Edinburgh Napier University

  Mergers are a fact of life in the private sector and are increasingly becoming a factor in the public sector. Organisations seek to merge in order to survive or grow by accruing benefits of scale, better or cheaper access to resources or by overcoming barriers to entry into existing or new markets. Financial shocks can play a part in increasing merger activity (Andrade et al., 2001; Harford, 2004) and the tertiary education sector in Scotland has witnessed a number of mergers in the last two decades, the most recent of which have been at least in part driven by the need to reduce public expenditure.
This study considered the guidance afforded to tertiary education institutions in Scotland and highlighted the paucity of support offered in the important area of bringing human resources (of potentially disparate organisations) together in a merger situation. The cultures of organisations were a primary focus, since they are the embodiment of the assumptions, values and behaviours which form the ‘soul’ of an organisation. The study acknowledged the prevalence of financial and legal due diligence in the pre-merger phase, arguing that there should also be an explicit consideration of 'cultural due diligence' (CDD).
An exploratory case study method was used to examine whether cultural aspects were investigated in a particular merger involving two Scottish colleges. A number of respondents, drawn from the governance, executive,
management and supervisory strata were interviewed in order to ascertain the level to which cultural issues had been addressed at the pre- and post-merger stages.
The research identified some activity pertaining to culture identification in the pre-merger stage but found little evidence that values and behaviours had been a specific focus, thereby suggesting that detailed cultural issues were not a priority at that stage in the process. The post-merger phase was characterised by a breakdown in interaction between the college executive and the remainder of the organisation precisely at a time where increased leadership and communications and the rebuilding of trust were called for.
Based on the research findings, CDD is explicitly defined and a set of principles to guide the conduct of a CDD exercise are offered as a contribution to existing practice. Enhancements to the existing merger guidance are made relating to CDD, continuous monitoring of progress towards a new culture by both governors and the executive and the selection and profile of leaders in a merger. Finally, a number of suggestions for future research are made in support of the premise that organisational culture and CDD in particular are important elements of any merger.