Culture is liability when the shared values are not in agreement with those that will further the organizations’ effectiveness. This is most likely to occur when an organization’s environment is dynamic. When an environment is undergoing rapid change, an organization’s entrenched culture may no longer be appropriate. So consistency of behavior is an asset to an organization when it faces a stable environment. It may, however burden the organization and make it difficult to respond to changes in the environment. This helps to explain the challenges that executives at organizations like Mitsubisihi, Eastman Kodak, Boeing and the US Federal Bureau of investigation have had in recent years in adapting to upheavals in their environment. These organizations have strong cultures that worked well for them in the past. But these strong culture become barriers to change when business as usual is no longer effective.
Barriers to Diversity: Hiring new employees who, because of race, age, gender, disability or other differences are not like the majority of the organization’s members creates a paradox. Management wants new employees to accept the organizations core cultural values .Otherwise these employees are unlikely to fit in or be accepted. But at the same time, management wants to openly acknowledge and demonstrate support for the differences that these employees bring to the workplace.
Strong cultures put considerable pressure on employees to conform. They limit the range of value and styles that are acceptable. In some instance such as the widely publicized Texco case (which was settled on behalf of 1,400 employees for $176 million) in which senior managers made disparaging remarks about minorities, a strong culture that condones prejudice can even undermine formal corporate diversity policies. Organizations seek out and hire diverse individuals because of the alternative strengths these people bring to the workplace. Yet these diverse behaviors and strengths are likely to diminish in strong cultures as people attempt to fit in. Strong cultures therefore can be liabilities when they effectively eliminate the unique strengths that people of different backgrounds bring to the organization, Moreover strong cultures can also be liabilities when they support institutional bias or become insensitive to people who are different.
Barriers to Acquisitions and Mergers:
Historically the key factors that management looked at in making acquisition or merger decisions were related to financial advantages or product synergy. In recent years, cultural compatibility has become the primary concern. While a favorable financial statement or product line may be the initial attraction of an acquisition candidate, whether the acquisition actually works seems to have more to do with how well the two organizations’ culture match up.
Many acquisitions fail shortly after their consummation. A survey by consultants AT Kearney revealed that 58 percent of mergers failed to reach the value goals set by top managers. The primary cause of failure is conflicting organizational cultures. As one expert commented, Mergers have an unusually high failure rate, and it’s always because of people issues. For instance, the 2001 $1183 billion merger between American Online (AOL) and time Warner was the largest in corporate history. The merger has been a disaster only 2 years later, the stock had fallen an astounding 90 per cent. Culture clash is commonly argued to be one of the causes of AOL and Time Warner’s problems. As one expert noted n some ways the merger of AOL and Time Warner was like the marriage of a teenager to a middle aged banker. The cultures were vastly different. There were open collars and Jeans at AOL. Time Warner was more buttoned-down.