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M&A Culture Transition: Size and Power Difference

Following an M&A deal, you may find that the power structure of the acquired company is very different from the power structure of your own company.

Geert Hofstede is a Dutch researcher who uses the term power distance to describe how members of a society interact with their bosses. (If you’re not familiar with Hofstede’s work, you should check it out.)

In cultures with a small power distance, subordinates respect the boss but also voice their opinions, which often disagree with the boss’s. Subordinates in cultures with a large power distance tend to view the boss as unfaltering and all-knowing; as a result, underlings rarely if ever speak up and give their opinions, especially if those opinions contradict the boss’s opinion. They just assume the boss knows everything.

As Buyer, you have to be aware of both your and your new employees’ views of power difference; otherwise, you run the risk of creating confusion or misunderstanding. For example, there was once a bunch of retail stores, one of which had a problem with two employees who were frequently at odds.

The store manager said that the two employees in question “hated each other” and constantly fought. When asked asked why she scheduled them on the same shift, she told the boss, “You never said anything, so I thought it was okay.”

Her comment made our differing views of power distance readily apparent. The owner grew up and spent most of his adult life in Chicago, so he assumed his subordinate would tell him of a problem, or better still, take charge and make the executive decision to not schedule the fighters on the same shifts.

This store was located in rural Georgia. Due to her cultural upbringing, the manager viewed the boss as an all-knowing entity who obviously knew of the problem; because he never said anything, “it was okay” to continue to schedule the fighters on the same shift.

Study the cultural biases and approaches of your new partner. You may have to ask exacting questions in order to get to the heart of the matter. Due to cultural differences, a subordinate may just assume you already know all about a situation and therefore may not tell you the full or accurate truth.

You can use power distance to your advantage. If you suspect a problem (and you don’t mind putting on a Machiavellian hat), you may be surprised at what comes out after you simply state, “I know what’s going on, so just tell me.”

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