How to Overcome Corporate Cultural Issues in M&A

Mergers typically combine workforces from the companies involved.

Companies typically form mergers and acquisitions (M&A) to create a new company that will have strengths that the previous two companies lacked on their own. However, a newly merged company, despite its strengths, must monitor the cultural integration of its employees. If the merged company cannot overcome cultural issues in the workplace, it might fail to reach its full potential.

Instructions

1. Address concerns about the merger quickly. Employees at both companies are likely to be nervous about the way in which their company culture will change. If you do not answer questions from employees quickly, rumors might spread among employees. For example, if the targeted company has a culture that values independence among employees, while the other company typically has tight management, employees from the targeted company could fear losing their independence. If employees ask how the changes will affect the company culture, answer immediately and honestly to avoid surprises that could radically upset the existing culture at both companies.

2. Create teams that use employees from both sides of the merger, if applicable. For instance, if you need a marketing team for a new product, form the team with marketing personnel from both companies to encourage culture integration. As the marketing team works together to solve problems and create marketing campaigns, cultural issues from the merger will fade away as a new culture forms.

3. Communicate with employees frequently. If employees from the targeted company in the merger feel like they are not in the loop with company operations, it will be more difficult for managers to alleviate and solve cultural issues. Communication unifies both companies, and encourages employees to adapt. For instance, all email and other correspondence should be combined for both companies in the merger. As employees communicate with one another, isolation is discouraged and cultural issues are more likely to dissipate.

4. Map out the chain of command within the new, merged company. If employees are unsure of their new roles in the merged company, or they do not know who their superiors are, you cannot overcome the cultural issues that arise from the merger. For instance, if the acquiring company wants to restructure the marketing department with more managers, it should detail specifically who will be affected. Employees who know their role in the company are less likely to isolate themselves from the new culture.

5. Give the employees in the merger time to adjust to the changes in culture. Cultural integration and the dissipation of cultural issues from the merger will take more than a few days or weeks, especially if both companies have operated for a significant amount of time. If possible, integrate cultural changes from the acquiring company to the targeted company in small steps. For instance, if the acquiring company in the merger wants to push its independent culture on the targeted company, gradually increase the independence of employees in the targeted company so that the change is not a shock.

References

• Human Capital Institute: The Importance of Leadership and Culture to M&A Success
• ITAP International: The Impact of Culture on Mergers & Acquisitions