McKinsey Analysis

        This article talks about how McKinsey did to deal with the issue on corporate culture and to asses cultural compatibility.

        First of all, it mentioned that e executives should focus on management practices, and the leadership style is to make employees accountable for their performance and create external relationship. McKinsey regarded culture as management practices and made it tangible and actionable, so that executives could have time to build on cultural assets and mitigate the risks of cultural clash.

        Second, different leaders or CEOs have different views on assessing cultural issues because different beliefs or instincts. For McKinsey’s, the Organizational Health Index (OHI) provides detailed, quantitative analysis of company performance in nine broad management practices that can help establish cultural compatibility. However, OHI needs substantial commitment of time and organizational resources and many companies have problems to complete the full OHI surveys. So, there is another cultural compatibility measurement- outside-in analysis. It uses publicly available information to asses both companies An outside-in analysis can provide clear cultural challenges in leadership, potential conflict in accountability, and strong cultural alignment in external orientation. It is much easier and more brief than OHI surveys. Then, it gives an outside-in analysis of company A and company B to show how it works. Compared the different leadership styles between A and B, which shows that they need proper “interventions” to sustain employee motivation, especially for company A, the patriarchal leadership style. Also, it mentioned the potential conflict between company A and B, which may lower productivity and lose the most valued employees. The outside-in analysis is more concise to see the potential issues or opportunities between two companies.

        Ultimately. it introduces two intervention options. One is standard integration intervention and the other one is tailored culture interventions. For standard integration intervention, it focus more on integration structure and alignment of the top team. Different choices fit different situations and no culture is "right" or "wrong", just giving concrete analysis to concrete problems. For tailored culture interventions, it focus more on changing targeted behaviors. It says that different culture will have different impacts on decision making during integration planning. This intervention takes advantage of outside-in analysis to see the advantages or disadvantages between two companies and then make major decisions based on the analysis.