Daimler Chrysler: Post Merger IssuesMergers of EqualsDaimler Chrysler is a case of a failed merger between two successful companies even though on paper it might be termed as Mergers of Equals. Because none of the firms was acquired by the other and a new company was formed, it was considered a merger of equals. But practically it did not prove to be a merger of equals. Following points explain why the merger between Daimler and Chrysler never worked out in real sense:- There were lot of cultural issues which were not taken care in the due diligence process of Mergers

DaimlerChrysler

Decision makingMethodical Encouraged Creativity

ValuesAuthority, Bureaucracy andCentralized decision making.Efficiency, Empowerment, Equal rights

Compensation StructureLow salariesGenerous pay packages- twice of Daimler

Working methodsLot of red tapeLong reports and discussionsNo red tapeMinimum reports

Organizational StructurePronounced hierarchies Top-down-managementFlat hierarchies

Approach to solutionDetailed plans and implementationShoot then Aim

Leadership Effectiveness There was lack of management control between the two companies. A lot of executives left Chrysler post-merger that lead to management of Daimler having an upper hand in resolution of issues. A concerted approach could be, to have theleaderspartner to ensure adequate span of management control between the two companies to avoid the wrong message sent out to the employee base. Chryslers leadership should have not taken the back seat in the newly merged company Communications The cultural issues as well as the uncertainty within the workforce due to the merger could have been reduced through proper communication. Daimler-Chrysler should have taken the necessary steps to communicate and train people on the new communication styles (German vs. American) that were to be used going forward. An iteratively deployed and adaptive process would have made more sense than to trying either to keep the autonomy or to force one very different culture upon another. The company should have created a transition team that is specifically focused on determining the communication gaps that exist between each company hence easing out the process of change management. In the centralized-decentralized structure that they instituted, Schrempp should have cut headcount on the management layer, and removed more of the bureaucracy and red tape, rather than adding to it.Manpower reduction always consisted of the workforce and not the management. Retention Another post-merger issue was top management turnover. Retention efforts should have been made especially to retain top leadership of the Chrysler. Schrempp could have mitigated the retention issues by taking better steps to enact a retention plan which could have included elements such as stay pay and a new bonus strategy (retention bonus), based on milestones of the merger. Designing a mentoring program for all employees would have helped solve issues related to attrition. Develop a formal plan or roadmap, to get to where DaimlerChrysler needs to be Reward systems of each legacy company should beexamined pre-mergerto determine areas where significant gaps or potential areas of conflict may occur.

If these change management process had been proactively taken then it would have created the required synergy between the two companies and the problem wouldnt have arisen.