Mergers and Acquisitions (M&A) are often celebrated as strategic moves to scale growth, diversify assets, or tap into new markets. While much attention is paid to the financial and logistical aspects, the role of organizational culture often takes a backseat. Yet, ignoring culture is a risky move. In this article, we delve into why focusing on organizational culture is paramount and offer actionable strategies to make your M&A not just a transaction but a transformation.
Common Roadblocks in M&A Cultural Integration
The Culture Clash
When two companies merge, they each bring unique cultures, values, and operational styles. You may encounter resistance or even clashes when teams have fundamentally different ways of approaching work or solving problems. The key to overcoming this roadblock is not to impose one culture over another but to create a harmonious blend of both.
In the frantic pace of a merger, essential messages can get lost in translation or drowned in a flood of information. Employees may feel like they’re the last to know about major decisions, feeding a toxic atmosphere of rumors and distrust. The way around this roadblock is to create organized, transparent, and two-way communication channels that are active throughout every stage of the merger process.
Change is Scary
Mergers inevitably bring about change, which can be unsettling for many employees. It’s like remodeling a house while you’re still living in it—messy, inconvenient, and filled with uncertainty. Address this head-on. People may become defensive or resistant when they feel their status quo is threatened. Including employees in the transition process can make them feel more secure, as they become active participants rather than passive subjects of change.
Your company’s “Casual Friday” might be another company’s “Why on Earth are you wearing jeans?!” Friday. Melding distinct policies and processes is a challenge. Both companies will have established sets of policies, procedures, and even software tools that are integral to their operations. Attempting to align or integrate these can be like trying to fit a square peg in a round hole. The answer lies in conducting a thorough audit and inviting key stakeholders in the decision-making process to ensure a smoother integration.
Employee morale can tank during mergers. The key to lifting spirits? Transparency and engagement. Humanizing the merger process by acknowledging these feelings and offering a strong support system can help alleviate the emotional weight. Celebrate big and small wins and encourage dialogue to address fears and concerns.
Turning Roadblocks into Stepping Stones
- Define a Shared Purpose and Vision
Creating a unified vision is like sketching out a blueprint before constructing a building. Everyone needs to see and understand the bigger picture. An uncertain merger process becomes less intimidating when the future feels collective, and everyone knows what they’re working towards.
Suppose your organization is known for environmental sustainability, and you’re merging with a company renowned for community outreach. A unified vision could be “Building sustainable communities for a better tomorrow.” This resonates with both organizations’ legacies while providing a new, combined direction.
- Conduct brainstorming sessions led by external facilitators or team leaders to encourage employee engagement. Utilizing tools like Miro or Zoom Whiteboards for digital brainstorming can help employees from both companies feel included, even if they’re remote.
- We’ve found that when leadership is involved in this phase, it increases employee buy-in substantially. Consider strategic planning sessions and leadership offsites to solidify abstract ideas into concrete plans.
- Establish an Employee Listening Strategy
An employee listening strategy is not just a nice-to-have; it’s a business imperative, especially in the context of a merger or acquisition. M&As often create a climate of uncertainty, apprehension, and fear. Employees need to know that their voices are heard and valued. A well-crafted employee listening strategy acts as a feedback loop that can alert you to emerging issues before they escalate into larger, more damaging problems. A study by Harvard Business Review indicates that companies with strong listening cultures have higher levels of employee engagement.
- Consider working with an EX Advisor to map out your organization’s Employee Experience Listening Strategy. The same way you would explore unfamiliar terrain with a map and a good guide, navigating employee experience should involve a well-defined roadmap and expert guidance.
- Regular, confidential employee surveys are one of your key navigational tools to gauge morale and collect crucial insights. An expert can help you design these surveys and analyze the data to provide actionable insights, ensuring that you’re not just gathering information but using it to make meaningful changes.
- Institute monthly or weekly “Office Hours” with leadership team members for a direct communication channel.
- Identify and Align Core Values/Essential Behaviors
Aligning core values during an M&A isn’t just about slapping a new mission statement on the company website. It’s about meshing the DNA of two different companies into a cohesive whole. The challenge here is not to compromise but to harmonize. The updated list should highlight the strengths of both organizations, forming a stronger, united front.
- Hold a Mission, Vision, and Values and/or Essential Behaviors Workshop to collaboratively find the actionable values that could serve as your DNA.
- Celebrate the employees who exemplify these newly merged core values. Whether through an “Employee of the Month” program or spotlight feature, acknowledging and rewarding these behavior patterns helps solidify your new corporate culture.
- Spotlight a “Value of the Month” in company newsletters, encouraging people to integrate this value into their daily work. This keeps everyone aligned and can be a part of your ongoing culture initiatives.
- Develop a Compelling Narrative
A compelling narrative isn’t just for storybooks; it’s the foundation of your newly merged company’s identity. While the initiation often comes from top management or the communications department, the best narratives are co-created, drawing upon insights from all layers of the organization. Employees at every level should feel that they own a piece of this story; after all, they are the heroes who will bring it to life.
- Use the narrative to shape internal communications, team meetings, or even company-wide town halls. Take opportunities to weave real-life testimonials to make the narrative authentic and relatable.
- Incorporate the narrative into your onboarding process for new hires, ensuring that everyone starts their journey with the end goal in mind.
- Encourage Cross-Functional Collaboration
Cross-functional collaboration allows departments to share resources, perspectives, and expertise, making the whole organization more responsive to challenges. An integrated team is good for morale and proactively breaks down silos, contributing to the smooth execution of the new organizational blueprint.
- Implement monthly “Lunch and Learn” sessions that feature speakers from different departments or teams across both companies.
- Create a Culture Advisory Board consisting of employees from various departments and levels of both merging companies. This board will serve as a think tank for aligning cultures and will provide recommendations. In many cases, such boards can benefit from an outside facilitator. Consider leveraging our consulting services for expert guidance in setting up and running your own Culture Advisory Board.
- Form “Innovation Pods” consisting of members from various departments to work on small-to-medium-sized projects. It can be a fun way of problem-solving while promoting inter-departmental understanding.
The successful integration of two organizations during an M&A is an intricate process that goes well beyond financials and logistics. Overlooking the significance of organizational culture is like ignoring the foundation while building a skyscraper; it may stand initially, but the cracks will eventually show, often leading to disastrous outcomes.
A carefully planned, empathetic, and strategic approach to merging cultures can be the difference between M&A success and becoming another unfortunate statistic. If you find that you need expert guidance to navigate these waters, feel free to get in touch with Velocity Advisory Group. We specialize in ensuring your organization not only survives an M&A but thrives through it.