I attended a networking meeting in downtown Chicago last week, and a mergers & acquisitions attorney told me that his business was booming. It seems that in 2012, consolidation is king. Given that I write this column, however, I immediately thought about the impact of all of these mergers on organizational cultures.
A merger usually goes through because it looks great on paper. All of the numbers line up, and it makes sense from a business perspective. Unfortunately, many M&A teams fail to take into account how well or poorly two companies with legitimate cultural differences will integrate.
In a recent piece for Inc., Nancy Rothbard, a management professor at Wharton, said that the failure rate of mergers is close to 75 percent, and most don’t produce the expected financial returns for years after the merger has taken place. “In some of the research, there's been discussion on how the culture piece has been central to why they fail.”
Whenever I think of a merger, I picture the Brady Bunch. Yes, that’s right: I see two adults who want to get married moving into one house with a couple of kids each and suddenly expecting the group to function as a family unit. And as you can imagine, it worked better for the TV-perfect Bradys than it does for corporate America.
Whether you are bringing together large or small businesses or a combination of the two, if you don’t carefully manage the cultural component, you are setting yourself up for disaster, including plunging morale and a suffering bottom line. Here are four things to keep in mind as you proceed.
1. Know your own culture and find out about theirs. Don’t sweep culture under the rug. If you haven’t already diagnosed your own culture, this is a great opportunity. Then, get together with leaders of the other organization and ask pertinent questions about its mission, vision, values and goals, as well as the work environment, communication style and people. Identify differences and plan how to cope with them before all of the paperwork is signed.
2. Don’t expect a Stepford culture. Since organizations are made up of human beings rather than robots (or Stepford Wives), you will not magically be able to assimilate everyone into a perfect and new uniform culture. You won’t achieve 100 percent consistency, and that’s okay. Choose the best cultural aspects of both companies (i.e. those that help make them successful) and implement those across the board. Otherwise, if it ain’t broke, don’t fix it.
3. Create a cultural leadership team. To this end, it’s important to have a group focused on cultural integration. Assemble a cross-functional team comprised of people from both organizations that can speak to the desires and concerns of the employee base and is capable of defining processes and procedures that will make sense in the new culture.
4. Talk to your employees. The predominant emotion merged employees feel is fear. They worry about being let go due to staff redundancies, they worry that their counterparts in the other organization will fare better and they worry that they won’t meet expectations in the new organization. Be vigilant about sharing regular updates and notes of encouragement with in-house and virtual employees, and encourage managers to host lunches or team get-togethers to communicate messages from leadership and perk up spirits during this difficult time. You might also consider an employee survey that gets to the heart of critical issues associated with the merger.
One more point: Don’t expect the transition to a merged culture to happen overnight. Deep relationships take time to develop, and you must move forward with patience and the expectation that issues are bound to crop up that require care and attention.
Alexandra Levit is a former nationally syndicated business and workplace columnist for The Wall Street Journal and the author of Blind Spots: The 10 Business Myths You Can’t Afford to Believe on Your New Path to Success. Money magazine’s Online Career Expert of the Year, she regularly speaks at organizations and conferences on issues facing modern employees.
Illustration by Russell Christian