages seek
to positively build on and integrate the two to create a ‘best of both’ culture. In collaborative
marriages the two organizations are in a ‘win-win’ situation.
Modern / Collaborative Marriage (co-create a new identity)
Cultural compatibility
When an company acquires or merges with another, a new organization may take one of
three possible forms depending on the nature of the two cultures, the motive for and the
objective and power dynamics of the combination.

98. 98
Difficulties of
implementing
mergers
• Conglomerate merger – the acquired
company is usually one of many under the
corporate umbrella; since the companies are
unrelated in product or service, internal
changes to the acquired company, which will
remain relatively autonomous, are likely to be
minimal, and there will be few cultural
consequences
• Vertical merger – most of the interaction
between the two companies is at the corporate
level; the level of complexity at the corporate
level increases, this leads to the demotion of
some executives to middle management, loss
of social standing, which often leads, in turn, to
a higher level of executive turnover
• Concentric merger – there is a tendency to
combine some operations and sharing of
expertise between the two companies, which
may be resisted by the employees of both
companies
• Horizontal merger – downsizing and
voluntary quits usually precede or immediately
follow the merger; the intense interactions
between the employees of both companies
may result in conflict and the compatibility of
styles and values between management and
staff becomes central in personnel decisions
Degreeofrelatedness
Difficulty of implementation
Conglomerate
lowhigh
low high
Vertical
Concentric
Horizontal

99. Culture, by itself, cannot be seen as reason of the failure
of post-merger integrations. What makes culture a
stumbling block in many M&A deals are the differences
that arise during the integration.
Challenges of Cultural Integration

100. 100
• As a rule, the financial, legal, technical, and organizational aspects of the merger
draw more of the focus while the human and social aspects fall behind.
• Result: not enough is done before, during, and after the merger to help people
unite successfully
• Cultural integration is given lip service but gets shortchanged on
investment and attention
• Communication with employees about the merger and new culture
is sporadic, inadequate, limited to ‘a need to know’ basis
• Leadership doesn’t identify culture risks during due diligence. No leaders
agreement on the desired culture to work toward (cultural alignment)
• In most acquisitions, the organizational cultures of two companies are compatible.
This doesn’t mean that the cultures are exactly the same, but rather that they
don’t conflict in certain fundamental respects, such as management style and
corporate governance practices.
Why organizational cultures
don’t merger?

101. 101
Cultural clash
• People don’t buy in to the newly
merged organization. They don’t get the
right information from leaders about
the purpose and plan for the deal, which
leads to distrust and fear about the
future, disengagement, and loss of their
loyalty.
• People don’t understand each other.
They don’t learn about the cultural
features of the merging organizations,
and can’t connect with new colleagues.
• People don’t collaborate, or even work
against each other. Different systems
and business styles keep employees
apart; ‘us vs them’ mindset produces
internal competition and conflict.
• People are distracted from the core
business. A poorly planned integration
takes too much time and attention;
productivity drops, eroding the
company’s revenue and customer base.
• People leave. They don’t feel like they
fit in anymore, or they’re unhappy with
the problems and delays of integration.
Social merger
• People have allegiance to the newly
merged organization. They are
comfortable and confident in the new
company and feel a sense of belonging
and united identity, are fully engaged
with each other and with their work.
• People have positive relationships with
each other. They talk to their new
colleagues and share their history and
ways of doing things.
• People cooperate to serve the business.
They share information and best
practices, answer questions, and act as
though they are all on the same side,
know when to adapt their processes so
that customers are served better.
• People stay. They are invested in the new
entity they’re building and feel respected
and valuable.
= Psychological synergy

