When Cultures Collide: Blending Cultures & Why So Many Mergers & Acquisitions Are Destined to Fail
October 6, 2021
When it comes to today’s steady stream of mergers and acquisitions, the single largest threat to employee engagement and success for the new company is a culture clash. Similar to a blind date where a shared history is not likely, the lack of common values and experience can create an inherent disconnect, or worse, resentment and resistance to the new company’s future vision and ultimate success.
According to Statista 2021, in the past year, there were 583 M&A transactions valued at more than one billion U.S. dollars. The overall number of M&A deals in the 12 months ending June 30, 2021 was up about 25 percent. While this trend may appear to be a sign of strengthening corporate assets, efficient operations, and a synergy of talent, in truth, it can lead to disaster.
One can look at such examples of Amazon’s absorption of Whole Foods as a marriage made in heaven. Combining the world’s most powerful retailer with arguably the biggest name in grocery sales, how could it fail? In reality, the venture has bumped and bruised its way to success. Integrating Amazon’s online-only presence with Whole Foods personal, tangible consumer shopping experience took some time to reconcile. Team members were hesitant to lose their more localized autonomy of operations to the management of the world’s largest company. Conversely, other mergers such as Disney and Pixar, and Sirius and XM Radio have been hailed as resounding success stories, almost at the onset.
So what makes for a successful integration of a company’s #1 asset – TALENT? Without the cohesiveness and buy-in from employee stakeholders, the likelihood of a smooth transition is small. The key to reduce employee discontent, turnover, and a poisoning of company culture is a successful integration of the existing cultures.
Tara Powers, CEO of Powers Resource Center (PRC) has some important advice for leaders guiding companies through a merger or acquisition…evaluate, anticipate and communicate. Powers says an honest, open evaluation of current company culture and an acknowledgement of the fear and loss associated with the dissolution of the old company is real and invaluable.
Evaluate: Temperature check: what is the current state of employee morale? What are the real pain points and fears about stepping into the new company? What are the underlying resentments or challenges that team members are afraid to voice? Understanding the motivation for holding on to the best of the “old way” of doing things is important.
Anticipate: What are the challenges that lie ahead for this transition? Are people afraid of losing their jobs? Are employees worried about the new management style? Interviews, focus groups, and engagement of project teams are some ways to involve team members and ensure they feel heard and valued.
Communicate: More is more. Visible, open engagement from leaders of both companies is critical. Presence and accessibility by leadership is key. Communication should happen MORE than seems necessary to help move people from a space of being confused or anxious to exploring the benefits of forming a new culture together. The expressed mentality of “we are all in this together” will be evident if management is actively involved in the building of new teams and the forging of a new company. Authentic and open invitations for keeping conversations going is critical.
By evaluating the past and having an open dialogue for the future, company leadership is poised for success. It’s best not to ignore culture differences, rather embrace the unique perspectives and how they can be brought to light under the spotlight of the new, more robust and enlightened company. A successful integration will leverage the best of what companies have to offer. A stronger, healthier work environment will ultimately lead to the success of the new company, benefiting everyone.
This is where PRC can help. As talent development experts, PRC is equipped to objectively evaluate your company and assess where it is today. By engaging your teams and leaders in key conversations, PRC can provide facilitation and the tools appropriate for building a cohesive go-forward strategy. If you are considering an acquisition or merger, take steps today to put a strong foundation in place for building a healthy culture. PRC can develop a customizable solution that incorporates proven diagnostic and assessment tools, customized communication plans and team building strategies that will blend seemingly divergent paths into a productive, positive work environment. Contact us TODAY!