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Cultural integration failures can disrupt, or even damage, the value and viability of M&A transactions. The consequences of such failures range from dips in performance and struggling retention rates, to more severe cases of conflict or toxic working cultures. Culture is often used to describe shared values and characteristics that are central to an organisation’s identity and ways of working, and it is widely recognised that employees are a costly, resource for any business. Yet, up to 90% of M&As fail, and issues related to people and culture and the integration of different ways of working, are one of the most common causes.

Nevertheless, there has been an upwards trend in M&A activity across the globe. Why? Companies are seeking opportunities to gain new skills and capabilities as well as access new markets and technologies. Overall, M&As provide companies with a competitive opportunity; increasing organisational resilience can help employers overcome turbulent economies and increased uncertainty, to ensure successful and sustainable organisational performance. As a result, managing culture integration and change should be approached with the same discipline and focus as other business areas in any M&A transaction. Below are some considerations when integrating two or more corporate cultures:

1. Increased transparency and communication

Increasing transparency, especially during M&A processes, could benefit a business. Communicating regularly can help keep employees feel engaged and unified during M&As; conversely, lack of open communication can undermine integration efforts across different business areas. Employers may engage and bring employees together by sharing company news internally, or by communicating key information via email or in-person; doing so can help employees feel more connected to the business during a period of transition. It is also key to bear in mind that not all employees communicate in the same way; providing multiple communication channels for employee feedback will assist in giving more people an opportunity to share their thoughts and concerns.

When it comes to restructures and/or redundancies in M&As, it is imperative to bear in mind the importance of employee engagement and communication. Simple things like sharing an anticipated timeline, relaying clear information around a robust selection process (where applicable), and demonstrating a supportive offboarding process as part of an employee consultation process will increase employee engagement, even during difficult transitional periods. Encouraging open conversations so that ideas, goals, and values can be discussed and shared amongst the different teams can help in fostering a new attitude toward learning and understanding strengths from one another.

Speaking, and consulting openly, with employees and providing opportunities to gather opinions and feedback during and after an M&A process can help to inform future business strategy and ensure that employees feel part of the decision-making process. This is especially important as M&As may not demonstrate value in the short term, so transparent and consistent communication is key in securing medium to long-term returns as quickly as possible.

2. Timing

In navigating a deal, it is advisable to treat HR problems with the same rigour as financial or legal ones, including the completion of cultural due diligence checks to understand and evaluate the compatibility of different corporate cultures. The findings of this research early on should influence the overall business strategy and can assist in understanding how different companies can better harmonise their workforces. Identifying similarities and differences can reinforce key behaviours to help harmonisation efforts post-deal; a fully integrated workforce can therefore not only help define the success of a deal but can help expedite one and make it appear even more attractive to the companies involved.

3. Align Cultural Integration Efforts with Business Goals 

Establishing a strong company vision and strategy that is supported by its people, and unified under shared business objectives, can help ensure that an M&A deal and any associated restructuring is successful.

Whilst a fragmented culture cannot prevent M&A deals from closing, failure to align culture and ways of working can upset the productivity and efficiency of a newly formed business. Issues with the incompatibility of corporate cultures can create a barrier to future organisational success and can often emerge after a deal concludes. As such, setting and communicating a strategy defining the vision and strategy of the M&A integration, sharing desired employee behaviours, and conveying the different milestones to expect to hit along the way, will be key in combining workforces and achieving business goals.

Working with IRIS HR Consulting

IRIS HR Consulting have the specialist knowledge and expertise to support businesses on mergers and acquisitions. From practical advice to strategic planning, we can help harmonize your people priorities during transactions.

Get in touch today to discuss our M&A services.