102. 102
• When dealing with people from another culture, one may know something about their
language, the space to use while dealing with people, awareness about your culture and
how to apply one’s cultural behavior with that of the other culture.
• Cultural intelligence is the capability to work effectively in culturally diverse
environments. It covers such areas as:
• Linguistic intelligence – helpful to learn about the customer's’ native language and
using international business English can increase effectiveness when communicating
with persons of other cultures
• Spatial intelligence – involves the space used during meetings, negotiations,
introductions, etc., and understand the effects of manipulating the spatial dimension
• Intrapersonal intelligence – reflects a person’s ability to understand his inner world
(from which many people are entirely disconnected), awareness of one’s own cultural
style in order to make adjustments to international counterparts
• Interpersonal intelligence – includes the ability to understand other people and
their motivations, has a keen ability to relate to others as individuals
• In order to work with a cultural integration, a person is supposed to recognize and adapt
with the differences in cultures – possesses cultural intelligence.
Cultural intelligence

103. 103
Interest, drive and motivation to adopt inter-culturally:
• Intrinsic interest – deriving enjoyment from culturally
diverse experience
• Extrinsic interest – gaining benefits from culturally
diverse experience
• Self-efficacy – having the confidence to be effective
in culturally diverse situations
CQ Drive (Motivation)
Flexibility to adopt when relating and working inter-
culturally:
• Adopt verbal and non-verbal behavior to meet the
needs of the group, while still remaining authentic
• If successful, meetings will be effective and respectful
• Non-verbal – modifying non-verbal behaviors (e.g.,
gestures, facial expressions)
• Verbal – modifying verbal behaviors (e.g., accent,
tone)
• Special acts – modifying the manner and content of
communication (e.g., direct/indirect)
CQ Action (Behavior)
Top components of cultural intelligence
Understanding of cultural norms and how cultures are
similar or different:
• Understanding that team members from some
cultures are less likely to speak up
• Business – knowledge about economic and legal
systems
• Interpersonal – knowledge about values, social
interaction norms, religious beliefs.
• Socio-linguistics – knowledge about rules of
language and rules for expressing non-verbal
behaviors
• Leadership – knowledge about managing people and
relationships across cultures
CQ Knowledge (Cognition)
Your awareness and ability to plan in light of your cultural
understanding:
• Awareness – knowing about one’s existing cultural
knowledge
• Planning – strategizing before a culturally diverse
encounter
• Checking – checking assumptions and adjusting
mental maps when actual experiences differ from
expectations
CQ Strategy (Meta-cognition)

104. 104
• Knowing that cultural differences as well
as similarities exist, without assigning
values (i.e., better or worse, right or
wrong) to those cultural differences
• It refers to a set of skills that allows you
to understand and learn about people
whose cultural background is not the
same as yours
Cultural sensitivity
• The ability of individuals and systems to
respond respectfully and effectively to
people of all cultures, in a manner that
affirms the worth and preserves the
dignity of individuals, families, and
communities
• The achievement of this last stage
requires the synthesis and application of
previously gained awareness, knowledge
and sensitivity
Cultural competence
Cultural competence
• An examination of our personal value
base and beliefs
• It involves the ability of standing back
from ourselves and becoming aware of
our cultural values, beliefs and
perceptions
• Developing sensitivity and
understanding of another ethnic group.
This usually involves internal changes in
terms of attitudes and values
Cultural awareness
• All we know that characterize a particular
culture – familiarization with selected
cultural characteristics, history, values,
belief systems, and behaviors of the
members of another ethic group
• Meaningful contact with people from
different ethnic groups can enhance
knowledge around their beliefs and
behaviors as well as raise understanding
around the problems they face
Cultural knowledge

105. 105
• It is hard for people in a culture to see a culture…
• Difficulty of blending two organisations lies in the fact that each group tends to see the
world through its own biased cultural filters, which he refers to as ‘familiarity blindness’
or ‘cultural trance’.
• People in each company look at the same events, the same decisions, the same
situations, but coloured by their culture and past experiences, they legitimately see
them from two different points of view.
• That is why outside ‘stranger’s eyes’ are needed.
• Understanding how things are seen in the other culture, learning mutual respect and
being open to exploring different points of view are the keys to the human factor in
any M&A.
• Cultural humility – having a sense that one’s own knowledge is limited as to what
truly is another’s culture. It requires us to take responsibility for our interactions with
others beyond acknowledging or being sensitive to our differences
• Others-oriented rather than self-focused
• Respect to others
• Lack of superiority
• Entertaining hypothesis rather than drawing conclusions
Cultural blindness

