The two major hospitals, Sint Franciscus Gasthuis and Vlietland Hospital, merged in 2015 (six locations, over 4,500 employees, 250 doctors, 28,000 operations, 550,000 outpatient visits) in the challenging context of metropolitan Rotterdam-Rijnmond. From a values survey among employees, 'understanding' emerged as the most desired value for the new merged organization. The ambition was for the new Franciscus to become the most understanding hospital in Greater Rotterdam, focusing on the person behind the medical complaint in a time when healthcare had become more rigid. This led to the concept ‘Because we understand that...’ This concept was internally translated into (moving) images, and members of the Board of Directors first visited all departments with it. It turned out that employees were indeed very proud of the concept and the specially made video, which went viral quite quickly. Subsequently, training and coaching programs were set up: how do we ensure more understanding for each other, for the patient, and their loved ones? Even in recruitment campaigns for new staff, they were no longer just looking for a doctor or a nurse but for colleagues who 'understand that...'. After seven years, this – quite literally – guiding principle in the form of the ambition value ‘understanding’ is still very much alive. The three-minute film can be viewed here: https://youtu.be/m47ezdZLOwA The essence of the famous quote by management guru Peter Drucker ‘Culture eats strategy for breakfast’ applies particularly to a growth strategy through mergers or acquisitions. Developing a single company culture is already challenging, but when two or more cultures have to come together, it becomes even more complex. Culture eats strategy for breakfast, operational excellence for lunch, and everything else for dinner. The question is why it often goes wrong in practice, and the merger leads to conflicts with employees. Some causes with open doors for improvement:

‘Corporate culture is the sum of all values and beliefs in an organization that determine how (well) we collaborate with each other’

A merger or acquisition is a process and starts with determining a target company. People mainly look at turnover, customers, services, or marketing power. Culture (mis)match is rarely one of the selection criteria and almost never a reason to cancel a deal.

• Then a due diligence (literally appropriate caution) is carried out by accountants and lawyers. Experts knowledgeable about culture are not involved. A cultural due diligence is missing because the assumption is that culture cannot really be measured.

• Later in the process, an increasingly uncertain, complex, and ambiguous environment arises for employees. Fear of the unknown paralyzes the organization, while the workload increases.

• The investment needs to be recouped as quickly as possible. Financial pressure also increases, and costs are closely monitored. There is no money for the human side.

• Time and money are primarily focused on the visible aspects such as optimization of processes and systems, merging offices, or harmonizing employment conditions. However, cultural problems from the invisible aspects become increasingly visible and harder to solve. The damage has already been done.

• Culture development and integration are seen as a small HR project that is allocated (too) little budget and usually starts too late. For employees, the short information sessions feel like a take-it-or-leave-it situation. Everything has already been decided, after all, and they weren't asked beforehand what they find important. They resist or leave the organization, with the best employees often being the first to go.

• There is much struggle with when, to whom, and especially how to communicate. However, the rumor mill does not stop. Managers lack change management skills such as proactive communication, showing understanding, appreciation, and increasing trust.

Measuring Culture

Measuring is knowing, and it's known that things we measure tend to improve. This also applies to what you focus on in a corporate culture. But how do we make culture measurable? First, a definition. According to Richard Barrett (founder of ValuesCentre.com in the USA, a worldwide authority in this area), corporate culture is: the sum of all values and beliefs in an organization that determine how (well) we collaborate with each other. It's very simple: the more shared values, the better people collaborate. Values such as honesty, quality, innovation, or independence are intrinsic drivers for our ambitions and aspirations. All behavior is therefore values-driven. Values are universal; for Western Europe, the ValuesCentre uses a set of only 80 values that can describe all our behavior. A Culture Values Assessment (CVO) measures which values employees find important and how you can intrinsically motivate them, among other things, by linking personal values to (desired) corporate values. In the end, you can quickly create consensus in very large organizations about what is important and get everyone on board more easily.

How does it work? In a CVO, all employees answer just three questions online, and it’s quick and easy to conduct. The output of the CVO is a Top Ten of most chosen values for both personal, current corporate values and desired corporate values (for the new merged organization). These are therefore bottom-up gathered, most shared values. With this priorities list, the management team must now start working top-down. Preferably, one ambition value is distilled from the Top Ten. This is the merger value or the key to success for the merger. Trust increases because everyone’s voice is heard, and a single, clear, ambitious guiding principle is chosen.

Jack Vos: ‘Positive impact on return.’

With the CVO, you also measure which values are potentially limiting. These are values perceived by employees in the invisible aspects, such as silos, miscommunication, short-term focus, cost reduction, hierarchy, etc., that can significantly hinder the merger. People feel this in the form of friction or frustration, but now it is explicitly measured. The sum of these potentially limiting values forms a percentage known as cultural entropy. Benchmarks are available for this. Cultural entropy during a merger/acquisition quickly rises to about 30 percent on average. For the CFO - usually not the one involved in culture - it means that 30 percent of wage costs are spent on behavior that does not contribute to the goals of the (new) company. The measured impact of culture is thus translated into euros. Cultural entropy also indicates the upward potential of the corporate culture: to what extent can we do more with the same people (instead of hiring new people).

'Culture in an organization is indeed measurable'

Culture and Communication

With the CVO, objective conclusions can be drawn about differences in culture, strengths, weaknesses, opportunities, and threats – if desired, for each department. This is the input for a combined culture and communication program. Culture involves targeted interventions in the invisible aspects, determined together with HR. What skills, competences, and resources are needed in line with the ambition value, and how and where do we reduce cultural entropy? This program usually starts with introducing the teams of the separate organizations to each other, using the CVO output as a discussion piece. A dialogue about the shared values immediately creates connection. Leadership development is essential, as well as CEO sponsorship. Simultaneously, a thoughtful concept with appealing and distinctive visuals around the ambition value is created together with the marketing/communications department. The concept is translated internally and externally into visuals, media, and resources. It becomes the common thread for all communication and even determines the office design.

Culture is Never ‘Complete’

Experience shows that people with 'harder' rational values like result-orientation, organizational growth, profit, or shareholder value usually lead (and take charge) during a merger/acquisition. They see the importance of culture less. Especially in the short term, people with 'softer' relational values like customer satisfaction, trust, or loyalty are overshadowed. However, these relational values are very important for the long term, especially for companies in business services. By making culture measurable and translating it into impact in euros, it becomes easier to make rational people in the organization aware that perhaps more time and budget are needed to develop one shared, effective corporate culture. This is not a project but a process that is never complete and requires a lot of patience. Of course, one can decide not to (intentionally) develop the corporate culture. Unfortunately, a culture will still develop and usually not in the desired direction. With the major risk of demotivated employees and, very annoyingly, dissatisfied customers.

Jack Vos is a certified culture engineer with extensive experience in guiding companies in the area of culture.

Source: this article originally appeared in VVP, read here the online article.