Reference no: EM13233724

Case study:

Building a common culture: The case of BHP Billiton

The merger in 2000 of BHP in Australia and Billiton of South Africa, although headquartered in London, as not undertaken because the organisations were similar. It took place in order to build scale and financial size, linking BHP's profitable long life and established assets with Billiton's more growth oriented projects. Although they were both mining companies, the cultures of the two companies were very dissimilar. BHP reflected the Australian cultural traits of openness, mateship and questioning authority. Billiton, although previously owned by Shell, reflected its South African heritage. It had a reputation for being strictly hierarchical, with a culture that demanded respect for authority. There was little openness, a lack of exposure to outside criticism, and almost no experience of confrontational unions. Senior management at Billiton consisted of a small coterie of hard - driving men who worked autonomously. BHP's senior management was more consultative, calculative and methodical in style and used to working under a strong board of directors.

This indicates a further reason for the merger and that was to access the talents of Billiton's management team. It was felt that the style and aggression of Billiton's managers would shake up BHP's more staid management style and lead the combined company on a path to past growth.

Merging the cultures was never going to be easy. It was complicated by the nature of the CEO's role. Initially, Paul Anderson, the American boss of BHP, was chief executive, but he was replaced in 2002 by Brian Gilbertson, the chief executive of Billiton. Seen as a talented opportunist, Gilbertson has risen to success mainly through takeovers. The rest of the senior management team were mainly Gilbertson's colleagues from Billiton days. To assist in merging the cultures at the operating levels of the company BHP Billiton adopted a process known as 'feathering'. This involved alternating the placement of former BHP and Billiton staff throughout its organisational structure in an attempt to break down old company allegiances. Early emphasis was given to quickly combining key HRM processes, such as remuneration and performance management. Integration teams consisting of managers from each company were formed very soon after the merger. They were encouraged to abandon preconceived ways and to consider only what was good for BHP Billiton. Integration was assisted to a certain extent by structural changes accompanying the merger. Both companies had designed their structures around their mining operations. But after the merger the focus was changed to the customer, and business were built around customer groupings.

However, the culture clashes in the executive suite far outweighed those at the operating level. Brian Gilbertson was an aggressive and ambitious executive who wanted to double BHP Billiton's size in a short time. This could not be achieved by organic growth; it had to come through acquisition. Gilbertson was always on a plane trying to do deals, but he failed to keep the BHP board informed of his actions and confided more in his close Billiton colleagues...

Questions 1:

Define corporate culture and give examples. What does the case tell you about how cultures originate and are sustained? Drawing upon the case, discuss why is there likely to be a high turnover of managers during and immediately after the integration? Why are culture clashes apparent in this case likely to be resolved by one group leaving the organisation?

Source: Adapted from Robbins, S.P. & Barnwell, N. (2006). Organisation theory: Concepts and cases (5th ed.). French's Forest,