Las Vegas Casino: Culture Integration

In the gaming industry, consolidation has become an increasingly important strategy for building scale, improving distribution and leveraging unique marketing and service capabilities.

Following a succession of relatively small acquisitions, the Las Vegas-based casino set its sights on merging with a prominent casino in a US$9.4 billion deal that would nearly double the company's geographic reach and expand its customer database from 28 million to 40 million names. The merger would allow the company to leapfrog over other recently merged organizations to become the world's largest gaming company. The company also stood to generate significant revenue gains by developing synergies such as expansion of its successful customer loyalty program to the acquired casino.

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Despite the revenue potential, the merger faced a looming obstacle from the moment it was announced. It was well known that both companies operated under vastly different corporate cultures.

The acquiring company's senior management saw the importance of mitigating cultural issues before the merger closed—identifying the key differences in culture within both organizations that posed integration risks and using that information to guide crucial decisions. By gaining quantifiable evidence of culture differences and the potential business impact, the acquiring company could take the necessary management steps to ensure a smooth and swift cultural and operational integration. The company also sought a means of measuring how the organization adapted to the merger over time, as a way of obtaining continual feedback on the merger, tracking performance and understanding the critical ongoing issues facing employees.

Five months before the anticipated merger close date, Accenture conducted a survey among more than 9,000 managers throughout the acquiring company and the acquisition company. The 122-item survey, based on Accenture's proprietary Culture Value Assessment methodology, was aimed at evaluating the existing cultures at both companies.

Following an unprecedented 80 percent response rate, Accenture synthesized the data, collapsing it into a company index to help identify how far each of the acquisition company properties were from the acquiring company's norm. Among other elements, the survey rated each property according to capacity, change and attrition risks. This allowed Accenture to identify the top five differences between the two organization cultures and the important steps then to take in facilitating the integration. It also helped identify which properties to focus on first when creating the integration plan.

As a result of the analysis, the company decided communications should be more frequent—especially pre-merger close—in order that associates from the acquisition company could feel included and informed as quickly as possible. The acquiring casino also laid the groundwork for rolling out supervisory training immediately following the close. The findings helped the company's management identify and prioritize that training more appropriately. Early intervention has also helped the company keep on track in managing organizational issues around compensation and benefits, a traditional impediment to cultural integration in an acquisition. Lastly, the company's well-regarded customer satisfaction analytics program has been fully leveraged throughout the combined organization with resulting improvements already being captured among the properties.

The mammoth merging of the two companies could have become an unwieldy organizational nightmare. Instead, by teaming with Accenture, the merger and subsequent integration went much more smoothly than was anticipated, requiring minimal operational adjustments.

As a result of the successful merger, the company now has an unrivaled platform for future growth. The company achieved US$118 million in additional property EBITDA (earnings before interest, taxes, depreciation and amortization) during the first year.

To accelerate those synergies, the company acted on—and continues to act on—the findings and recommendations of Accenture's cultural assessment coupled with the overall integration plan that was developed, pre-close. The company is leveraging similarities and opportunities while also proactively managing identified risks. Such attention to culture issues is an important driver of value in mergers.

Meanwhile, by working with Accenture and its Culture Value Analysis tool, the company has in place a survey and benchmarking mechanism for measuring the merger's effectiveness in the future. This gives the company an efficient method for quickly identifying and resolving any looming human performance or organizational issues. By teaming with Accenture, the company has not only completed a winning merger of vast proportions, it also has taken a giant step forward in the journey to become a high-performance business.

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