106. 106
Identity ambiguity
Loss of an understanding of what are the
central and distinctive characteristics of an
organization may lead to identity ambiguity
– multiple understandings and interpretations
of the organization’s identity. In the event of
an acquisition, where two formerly separate
companies are to be merged into one,
identity ambiguity may arise:
• First, different companies may have
different assumptions of what are central
and distinctive features of their own
organization.
• Secondly, the image the members of the
organizations have of “the other
company” may differ from the “other
companies” self-concepts.
• Thirdly, the identity ambiguity can refer to
the multiple understandings and
interpretations of what are the combined
organization’s central and distinctive
features.
People are strongly motivated and committed
to take actions to restore their organizational
image, and also to preserve their identities.
‘Them/Us’ syndrome
M&As often create winners and losers at
both the corporate and individual staff
levels. One culture unseats another. One
employee outweighs another. Power
struggles prevail.
After the acquisition employees of both
organizations tend to adopt a ‘them and
us’ or ‘they and we’ approach very often
degenerating to ‘winners vs losers’ or
‘more than equal’ position.
• Acquiring organization should get rid
of any arrogance on the part of their
people to ensure that acquired
employees do not feel inferior and
‘conquered’.
• A post-acquisition atmosphere
promoting mutual respect will facilitate
a better understanding of the others’
perspective and make a smoother
integration.
• Very important is to mix employees as
much as possible at all organizational
levels.

107. 107
Employee
reaction model
Three perspectives that can be seen as
complementary paradigms to examine how
employees attempt to understand the meaning
of an announced M&A:
• Psychological - looks at the individual and
how the merger affects stress levels, coping,
and commitment.
• Social - is based on group dynamics and
tackles issues associated with group
membership, social comparison, and status.
• Cultural - looks at organizations as a whole
and considers culture clashes to be the core
of decreased performance in mergers.
M&A impact at individual level:
• Employee motives: culture, roles, authority,
staffing, relationships, competencies,
information, training, facilities
• Occupational stress
• Trust in management and organizational
justice
• Attitude towards or resistance to change
Deal
characteristics
Employees
perception of
Employees
reaction
Cultural clash
potential
Degree of
integration
Deal
structure
Cultural
similarity
Uncertainty
Power
Collaboration
Intention to
leave
Conflicts
Satisfaction
Marmenout (2010)

108. 108
Potential hot spot in cross-culture
communication:
• Opening and closing conversations
• Taking turns during conversations
• Interrupting
• Use of silence
• Appropriate topics of conversation
• Knowing how much to say
• Sequencing elements during
conversation
Cross-cultural
communication
The communication process begins with a sender
having a message to be communicated to the
receiver. The sender encodes his thoughts into a
message and the receiver decodes the message into
thoughts. It is this process of encoding and
decoding messages that can lead to failure because
the sender (receiver) encodes (decodes) messages
by using different cultural filters.
Cross-cultural communication is a field of
study that looks at how people from different
cultural backgrounds communicate, in similar
and different ways among themselves, and how
they endeavor to communicate across cultures.
Purpose of cross-cultural communication in
business:
• To create cultural synergy between people
from different cultures within a business.
• To avoid problems stemming solely from
misinterpretation when coming across people
from different culture and society in the large
expanding business globally.
• Communicating across cultures effectively
improves productivity and efficiency.

109. 109
Communication and M&A
• Communication plays a significant role in cultural integration. It reinforces the ‘transformation
vision’, the alignment of leadership, and it is instrumental in engaging stakeholders.
• Change communication is a critical element in creating, managing and distributing the
messages at each stage of the cultural integration process.
• Making the cultural, financial and operational elements of a merger or acquisition work starts
with effectively communicating about it from the day it is announced, before the rumor rise and
spin out of control.
THE FIRST MESSAGE EMPLOYEES HEAR GENERALLY IS THE ONE THAT WILL MOST
INFLUENCE THEIR PERSPECTIVE
• Employees need to know what’s changing, why, when and what will happen, both in the overall
big picture, as well as on a day-to-day basis.
• Therefore, the goal of an M&A communication strategy is to provide clear, simple, and credible
answers to the three most important questions that the acquiring and acquired workforces will
have:
• WHY is this happening?
• WHAT will happen to me?
• HOW will it work?

