Blog Post

Focus on Your People: Three Ways to Ensure Cultural Fit in a Merger

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In brief: Healthcare organizations that are considering mergers or acquisitions need to address the topic of culture, as lack of attention to this issue has been a factor in the dissolution of many partnerships.

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Cultural fit is often discussed during the due diligence phase of a merger or acquisition and is typically identified as the most critical success factor. But once a hospital-physician or health system alignment is executed, culture tends to become a secondary concern for many organizations.

While culture often takes a back seat to financial concerns and other, weightier matters of strategy, organizations that ignore cultural alignment do so at their peril. Health system partnerships end for a variety of reasons, but cultural differences are frequently cited as being among the top causes of dissolution.

What Is Culture?

It’s a term that has different meanings for different people and organizations. And while there may be no universal definition for culture, it can be taken to include an organization’s expectations, experiences, philosophy, and the values that hold it together. Culture is expressed in interactions within and outside the organization, and is based on shared attitudes, beliefs, and customs. Importantly, an organization’s culture is also demonstrated in the level of its employees’ commitment toward collective objectives.1

The pervasive effects of negative employee sentiment toward a partnership can be difficult to resolve defensively, and are likely to be more successfully addressed as part of a larger, proactive cultural fit strategy.

With that in mind, below are three ways that healthcare organizations can tackle cultural issues head-on—before they become conflicts that can threaten the success of the alignment.

  1. Understand how day-to-day operations affect the staff, and ensure they reflect characteristics of both organizations. During and after an alignment between organizations, there is a focus on how the combined organization will operate and function. Policies and procedures provide the daily activity guidance for employees and represent the foundational operations of an organization. In a merger, policies and procedures also need to merge to reflect the new realities of the combined organization. But when new procedures don’t reflect an organization’s historical procedures, or the rationale for change is not communicated, management and staff may feel overlooked, which can lead to disengagement.
  2. Evaluate the use of partner resources, and choose these resources wisely. When approaching a partnership, departments such as IT may become a shared system service, managed by the system’s infrastructure. Utilizing centralized resources in this way likely has financial benefits for both organizations, but the implications on culture shouldn’t be overlooked. Staff who feel that their support teams are distant, unavailable, and disconnected often feel unsupported by the organization and its resources.
  3. Ensure that leadership teams work together understand the values, mission, and goals of the combined organization. Cultural fit needs to be more than a discussion point during the pre-alignment phase. Establishing shared values between the organization is a critical success factor. In a recent dissolution of an academic/nonacademic organization, physicians expressed that the nonacademic partner organization failed to understand the goals and mission of an academic medical center and a Level I trauma center. This lack of understanding at the leadership level trickled down to staff, who were unclear of the goals and mission of the combined organization.

Benefits of Staff Satisfaction

Fostering a positive cultural fit among partner organizations is more than just a means of safeguarding against a merger’s demise. Changes that come in the wake of a partnership are often felt most acutely by staff, and their satisfaction is critical to the success of the combined organization’s success.

  • Creating a positive culture can help minimize turnover due to dissatisfaction. Reduction in turnover is a win-win for staff and the broader organization, given the potential for immediate savings in labor-related costs and training of new hires.
  • Staff are part of the community the organization serves. If staff are committed to the organization, this perspective will be spread via word of mouth throughout their networks, which is often the service area of the hospital.
  • Staff are typically also patients within the health system. Their positive outlooks may help keep them from seeking care outside the system.

Staff want to be part of a professional culture that understands and recognizes the value of their work. Organizations that recognize this will take steps to ensure that discussions about culture don’t end when a partnership agreement is finalized.