Terry

We have all heard Stealers Wheel’s song Stuck In The Middle With You. Its sentiments echo the uncertainty middle management feel in any merger, as it’s likely they will bear the brunt of the ‘synergies’ that inevitably follow.

Surprisingly little attention is given to the ‘soft issues’ such as culture and people in merger situations. It’s all about getting the deal done and satisfying shareholders. But beware the perils that await if people issues are not addressed at the start. Research from the Hay Group showed 30% of variance in financial results can be explained by misalignment in organisational culture. And as a McKinsey survey discovered, 92% of executives believed major transformation would have benefited from greater cultural attention.

While Booker and Tesco believe their merger would benefit both sets of customers, with Booker looking to customers for reassurance, instead they would be wise to look internally at the cultural compatibility of the two organisations as part of due diligence. The merger of Chrysler and Mercedes-Benz looked a perfect business fit on paper but the cultural clash ultimately destroyed the marriage.

Tesco and Booker have a great opportunity to create aligned vision, purpose and values. But what are the actions required? First, leadership must define a clear brand positioning and vision. What does this mean from a competitive position, and what is the value we bring to our respective customers? Next, what do we stand for and what is our purpose? What contribution do we make, not only to our investors, but to society as a whole? It’s important to understand the differences between the two cultures, particularly at middle management level, and where the incompatibilities that will hinder integration lie.

Finally, follow the 3 ‘i’ principles of employee engagement - Inform, Involve, Inspire.

Tesco and Booker should also take heed that a lack of purpose, shared vision and employee engagement could one day result in headlines that read: ‘Booker and Tesco fail to consolidate under a common vision through a clash of cultures.’

Terry Tyrrell is worldwide chairman of Brand Union

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