people inside room
GuideSpark

Building the Optimal Culture During Mergers and Acquisitions

By Trish McFarlane | 3-min read


In today’s world, mergers and acquisitions seem to happen every day. They can be a quick way to increase market share, expand service or product offerings, or outpace competitors. From a human resources perspective, mergers and acquisitions can serve as an ideal opportunity to showcase skill sets related to business acumen, people processes, and culture.
 
While operations and processes are paramount to a successful new relationship, and are often given careful consideration by business leaders, the culture of the two organizations is sometimes overlooked. As Henry Ford once said, “Coming together is a beginning; keeping together is progress; working together is success.” In organizations that see the most post-merger or acquisition success, HR teams take into account the unique challenges associated with blending two cultures and create a communication plan for the entire organization.
 
From a culture perspective, several challenges arise when trying to bring two organizations together. Even if the two companies are complementary to each other from a product or service perspective, the internal politics or ways of working may be drastically different. A common misconception is that the two cultures will automatically align if their business values align, but this is not always the case. Rather, you have to dig deeper into the way the business values are put into action. For example, both companies may value training or innovation but have different definitions of what those mean, or how to operationalize those values. Similarly, even if business values align in the organizations, the two cultures may not automatically assimilate. In reality, aligning both cultures takes work and careful planning. 
 
According to Deloitte, the best thing to do when starting a merger or acquisition is to begin with the end in mind. Believing that one organization will just merge into the other’s culture is not realistic, nor healthy. Instead, what will actually happen is that a whole new culture will emerge when the two companies join together. The key is identifying the best components of each culture, uniting them in a new shared mission, and then communicating those new, shared values to all employees. This method works because it signals to employees that the most valued aspects of their company will remain. In fact, each company’s employee base will see that the organization values the reasons they joined the company in the first place. This is an excellent way to encourage all employees to be excited about the newly merged (or acquired) company.
 
So, how do you unify two organizational cultures?  First, conduct a culture assessment. There are a few ways to go about this, one being to hire an external vendor or consultant to take an impartial look at both cultures, then help your leadership team map where the similarities and differences lie. By doing this, you can create an open dialogue that doesn’t value one culture over another. These vendors may conduct culture surveys or interviews with employees to suss out their perceptions about the company. The downside of hiring an external vendor is the cost involved with employing a third party. 
 
Another option is to conduct the culture assessment yourself. While it’s harder to be impartial, you can start by looking at everything from the way workspaces are set up to what artifacts are around the office, what traditions the company holds dear, how various processes drive employee interaction, how decisions are made, or how conflicts are handled. These things tend to vary drastically from company to company. Note which of these are the most important and how those interactions play out day to day. You can also tap into existing organizational insight: Is there HR data from either organization that can lend you clues as to what the new organization will want and value? 
 
Next, focus on the values and behaviors that will ultimately lead to the success of the new organization. Now that you have some of the key similarities and differences, assess which of these will lead to the long-term financial stability of the organization. Talk to leaders from various departments to determine which of the values lead to a better employee experience, more sales, better customer service, shorter down time, and higher employee retention. Be sure to avoid any radical changes as you don’t want to mistakenly eliminate the finer cultural points that drive growth, productivity, or engagement in either company.  
 
Lastly, create a communication plan that clearly outlines the values of each organization, why the two came together, what the future business goals are, and how culture was taken into account during the original decision to merge. Experience shows that by doing this you not only get buy in around financial goals, you also encourage employees to believe in the very heart of the new organization. Once the communication plan is created and shared, be sure to reinforce it over time as the organization evolves and new members join the team. A “one and done” approach rarely leads to sustained behavior change. Leaders who do not embrace this approach are often unsuccessful over the long term because their best employees lose their original passion for the organization and eventually leave the company. 
 
When planning for a merger or acquisition, culture shouldn’t take a back seat. Mindfully and artfully combining the best parts of each company will lead to buy in from employees and, ultimately, the success of the new organization.