Mergers and alliances: Check your culture at the door
So often, you find yourself asking why things transpire they way they do in your organization and 9 times out of ten, you can point to culture. No, we’re not discussing pop culture or arts and culture. This culture is the underlying and invisible fabric of how your nonprofit behaves, what the underlying assumptions are and what the organization values. Thankfully, we all are given a free pass on striving for a perfect culture because the truth is, there is no perfect culture. With perfectionism out the way, we can go about factoring organizational culture into one of the more important roles it has to play, which is in an alliance or merger.
With our Page to Practice feature of The Nonprofit Organizational Culture Guide this summer, we learned about the importance of organizational culture and how pervasive it is with everything you do as a nonprofit leader—from hiring decisions and board training to marketing and strategic planning, organizational culture, as the authors Teegarden, Hinden and Sturm say, “reveals hidden truths that impact performance.”
That’s why it comes as no surprise that our currently featured author, Tom McLaughlin, spends some time in his book, Nonprofit Mergers & Alliances, on the importance of taking a “culture check” as one of the preliminary steps for considering collaboration. “Culture is stronger than strategy, so it is crucial to understand and be comfortable with a potential partner’s organizational culture,” says McLaughlin.
He further adds that since people take action and demonstrate behavior every day using underlying values, blended cultures translates into blended value systems that don’t always complement one another. In fact, 75 percent of hospital mergers fail if cultural issues are not taken into consideration, according to McLaughlin.
Ultimately, “one of the most reliable rules of thumb for post merger implementation is that the tighter culture always prevails,” says Tom, and the larger organization doesn’t automatically dominate, nor will the loudest or flashiest. So, how do we go about identifying one another’s culture before engaging formally in an alliance? McLaughlin has provided a list of good places to look for evidence of nonprofit culture that we reviewed at the beginning of the month:
- Composition of board and management team
- Degree of centralization versus decentralization
- Demographics of clients
- Demographics of staff
- Financial investment policies
- Financial performance
- Geographic location
- Management compensation policies
- Marketing materials
- Number and type of management meetings
- Number of board meetings per year
- Philosophy regarding staff turnover
- Process for recruiting and selecting new board members
- Requirements of major funding sources
- Size of board
- Size of management team (especially versus comparable nonprofits)
- Unwritten/unspoken hiring preferences
Not every item on the list will yield insight and some will produce contradicting impressions. However, if taken together, these areas can help you create a composite of your potential partner’s culture.