110. 110
Communication
components
• Audience – during integration, there
are multiple interactions and exchange
of information with several people and
across functions
• Media – different channels of
communications are used including
verbal, email, PPT presentations, excel
analysis and others
• Timing – right timing of
communication is critical
• Content – ability to provide right and
relevant details; the more crisp and
precise the information, the more
powerful the content
• Modulation – ability to modulate and
calibrate as per the receiving audience
Modus operandi
• Case for change – create a strong,
compelling case for change and a shared
sense of urgency by carefully presenting
the reasons for the transaction
• Vision – shape a picture of what the
organization will look like after the
change
• Engage – involve key stakeholders in
critical aspects of the change
• Align – ensure that all revamped work
flow and supporting processes and
practices are adjusted to support the
vision of the future
• Sell – communicate relentlessly, using
consistent messaging to ensure the right
information gets to employees in ways
that make sense to them
• Persist – keep the energy up, create and
implement early warning mechanisms
that let to know if progress is being
made or if dangers have just gone
underground

111. 111
Every merger or acquisition is about people, therefore, the deal
success or failure is determined by an organization’s ability to
anticipate, understand and address employees’ specific
concerns and questions. Following are guiding principles for
communicating change with a people focus:
• Start communicating early. Continue communicating
throughout the transition – frequently and consistently.
Guiding principles of communication
Questions most employees ask
themselves when faced merger or
acquisition – ‘me’ issues:
• Why is this happening – is the
company in trouble?
• Will I lose my job?
• Am I or my skills still relevant?
• Even if I keep my job, will my
status or responsibilities change
or my unit be restructured?
• What will ‘they’ be like to work
for?
• Create and maintain an ongoing dialog with employees to build trust – communicate before,
during and after the organizational transition.
• Always tell employees all that it is important for them to know at any given time.
Acknowledge what you don’t know.
• Keep direct communication with outside stakeholders controlling their engagement.
• Silence almost always creates fear and provides too much opportunity for rumors to fill the
void.
Communicators have the opportunity to play a leadership role in the cultural change. But this
can only happen when communicators understand the components of the change process and
synchronize their thinking and activities to that process.

112. 112
• Change management – the process through which an object of management
attention is moved from one state to another in a planned and intentional
manner.
• A cultural change is not that management tries to impose new behaviors, but a
change of the ideas, values and meanings of large groups of people.
• Changing culture thus involves changing what people value and the assumptions
they hold in relation to the nature of their experience.
• It is important to differentiate between ‘cultural change work’ and ‘non-cultural
change work’. One way to do this is to make a distinction between two-orders /
three types of cultural change:
• First-order changes emerge from established cultural norms and thus is a
product of previous thinking – does not need new thinking or cultural sense
making to occur
• Second-order change is a multidimensional, multi-level, qualitative,
discontinuous, radical organizational change involving a paradigmatic shift,
and requires different change management strategies and knowledge
Culture change management

113. 113
• Cultural reproduction involves the repetition of established ways of doing things as
business expands – the organization simply reproduces the architecture of the
operating culture that it knows and understands.
• Cultural adaptation involves an existing activity being changed in terms of its form,
but not involving any change to the meaning attached to the change target – the
organization adapts cultural practices to keep up with trends.
First-order cultural changes
• Cultural transformation involves the identification of elements of the organizational
culture that are deemed redundant and the changing of organizational form – a
process that would change the meanings that members attach to a phenomenon to
subsequently invoke a change in their attitudes.
• This is a completely different form of change and requires different change
management strategies and knowledge.
Second-order cultural change
Types of cultural change

