Cementing an alliance

by Terence MacNamee

A while ago Bloomberg ran a story about the upcoming merger of cement giants Lafarge and Holcim under the headline “Lafarge-Holcim Success Hinges on Bosses Bridging Culture Gap“. It was not apparent right away what kind of culture was being talked about. But it turned out that the story was not focussed on national cultures or even corporate cultures, but actually leadership styles. Lafarge’s Bruno Lafont and Holcim’s Wolfgang Reitzle are going to divide up the power between them: Reitzle will be chairman and Lafont will be CEO of the new juggernaut, assuming the merger is approved by all the regulators involved. Lafont is supposed to be a man who likes to be in charge and keeps his cards close to his chest, whereas Reitzle is more a delegator. “Lafarge is all about command and control,” the article quoted one industry analyst. “Holcim is about delegating to the regions.”

Yet should we not being talking about other kinds of culture too? Today high-profile mergers and acquisitions are usually international, and involve power bases in two or more countries. Obviously national culture is important here. Lafarge is a French company and Lafont is a Frenchman, while Holcim is a German-Swiss company and Reitzle is a German.

Another industry commentator, Christian Stadler, picked up on this aspect in a recent article on Swissinfo. He noted that the division of the new corporation’s HQ functions between Paris and Zurich may have pleased the governments involved, but that it was likely to lead to “turf wars”. Warning of the destructive potential of a “clash of cultures”, he recalled that “when Daimler and Chrysler merged, the Germans were used to setting a target and working towards it, while the Americans made adjustments along the way. From the German perspective, the impression was that Chrysler never stuck to a plan, while from an American perspective the impression was that Daimler stuck to a plan even when it no longer made sense.”

National culture interplays with corporate culture, which includes leadership styles. As was pointed out long ago by Edgar Schein, companies seem to develop a culture of their own, analogous to national cultures. Obviously it is not as all-pervasive and unconscious as a national culture, but it does have the same features: perceptions and assumptions (the way a group of people see the world), values and norms (what is valued and how people are expected to behave in that group), and artefacts (not only what the company makes but what sort of structures it has – from buildings to organization charts). Employees all conform to the culture, even though a lot of it may be implicit, not explicit.

Again, corporate culture, while it interacts with national culture (all French companies have a French way of doing things), also has lot to do with what might be called industry culture. Cement manufacturers are bound to have a certain amount in common, just because they make the same product for the same kind of customers.

In the case of this Lafarge-Holcim merger, it would be an intriguing study to sort out what is going on a different levels. My guess is that national culture, although a background phenomenon to the feverish excitement of M&A, will be the biggest challenge – because national culture is just about eternal, whereas corporate culture lives only as long as the corporation does, and as for CEOs, well, they come and go.