Establishing a corporate culture and maintaining it is a challenge for companies’ human resources areas. The work is even harder when companies go through a merger or acquisition process .
To get an idea of the importance of the topic, in a survey carried out by the Bain consultancy with executives who went through mergers, culture shock was the number 1 reason for the failure of an M&A deal to achieve the expected value. According to the consultancy’s report, “In a culture shock, companies’ fundamental ways of working are so different and so easily misinterpreted that people feel frustrated and anxious, leading to demoralization and defections.”
In these cases, productivity shows signs that things are not going well, but managers do not always pay attention to this point or they do not know how to correct the problem.
Corporate culture is often not a priority
Not infrequently, executives involved in a merger or acquisition process have well-developed tools to manage the financial and operational aspects of the business, closely monitoring the results and holding executives accountable for achieving their goals on time. On the other hand, integrating two disparate cultures, says Bain, is “hard to measure and almost impossible to manage directly. As a result, few organizations apply the same rigor to managing and guiding cultural integration.”
In a recent article, Mariana Dias, founding partner of the Gupy recruitment platform , stated that it is the role of managers and leaders to defend the understanding that, after the merger or acquisition, the two companies have the same identity and the same objectives, encouraging teams to understand the new scenario.
“A new organizational culture ends up being established naturally and, in many cases, work must be carried out to change the mindset on the way of acting from then on, which must start with management to reach the other professionals in the company”, says Dias. .
One of the great challenges in relation to people management after M&A is that the business can generate, in the employees, a fear about what the guidelines and rules will be from that moment on. Therefore, clear and assertive communication is essential. “The company must clearly and transparently position itself on the objectives, perspectives and expectations generated by the merger and acquisition process of another company — it is possible to convey to teams a message of optimism and motivation, focusing on opportunities for learning and professional growth”, wrote Dias.
How to carry out cultural integration after the M&A
As each company involved in the negotiation has its own customs, policies, ideologies and way of working, the risk of confrontation exists and cultural alignment is extremely necessary from the beginning.
Bain gives a list of best practices for successful cultural integration after a merger or acquisition.
Establish the cultural integration agenda
It is worth remembering that a company’s culture includes shared values, beliefs and behaviors that determine how people do things in an organization. To integrate two cultures, therefore, one must first define the cultural objective in broader terms, which requires involvement from the top of the organization, including the CEO. This scope needs to make clear what culture will emerge from the combination of the two companies.
Diagnose the relevant differences
In many M&A cases there are significant differences in the culture of the two companies involved. A diagnostic can identify and measure differences between people, business units, geographic regions and functions. This mapping will help determine how the gaps will be closed.
Define the culture you want to build
Once you have the schedule set and the diagnosis made, it’s time to take action. The company’s leadership will then have two jobs to do. One is to determine what critical gaps to close, and the second is to establish a detailed picture of the future culture. This photograph goes beyond the company’s values and vision, and needs to be concrete enough to be carried out on a daily basis by managers. Therefore, this photograph needs to bring specific actions and behaviors in detail.
To create this new culture, workshops can be very helpful. In them, the people of the company come together to build a vision of how they will collectively behave and what they will achieve with this behavior. A practical example: The combined company’s new head of sales and regional managers participated in tours with sales representatives from both organizations, observing how salespeople interacted and made real-time decisions in the field. From there, they collected data. Workshops can help sales managers name the specific sets of behaviors they want to see in the future, along with the processes and incentives that will encourage those behaviors.
The integration of corporate culture cannot wait, and must be a priority for an M&A business.