114. 114
There are differences in culture change when organizations are in a steady environment
versus an M&A integration environment:
• Steps taken within an M&A integration environment are often counter-intuitive to those
taken during a steady environment, making execution more challenging.
• Culture integration is about aligning the right behaviors with the desired results.
• A successful M&A integration that puts the right leadership, processes, systems, metrics
and incentives in place creates culture as an outcome. A common misconception
during M&A integration is that in order to integrate well, one needs to 'fix' the culture.
Cultural Change
(steady environment)
• Focus mainly on morale
• Promise business as usual
• Be slow and methodical
• Be patient
• Enforce and reward a common culture
• Gradually shape cultures
• Navigate uncertainty and ambiguity
Cultural Integration
(M&A integration environment)
• Focus on business performance
• Promise and commit to change
• Create a sense of urgency
• Make the hard decisions early on
• Leverage strengths, reward behaviors
• Drive desired behaviors in rapid waves
• Deliver synergies, create shareholder
value

115. 115
Alignment
vs
Integration
In M&A you are gaining employees who bring
with them an entirely different set of beliefs and
values than your existing workforce. Either those
people’s former culture will come together with
yours and there can be actualized alignment, or it
will clash. The real task of aligning the culture of
two companies’ centers on a thoughtful and
thorough analysis of the people you are
acquiring.
There are multiple approaches applied during
integration. They vary by situation and
transaction type, so it is important to understand
key steps involved in each approach, when to
apply them and how to minimize risks by
maximizing transaction value.
• Traditional linear approach – typically
applied on large consolidation mergers, merger
of equals with multiple sub-cultures (e.g.,
functional, geographic, etc.); moderate pace, less
upfront risk and slower results
• Wargaming – deployed when little to no lack of
culture due diligence; few decision makers and
personality driven dependencies; compelling
need to overcome most evident barriers or
navigate around them; slower pace, moderate risk
upfront and moderate time until results
Cultural assessment
Transaction type
TRADITIONAL
LINEAR
APPROACH
WARGAMING
PROGRESSIVE
UNCONVENTIONAL
APPROACH
• Progressive unconventional approach –
focuses on creating a “new way” together , new
business model or capability acquisitions; more
concentrated on leaders, strengths-based
teamwork; faster pace, more risk upfront and
faster results

116. 116
Acculturation
Acculturation – the changes introduced in two
cultural systems as a result of the contact
between them and of the diffusion of cultural
elements in both directions.
• Assimilation – when members of the
acquired organization willingly relinquish their
existing culture, adopt and become absorbed
into the culture of the acquirer or dominant
merger partner, they assimilate
• Integration – (ideally) there are interaction
and adaptation between the two cultures,
which result in the evolvement of a new
culture which represents the best of each
culture
• Deculturation – when members of the
acquired organization are dissatisfied with
their existing culture, but unconvinced as to
the attractiveness of the other culture,
deculturation occurs
• Separation – when members of the acquired
organization resist any attempt to assimilate
or adapt to the culture of the acquirer
Perceivedattractivenessofotherculture
Perceived attractiveness of own culture
ASSIMILATION
potentially smooth
transition
INTEGRATION
culture collision
vs
satisfactory integration
DECULTURATION
alienation
SEPARATION
culture collision
vs
satisfactory tolerance
(multiculturalism)
lowhigh
low high

117. 117
Regardless of the cultural fit, all M&As will involve
some conflict and turbulence during a necessary
process of acculturation:
• Conflict Stage – while the two companies try to
overcome their difficulties, each, depending on the
merger type, the amount of contact each has with
the other, and its cultural strength, will compete for
resources and try to protect its turf and cultural
norms.
• Adaptation Stage – conflict between the two
organizations will eventually be resolved either
positively or negatively. In a positive adaptation,
agreement will be reached concerning operational
and cultural elements that will be preserved and
those which will be changed. In a negative
adaptation, the conflict will be manifested as
employee dissatisfaction and high turnover rates,
which could result in operational under-
performance.
Acculturation is described in
theoretical terms when there
is a requirement for change in
one or both companies:
• Cultural pluralism,
in which the partners
coexist;
• Cultural integration,
in which the partner
companies blend current
cultures together;
• Cultural assimilation,
in which one company
absorbs the other one;
and
• Cultural transformation,
in which the partner
companies abandon key
elements of their current
cultures and adopt new
values and norms.

