Disregard for history leads to cases like Y&R

Reading about the travails of Young & Rubicam [“The Fall of a Madison Avenue Icon,” July 25] was a sad experience. It is a morality tale of which many businesses should take note. (I have not, by the way, ever had any connection with Y&R.)

I have studied the effects of mergers and acquisitions for years, both as a historian and management consultant. I also was once “caught” in a merger gone wrong many years ago. What I’ve learned is that cultural due diligence is as important as financial due. The WPP press release about the Y&R acquisition stated that they had “a common philosophy and culture.” Clearly, that was not the case. But even if it was, if problems are ignored and swept under the rug, then all the due diligence in the world will not prevent the problems that companies such as Y&R and AOL and Time Warner have faced.

Most mergers and acquisitions, according to many studies, are failures in many aspects, from dropping share price to loss of clients and lowered productivity. The human toll is great, too: While some people cash out, many lose their jobs, and shareholders and retirees lose money. Also, as happened at Y&R, many of those who left for one reason or another had experience and skills and “corporate memory” that cannot be duplicated or replaced for many years, if not decades. Then there is the cost of replacing and training people.

But the biggest problem is the inability of people from each party in a merger or acquisition to work together. Corporate culture comes from a company’s history. It is necessary to know each party’s history and traditions and “corporate memory” and transmit this to the people from each party. The first lesson to learn is that the past has lessons to teach.

Phyllis Barr


Corporate Culture Marketing

New York

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