Culture Change During Mergers and Acquisitions

Root Inc. on November 22, 2012

As an organization is getting ready to face any type of change, leadership creates a strategy and gets ready to roll it out. They think about the challenges that will inherently arise and the best ways to get the troops on board and ready for the change at hand. The ante is upped significantly when the change involves merger or acquisition. In good situations, there’s nothing haphazard about it and the folks in the big corner offices truly feel like they have tended to all the “i’s and t’s.”

But, there’s one area that is sometimes left to chance, and it can have MAJOR repercussions.

If you are not considering your corporate culture and how that may or may not fare through M&A, you are likely doomed. We know…it sounds a bit dramatic. However, think about it. Your company culture is your DNA. It’s the way you do things. It’s the behaviors you value. It’s the beliefs that guide how you do business.

In a nutshell, it’s the lifeline of your company because it weaves all the individual personalities into (ideally) one aligned mindset. It’s what ties every single role at every level together into a cohesive unit. While most would argue that business decisions need to be void of emotion, they most certainly need to incorporate your people. Right?

Overlooking Culture Impact

There are three main pitfalls companies face when wrapping company culture into the M&A process:

  1. Underestimating the impact of culture on financials.
  2. Not factoring in the feeling of loss for the old way of life.
  3. Undervaluing the role culture plays in managing the overall integration process

So, while the heavy lifting typically kicks in after the merger or acquisition is finalized, there is a short list of things that should be considered throughout the entire process.

  • Make sure your communication and behaviors are clearly defined
  • Carefully articulate what the future holds
  • Remember that employee engagement is EVERYTHING

 5 Things Leaders Must Do for Better Culture Change

Once the merger is done, you need to get your executive ducks in a row. And we all know that saying, “You only get one chance to make a first impression.” Well, this first impression is key since this is the new leadership team taking everyone into the future. So how do you bring them together and make everything feel seamless? You give them the tools to do these five things:

  1. Build trust – Vulnerability, shared vulnerability, and even public vulnerability are key to building trust.
  2. Master conflict – Conflict without trust is politics, and politics is an attempt to manipulate others so you can win an argument. None of this makes for high-performing organizations.
  3. Achieve commitment – Creating consensus or avoiding disagreements doesn’t drive success. Great teams put most critical issues “in the ring” and battle issues to clarity and commitment.
  4. Embrace accountability – Accountability is all about having courage to confront someone’s deficiencies, take a stand in the moment and deal with their reaction. This leads to real change.
  5. Own the whole – When leaders focus only on the results of their function, which is the opposite of teamwork, it’s a challenge for any organization

The net-net is this – if you want to weather the change that naturally comes with M&A, align your leaders and get everyone on the path to building a culture of competence.

“You can substantially accelerate results when leaders connect all employees to the unique and differentiated value of the culture and how that translates for the business.”

Assess your Readiness

Here’s your homework. Answer these questions to see how well (or not so well) your company culture is set up to survive M&A:

  • What unique value is being created from the merger or acquisition? Why is this value enhanced by the combination of these two firms?
  • How well are we currently integrating these unique value drivers into our strategic and operating plans?
  • What must be done to better integrate these strengths into how we manage and operate the business?
  • Why are these competencies valued by the marketplace? How can we enhance the value that is being created in the marketplace?
  • What barriers exist within the current businesses that will inhibit our ability to fully develop and realize this value?
  • What aspects of the culture must we keep/enhance, eliminate, and create to ensure that the ways we work allow the integrated firm to organize itself to support these unique value drivers and create a culture of competence?

 Off you go! Get those leaders aligned, make sure your folks stay engaged, and get everyone prepped to face the change together with confidence!

Are you looking at M&A possibilities? How are you getting ready?

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