118. 118
Culture integration team
• Typically, merging organizations deploy ‘Clean Teams’ in
traditional areas of due diligence and integration planning,
such as finance, operations, HR. But clean teams can add
significant value outside of traditional boundaries, as for
instance, a way to address the cultural differences that often
hobble integration.
• A clean team can provide the earliest window on identifying
cultural differences, determining how those differences
could affect integration, and developing plans for
accommodating them. The sooner merging organizations
can get a grip on the dimensions of culture, educate their
leaders about each others beliefs and ways of working, and
create a shared vision of the future environment, the greater
the likelihood of success.
• Before deploying a clean team, the organizations must
consider several issues:
• ‘Clean Room’ environment
• ‘Clean Team’ structure
• Staffing
• Operating rules and reporting relationships
Start with the business case; don’t start with the
differences. Focus on sharing rather than differing. The
process of jointly defined mission is more effective than
focusing on differences.
• The term clean team originated
in the health and computer
sciences fields, where a
designated work environment –
a clean room – is sealed off to
prevent contamination.
• In an M&A context,
contamination refers to the
disclosure of specific,
confidential information that
could affect competition
between involved companies
during the pre-closing period,
or in the event the transaction
falls through. They can be third
party teams.
When not to go for Clean Team:
• If the size of the merger is too
small
• If the risk is very low compared
to the cost of forming a clean
team
• There can be crucial business
reasons to avoid disclosing
data to clean team
• Trade off between cost, risk and
interests

119. 119
Leadership
• Acquisitions generally don’t fail
because of bad intentions or
insufficient plans. If they fail, they
mostly do so, because of the way
their leaders and management
behave – the choices they make, the
way they solve problems, the way in
which they (fail to) cooperate. In short:
because of the culture.
• Cultures begin with a leader imposing
his own values and assumptions on a
group.
• During periods of transition and
disruption, employees look first to
leaders for guidance about how to
react and behave, for motivation, and
for focus.
• When employees are convinced that
leaders genuinely do care about them,
they become more open and willing to
make necessary transitions. Leaders set
the priorities and create the positive
business momentum and discipline
required during M&As.
Roles of leader
• Cultural understanding is essential for a
leader – try to understand culture, give it
its due, and ask yourself how well you
can begin to understand the culture in
which you are embedded.
• As the environment changes and some
of the assumptions are no longer valid,
leadership begins to evolve and must
create processes that are more adaptive.
• Provides guidance as members share the
common assumption of being
dependent on the leader.
• Helps group fusion by encouraging team
participation and contribution.
• Decodes cultural signals in order that
cultural misinterpretations not interrupt
the normal flow of work.
• Proposes initial responses to the
emerging group’s questions about how
to operate internally and externally.

120. 120
• Impatience - most leaders underestimate the time it takes to
shift organizational culture – they start cultural change process
with structural reorganization to symbolize their intent, but as
soon as cultural resistance looms, they lose heart and give up
before the cultural change has gathered its own momentum.
• The effect of conflicts within the senior leadership group - they
spark off a range of confused and counter-productive feelings
and behaviors of subordinates (‘organizational schizophrenia’ ).
Leader’s cultural challenges
• Rivalries, fiefdoms and silos - existing internal tensions between units and/or departments can
be aggravated by an acquisition.
• Preaching the new but rewarding the old - people assume that they need not take cultural
change seriously, and so continue with ‘business as usual’.
• Organizational disappointment - changes start by raising hope, however, outcome of not being
able to live up to the expectations created by this hope is disillusionment.
• Plans for change are too static and inflexible - change plans are static, designed to meet
immediate needs, and unable to respond quickly enough to the changing strategic and political
context.
• Blind faith in a formula - any prescription that advocates a formulaic (step-by-step) approach
without recognizing the complexity of organizational behavior and the uniqueness of each
organization is destined to failure.
Leadership factors
• Perception of leadership
during change
• Leadership style
• Communication
• Transparency and trust
• Respect for authority of
leaders

121. “The only thing of real importance that leaders do is to create and manage
culture. If you do not manage culture, it manages you, and you may not
even be aware of the extent to which this is happening.” // Edgar Schein