Managing Culture Changes During an M&A Transaction: 7 Keys
Companies are merging in record numbers as executives pursue acquisitions, mergers and joint ventures. This creates value by demonstrating global brand presence, establishing economies of scale, and obtaining market access, products, as well as technologies.
Even so, there are still many merged businesses that have lost value for shareholders, littering the business world. One has to wonder what forces are strong enough to counteract the value-creating energy of company integrations.
Culture was singled out as one of the main barriers of successful business integration. When companies with different cultures merge, they have a hard time making decisions moving forward.
For effective merges, companies need to learn how to manage culture changes. Since company integrations are human-driven, individual companies should brace themselves for impending cultural influences, following a merger.
1. Prioritizing Culture as a Component of Change Management
For most company mergers, the main focus is usually managing communication. This minimizes the importance of change management because proper communication is only possible when cultural change is accounted for.
When companies recognize culture as an important change management task, then they can effectively work towards their integration goals.
2. Owners of Corporate Culture Should Report to Senior Management
For equal representation, owners of cultures from both companies should report to senior management. The companies involved should consider outsourcing outside assistance for this task. Most times, owners of a given culture have a challenge recognizing it because of its implicit nature.
3. Focus on the Tangible and Measurable Aspects of Culture
The steering committee of a merger should take it upon them to reject vague, soft and poorly defined presentations of culture. Culture owners should only discuss cultural issues that are well defined, specific and supported with elaborate examples.
4. Focus on the Strengths of Culture, Rather Than the Weaknesses
Most of the time, when companies merge, the assumption is they’ll take the best from both sides for integration. However, business integration is much more complex than creating a “best of” CD from different bands.
More often than not, corporate strengths are incompatible. So should strengths be regarded as weaknesses because they don’t mix well with other strengths? More varied integrations ensure that positive cultures aren’t discarded because they don’t mix well with other cultures.
5. Cultural Differences Shouldn’t Hamper Decision-making Processes
The ability to make fast decisions determines if a business integration will stand the test of time or not. A company’s culture determines its style of making decisions. After a merger, this process need not be clouded by conflicting cultures.
Integrated companies need to establish a unanimous decision-making style for effective operation.
6. Build an Employee Brand that Will be Understood by All Employees
Just as you secure the loyalty of the customer, it should be the same with employees. If you plan to retain all employees after the merger, you should build an employee brand that will be understood by all employees.
The company making an acquisition should make their employee brand attractive. Employees joining your company should have a sense of identity going forward.
7. New Organization Models Should Have People with Culture Change Knowledge
Lastly, make sure the new organization model is run by individuals who understand how cultural integration works. This new model determines how the merged entity will re-enter the market.
Culture is at the center of business operation before and after a merger. Executives should always bear in mind that culture is both implicit and powerful. To guarantee value-creation, integrations should pay keen attention to the incorporation of culture from both parties.
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