Managing Cultural Change During a Merger
Building a business through mergers and acquisitions is a tried-and-true growth strategy. Every year, thousands of companies experience a merger or acquisition, and 2015 set the record for the most mergers and acquisitions ever! However, a happy merger between leadership does not necessarily translate to a happy merger between teams, and it can have powerfully negative long-term effects.“[Culture problems] can linger on for years after the merger has been completed,” says Glen Carroll, the Laurence W. Lane Professor of Organizations at Stanford GSB, in an article for Stanford Business Insights. “Failing to successfully integrate the cultures is a very serious thing.”Whether you plan for it or not, anytime you bring together two company cultures, you’re going to experience significant cultural change as the two teams get used to the new normal. If you want the change to be in a positive direction and you want to prevent negative long-term effects, it’s in your best interest to step in and manage how that change takes place. Here are three things you should keep in mind when you’re managing cultural change during a merger or acquisition:
Strategic Cultural Change Starts With Data
As part of your merger and acquisition paperwork, assess both company’s cultures so you have some starting metrics to work with. At CultureIQ, we recommend collecting feedback in a way that allows you to understand trends amongst different demographic groups — location, department, level, etc. But however you do it, having a baseline for where each culture stands will enable you to make informed decisions about the merger. Not only will this data help you identify long-term cultural change initiatives when you’ve had success with the one or two things you’re focusing on now, but it will also help you identify which company’s practices should stick around. For example, when P&G bought Gillette in 2004, the company was careful to create room for healthy debate and “taking the best of both, even if that meant recognizing Gillette practices as better.” Having data on each company’s pre-existing culture qualities will put you in a better position to identify which company’s approach is working and which could improve. Then you can make an informed decision about which process to keep and support that decision if current employees ask are resistant to change.
Focus on One or Two Cultural Change Initiatives
Your attention is only as powerful as your focus. So, if you think you can bring an entire organization into the fold and have them conform to 100+ different kinds of new behaviors without any tension, we wish you luck with that! Instead, research shows that focusing your efforts on one or two big changes will deliver better results than dividing your focus among a larger number of goals. For HR managers managing cultural change after a merger or acquisition, this might look like focusing on one or two large initiatives in a given 6-month period, such as Communication or Collaboration. This means that in your day-to-day, you’ll focus on your messaging around these two concepts for the entire company and establishing shared values for the new, combined company. In a large company, this could also mean focusing on one or two segments of employees at a time depending on your industry, such as front-level customer service employees in a retail company or the engineering team at a software company. Regardless of how you segment your attention, focusing on one or two big changes rather than micro-managing every aspect of the transition will result in much more effective cultural change.
Encourage Consistency With Company-Wide Buy-In
Regardless of how you’ve positioned a merger and acquisition, incoming employees will always suspect that there are big changes ahead and worry about how those changes will affect their responsibilities and their employment. Unfortunately, when employees are stressed or worried, almost every aspect of their performance goes down: productivity, communication, collaboration, you name it. If you want cultural change to stick, you need to give employees a sense of buy-in and community so that they feel that there’s a context to the changes going on. First, bring leadership on board to give your cultural change initiatives a strong backbone. Next, use every employee communication method you have to reinforce your top one or two messages about the change. Use messaging to get everyone on board so that everyone knows what to expect and sees those changes rolling out consistently.
For example, during a merger or acquisition, mid-line managers should be empowered with as much information as possible and given as much freedom to share that information as is appropriate for the state of the merger. The more information a manager can share with their team of current and incoming employees, the more included and reassured employees will feel that they know what is happening and what is coming.
The alternative is a team that’s being asked to experience a lot of change without a clear vision of where that change will take them — a perfect recipe for attrition, and perhaps explains the 10% average attrition rate for companies going through their first merger or acquisition.
By their very nature, mergers and acquisitions will have an impact on your current company culture. Bringing two organizations together is not something you can do with a snap of your fingers. However, there’s a lot you can do during the transition to increase employee engagement and embrace the cultural change that comes. It takes focus, planning, and consistency. But, like any cultural change, with the right planning in place, it’s possible to shape a new culture that plays on the strengths of both companies.
Have you gone through a merger, or are going to be soon? CultureIQ can help retain your culture through the transition. Learn more here!