By Leah Gladu
Have you ever experienced that awkward feeling when two families, recently joined by a wedding, have dinner together for the first time?
Each family has its own rhythms, traditions and dynamics, and there’s a strong likelihood those idiosyncrasies won’t mesh, at least not right away. The result is a couple of hours of awkward silences and misunderstandings.
Now imagine having one of those dinners five days a week. For eight hours a day. That’s what happens when a merger or acquisition isn’t handled the right way.
I’m not talking about the finer details of the transaction itself – the contracts, financials and handshakes that make the deal a reality. Every company should have a team of M&A experts who are trained and ready to cross the Ts and dot the lowercase Js. What I want to focus on is how you logistically and thoughtfully weave two different teams together to work effectively and sustainably as one.
Managing change that deals with more than process
This kind of delicate change management can be the deciding factor in whether or not a merger or acquisition succeeds or fails. And when that much money is involved, outright failure isn’t exactly the preferred outcome.
In 2021, the global M&A deal value eclipsed $5 trillion, representing a 64% increase from the year prior and the best year on record by more than $1 trillion. And projections for 2022 indicate a similar trajectory.
Here’s where things go off the rails: According to Aon Hewitt, 58% of companies that went through a merger did so with no way of assessing and integrating culture in the deal. Not surprisingly, more than 50% of mergers and acquisitions fail to meet their goals.
The art of bringing disparate groups of people together to work toward a common goal is no longer a “soft skill” or a “nice to have” to improve end-of-year survey scores. Stewarding culture and connection is a vital business tactic that leads to a stronger bottom line.
A people-first approach
We consistently encourage our clients to view their people as their most important asset and put them at the center of their businesses. When merging, each side of the deal has to treat its people and culture the same as it would infrastructure or cash in the bank.
By focusing on a people-centered approach, leaders can spark stronger business outcomes for an evolving organization with increased efficiency, productivity and engagement following a major change. In fact, studies by Great Place to Work® demonstrate a 3.23x better stock performance among companies with strong culture.
Intentionally evaluating culture can identify core opportunities and pitfalls that often aren’t visible on your typical financial spreadsheet. Then, armed with that insight, change management and communications strategists can find ways to emphasize strengths, address weaknesses and keep employees informed along the way. (Did you know 63% report “the success of their M&A activity is moderately or highly dependent on a successful transformation,” according to Deloitte?)
If Company A relies on an office messaging program for announcements while Company B relies on its intranet, there may not be much of a middle ground when bringing these two cultures together. That’s not the kind of detail you can assume will just work itself out.
The good news is often one organization’s strengths may address another’s weaknesses, and when orchestrated strategically, teams can fit together like puzzle pieces. But only if they agree on and address these topics up front. If there are areas where the two sides could potentially clash, it’s equally important to identify and solve for those.
Don’t treat change like an afterthought
The question driving all parties should be “What will work best for our people?”
Far too many companies fall into the trap of acting first and managing change later. Communication that fosters a sense of connection to change makes it real for employees. Driving change from the top down without rallying employees around the benefits of the change results in significant stalls, underperforming initiatives and even lost revenue or missed opportunities. And rather than focusing exclusively on change management theory, the most effective change strategies are informed by an understanding of the people involved in organizational transformation.
Quick wins to get started
Weaving together two cultures and managing change around organizational transformation is no simple task, but even small adjustments can add up and make a significant difference. Here are a few ideas to get started:
- Start with a culture survey to identify the specific characteristics of each company’s employee community. This not only provides valuable information on what employees want and need to feel cared for, but it provides a benchmark to measure against later. For a greater depth of insight, layer in qualitative data by interviewing leadership and hosting employee focus groups to dig deeper into information gathered from the survey.
- Complete a full communications channel audit for each company involved in the M&A activity. See where there are synergies and where there are gaps. As you’re building a communications strategy, be sure to segment messaging by audience and communicate proactively along the way.
- Empower a change ambassador network that includes employees and influencers from across organizations. Pilot the rollout of the acquiring company’s mission, vision and values among this group and use the intel to inform your messaging and programs moving forward.
- Create spaces for employees of each company to organically come together. Use the insights you’ve gathered to inform engagement campaigns.
The ultimate goal of a successful merger or acquisition isn’t to simply super glue two cultures together and hope that glue holds against any resistance. It’s to create a new, single culture that will allow this new company – and its people – to succeed.
You may run into resistance, difficult conversations and compromises. But facilitating intentional communication and connection is the hard work required to bring two cultures together. And when done well, the benefits are substantial.
Read more from Leah in PRSA’s Strategies & Tactics or connect with her on LinkedIn to continue the conversation.