Reorganizing DNA: How to Unify Diverse Corporate Cultures Post-Acquisition

Jan 24, 2019

According to a recent Standard & Poor’s report titled “U.S. Equity Investment Outlook,” companies will be less focused on spending time and money on organic growth and more focused on increasing market share via merger and acquisition (M&A) activity. However, no matter the quality of the deal, success isn’t always guaranteed.

Most senior leaders tend to only analyze the financial aspects of an M&A deal. They often fail to recognize how important culture is to the success of managing a business. In fact, a recent Mercer and Kroll study, “M&A Beyond Borders,” revealed that 50% of executives believe that organizational cultural differences are the cause of failure in an M&A. This attribution to failure is somehwat understandable; it can be challenging to successfully bring together and integrate separate and distinct corporate cultures to ensure a united organization and workforce.

In order for M&As to thrive, leaders need to realize the fundamental value that corporate culture has on their success.

Going through a merger or acquisition, you must put a strategy in place to define your culture and unify your workforce without jeopardizing the value of the business that was acquired. There are a series of steps and strategies the leadership team should undertake that include assessing the problem, identifying goals, communicating, utilizing assets and building accountability and trust.

Assess All Entities Involved

First and foremost, the team in charge of leading the transition needs to understand the operations and culture of the acquired business from inside out. But that’s not enough. Your change management team needs to identify and understand not only the culture of the acquired company but that of the company doing the acquiring. This cultural assessment must identify any prevalent gaps in the way the two entities operate; including geographic customs, cultural differences, labor practices, and organizational structure.

After gathering this information, the managers must identify the best traits of each company’s culture, and how to integrate these values and behaviors in the new company’s vision.

Identify and Define Your End Goals

Once you have identified the strengths and weaknesses of each company involved in the transition, it is critical that everyone is on the same page in terms of the future direction of the combined business. Defining outcome goals is a very important step to take before any process and procedures are set up for the transition. These goals should address financial and nonfinancial issues, human resources, and overall culture. Once the picture is clear, the team should develop an action plan outlining steps to achieve these objectives, including timelines, deadlines, and metrics. Commitment is key and follow through is of utmost importance.

Communicate Early, Communicate Often

Once the overarching plan and goals have been solidified, communication is next on the agenda. Companies need to be prepared to address pre-merger, day-of, and post-merger strategy, using multiple communication vehicles such as town hall meetings and other face to face forums, written announcements, FAQs and talking points to arm managers with the information they need, and electronic vehicles like webcasts and conference calls. Consistency with messaging is critical as you build this new company. The development of tangible tools, such as FAQs, a helpline, or even an open-door policy, will help show employees that you understand their concerns and are there to help along the way.

These tools should address any apprehension staff may have with HR issues, benefits, retirement, vacation, titles, and pay. It is of utmost importance that your teams and new co-workers strategically understand why the acquisition makes sense from an overall business strategy perspective.

Use Your Team

The people at your merged company can help you successfully navigate a transition.

Companies should form small, agile teams that include people from both companies, and a clear mission to ensure that detailed integration plans will be executed. This will provide teams with accountability and expected metrics. Moreover, consider linking compensation to achievement of integration goals, to ensure that everyone is aligned with deadlines and outcomes. Finally, hold a post-mortem after events are complete to discuss what worked, what didn’t work, and what the teams should do differently in future.

Build Trust, Build a Unified Culture

Keep in mind your audience. You will want to make sure that all employees involved, from entry-level to senior management, trust that your plan and suggested route of transition not only reflect what is best for the business as a whole but also for the employees. Through open and honest communication, you can build trust, and people will be more inclined to accept new ideas and protocols. Companies need to commit to the defined culture they desire, ensure leaders model this behavior, and use staff to guarantee success.

Embarking on a journey to unify diverse corporate cultures post-acquisition is not easy. However, through open communication, accountability, and trust, companies can successfully integrate the best of what each party offers, giving them a more successful business model, dedicated staff, and focused management team. The sum of all parts working cohesively together is larger than that of the whole, and the value of integration is paramount to the success of a business.