Article: Protecting the Culture of the org during M&As

#MergersAndAcquisitions

Protecting the Culture of the org during M&As

Dealing with cultural changes of two organizations is a huge challenge. Mitigate the effects of these changes well.
Protecting the Culture of the org during M&As

“Culture is simply a shared way of doing something with a passion.”– Brian Chesky, Co-Founder, CEO, Airbnb

An M&A goes through because it looks great on paper, the numbers line up and it makes sense from a business perspective. But does the M&A team pause and think about how two companies with cultural differences can integrate well or poorly? Nancy Rothbard, a management professor at Wharton said that the failure rate of mergers is close to 75%. And the culture has been central to that failure.

An example of a successful merger is the coming together of the legendary Walt Disney and Pixar that was a match made in cartoon heaven. This merger made perfect sense because Disney used to distribute all of Pixar’s movies before. With this merger, both the companies could collaborate freely and easily.

Not all mergers work out. When Procter & Gamble bought Gillette for $57 billion, the fact that 6,000 people lost their jobs was all but buried in the details of a deal that linked some of the world’s most well-known household brands.

Here are a few things to be kept in mind during the M&A process.

Understand and Discover

Understand the culture of your own organization well and find out about the culture of the new organization. Get together with the leaders of the other organization and ask questions about their mission, goals, and values, as well as the working style, environment, and communication. Identify the differences, make a note of the successes and have a plan of how to cope with all the changes.

Do not expect miracles to happen straightway

Since both the organizations are made up of human beings rather than robots, it would be difficult to expect things to work well straight off and magically assimilate everyone into a perfect culture. Implement the best cultural aspects of both the companies. If the cultures are fairly similar and go along steady lines, then do not attempt to fix it. Let it be for a little while before you reexamine it at a later stage.

Create a cultural leadership team

It is very important to have a group that can focus on the cultural integration. It would be a good idea to assemble a cross-functional team of people from both the organizations that can address the desires and concerns of all the employees. This group should also be able to define processes and procedures that will make sense in the new culture. When Daimler Benz and Chrysler merged, the upright, hierarchical approach to things at Daimler and the risk-taking, entrepreneurial, loose organization at Chrysler forced many top executives to leave just ahead of the merger.

Talk to the employees

The predominant emotion that emerges out of M&As is the fear that employees have. They worry about staff redundancies and that they would be asked to leave and that their counterparts in the other organization would fare better. Share regular updates about what is happening and what is likely to happen and give constant encouragement to all employees, in-house or virtual. Encourage managers to get their teams together as often as possible, through lunches, meetings, and get-togethers during this difficult time.

A merged and a successful culture will not take place overnight. Deep relationships will take time to develop. Show patience, care, and attention.

Topics: #MergersAndAcquisitions, Culture, C-Suite

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