Avoid These Common Risks during M&As to Prevent Culture Clashes

Make sure a merger delivers value in the real world, not just on paper

Mergers and acquisitions often seem like good ideas on paper. But when it comes to integrating two (or more!) cultures, people have a way of not conforming to formulas. Leaders often fail to anticipate how challenging it is to merge cultures, spending very little time or energy on implementation. As a result, “more than two-thirds of [M&A’s] that fail do so at the execution stage.” The most common reasons for failure include:

  • No clear leadership team or accountability for the merger. Without a dedicated team, details slip through the cracks, and the plan’s execution fails (especially during hand-offs between teams). Lack of executive involvement also leads to resentment, as rank-and-file workers feel like they’re doing all the work, while the C-suite reaps all the rewards.
  • No cultural change plan. As soon as plans are announced, employees start thinking about the merger as an “us vs them” situation, or worse, “who goes and who stays.” Guiding principles (like why the merger happened) and ground rules (like how to make decisions) aren’t established; stakeholders aren’t involved; transparency is limited; there’s no flexibility in the plan once it’s enacted (or clarity around who can make the changes).
  • Lack of metrics focused on culture. Similarly, there’s no consistent method for measuring success or tracking progress towards milestones. Or, targets may exist, but they’re too conservative or wildly ambitious, and there’s no method for modification, which demoralizes teams when they fail to make meaningful change.
  • Desirable employees aren’t courted. Especially in the case of an “acqui-hire,” parties need to sit down to determine what both sides need to succeed. Ignoring issues like employees’ ongoing autonomy, decision-making rights, and career paths will lead to frustration and ultimately, acqui-hires fleeing—which defeats the entire purpose of a merger.
  • The customer experience suffers during the change. During a change, the customer wants to be reassured that they will be taken care of, but if the leadership team is busy with the merger, the customer’s priorities slip. This is made worse as people leave the organization and take clients with them.

Of course, these issues aren’t exclusive to M&A’s—they can occur any time you’re trying to coordinate the efforts of two separate groups. If you’re going through a current culture clash, consider the following:

  • Join forces. Bring your leaders together before the teams are set to combine, and use this time to define shared values and determine what success looks like. What behaviors do you want to carry forward? What habits should be left behind? No merger has to be a perfect 50-50 blend of cultures, but everyone must be clear on how both teams should behave. This is also a great opportunity for leaders to start to learn each others’ working styles. Without this foundation in place, the rest of the team will feel the lack of joint leadership and start to panic.

  • Honor the past. Even when change is for the best, people experience change as loss. Your role is to act as the cultural barometer of the team. Don’t just celebrate all the new and exciting things to come—hold space for people as they mourn and let go of the old ways of doing things. When the agency KBS merged with Forsman & Bodenfors, for instance, they decided to adopt the latter as their name. But to commemorate their history and all they’d achieved, they named a star after KBS.

  • Make the right thing easy. In the first few months after you’ve combined teams, find ways to connect people and ways of working across offices and cultures. This doesn’t have to be complicated or expensive: one client we worked with created a “pen pal” program where people from different teams wrote each other actual letters. This simple act really resonated with the team and directly impacted engagement levels. Another client held an offsite in which teams from merging departments gave presentations to the rest of the team about the work they’d been doing together.

  • Take the pulse of the organization. Survey people regularly—it shows that you’re listening and can identify potential problems before they become full-blown crises. Of course, this also implies that you take action. Repeatedly surveying people but not making changes will only make people cynical about future surveys.

  • Be as transparent as possible. It’s always tempting to put forth a message that “everything is under control”—but no one will believe it. Not only is it okay to admit you don’t have all the answers, it empowers people by giving them a role to play in making the merger a success. One of our clients did this by holding an all-hands meeting with an open Q+A session afterwards. This can be risky—not all leaders feel comfortable answering challenging questions on the spot—but the payoff can be impressive: people were talking about the all-hands for weeks, and it set a tone of openness within the organization.

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Avoid These Common Risks during M&As to Prevent Culture Clashes
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