The M&A process is an exciting but lengthy one. It can last anywhere from months to years depending on the size of the company involved. During this period, the merging of two company cultures can create culture shock, damaging productivity, profitability, and morale. Let’s talk about how to avoid that!
Entering into a merger can be challenging for both companies. Whatever the reasoning behind the merger, one thing is for sure—change is coming. According to Harvard Business Review, between 70 and 90% of mergers and acquisitions fail. A culture clash is often to blame for this extremely high number.
Preparing for a merger or acquisition requires time and planning. A large portion of this time is dedicated to conducting due diligence. Not sure how to go about your due diligence? Check out our due diligence checklist to ensure a smooth transition during an M&A.
Due diligence happens during the process of an M&A — But what about the potential culture shock post-M&A?
Leadership can help bring together the best of both cultures.
Employee engagement doesn’t have to suffer when you merge two different cultures. The leaders of both companies hold the power to protect employees and help them successfully share their cultures. One strategy is a weekly leadership meeting in which everyone steps back from the chaos of the merger to highlight the advantages of both cultures and strategize on ways to bring the best of each culture together to create a new, optimized company culture that works for everyone.
Creating a successful company culture requires an investment from everyone on the team and is essential to retaining employees and keeping them engaged in their work. Here’s how to get started.
Redefine your company’s core values.
Your culture and your purpose are defined by your core values. Merging two different sets of core values can be challenging. In many cases, the acquiring company attempts to keep its core values and share them with the other team. This frequently results in a sense of disenfranchisement by the acquired company’s employees and results in reduced morale, productivity, and in turn, profitability. A more egalitarian approach incorporates a process in which the leadership, often facilitated by an outside coach or consulting team, finds the best elements of both sets of principles and works to merge them, creating a new set of core values that speak to the merged company.
Training and development.
As you work to merge two different cultures together, it’s important to engage in team-building activities and ongoing training for all levels of the organization.
Another aspect of the development of your team is ensuring your team members are aligned in their roles. Role alignment is essential to the success of your new merged business. When employees are aligned in roles that match their strengths they will be more engaged and excited about work.
Through training and development programs, team members who are not role aligned can discover their optimal roles and, in the process of reconfiguring the companies in the merger, change roles to be more productive and set up for success.
Check-in with employees regularly.
During a merger, it is essential that leadership and HR communicate regularly with all employees to ensure their concerns are being addressed. This can be done through informal check-ins, and/or formal employee engagement surveys. Monthly performance reviews can focus on an employee’s individual contributions to the overall company goals and assure them that their role is secure in the transition
One of the top reasons mergers and acquisitions fail is a lack of communication. When communication is lacking between managers and employees, employees are left asking questions: Why is the company merging? How will I be affected? How will I be supported throughout this merger? Am I about to lose my job?
Lack of communication with your employees may leave them confused and unmotivated to work hard for the newly merged company. Keep employees updated on the context of the merger, the timeline of what’s next, and other frequently asked questions related to the merger. Like restructuring the Org chart.
Employee engagement before and after the merger.
Analyzing employee data before and after the merger can help you better understand how your organization has been impacted by the merger. In doing so, you can identify areas of your culture that may need work.
Employees will likely feel on edge during this major transition. They may be faced with fears of losing their jobs, being asked to re-apply for their job, or drastic company culture changes. Losing employees during the merger will negatively affect profitability. So focus on communication, incentives, clear goals, and strategies to keep your team engaged and in the know.