South-Western - Management  
Better Management, Not Better Organization Charts
Topic Internal Environment and Culture
InfoTrac Reference A142730306
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Key Words Organizational cultures, culture change, synergies
Introduction Merging organizations into giant conglomerates has become a standard American business practice. Designed to capitalize on synergies and change cultures, experience has shown that company cultures tend to stay the same even when an organization chart is merged with another culture's.
News Story

Merging organizations with the goal of increasing efficiencies and then pulling the organizations apart when the synergies don't materialize has become a standard American business practice. When Time Warner and AOL came together in January of 2000, the merger was seen as stunning and brilliant, a combination of the world's top media company with the world's top Internet service provider. The match seemed destined for greatness. Similarly, when the Department of Homeland Security was created in January of 2003, the consolidation was hailed as historic. The merger brought 22 federal agencies together into one single giant agency with 170,000 employees.

Brilliant merger ideas on paper are one thing. In reality, organizations have the tendency to stay the same whether they are merged into bigger companies or not. It can take decades for organizational culture change to occur. Recruitment, pay, and IT systems need to harmonize, top executives need to sort out issues of status and power and old organizational missions need time to adapt to being part of larger missions.

In the case of Time Warner and AOL, the cultures never merged at all. The Department of Homeland Security still has distinct cultures with its framework like the Secret Service and FEMA. Just moving the boxes on an organization chart does little to solve the problems of managing the areas better and finding ways to help various divisions work together with more efficiency.


What are the three levels of organizational culture and how are these levels observed?


Why have mergers like the AOL/Time Warner and the Homeland Security conglomeration that made so much sense on paper failed in execution?


How can organizational culture truly be changed?

Source "Better Management, Not Better Organization Charts," Workforce Management,April, 2005, page 37.
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