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Culture
Managing Culture Change during the M&A Process
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by REBECCA DOEPKE

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Creating a process and plan to measure and manage cultural values
“In a survey of executives who have managed through mergers, a culture clash was the No. 1 reason for a deal’s failure to achieve the promised value.”

~ Bain & Company

In our last installment on culture during a merger or acquisition, we addressed the importance of driving cultural values internally and externally during a M&A. No one wants to lose valuable customers or employees when two companies combine forces, and while many companies develop operational plans and projections – customer retention and acquisition and market value – how many merging companies develop a robust strategy for aligning two potentially disparate cultures? According to Bain & Company, “[F]ew organizations apply the same rigor to managing and steering cultural integration that they apply to a conventional, hard-dollar synergy… Senior leaders can find themselves in the uncomfortable position of watching the problem unfold without knowing what to do about it.”

Planning for Change

In carpentry, the adage, “measure twice, cut once” is an apt analogy for culture change. Making mistakes by diving head-first without a plan in place doesn’t work in home improvement or in mergers. In developing a change management plan, accountability is key. Identifying the appropriate team to deploy culture programs internally and externally, benchmarking their success, course-correcting where necessary, and providing support throughout the process can mark the difference between a successful culture shift and one that gets filed into the annals of corporate failure. While culture shift may be thought of as a “soft process,” it can and should be measured. Define what culture success looks like, track toward it and measure it – whether it’s employee retention or delivery of corporate ideals. 

At the end of the day, programs for culture are as important as ROI (hard) targets, because they inform the bottom line and the health and value of a brand. Although functional teams and accountability are vital to developing and driving culture programs, none of this will work without buy-in from leadership and management. Executives must understand the inherent value of developing a positive culture and embrace programs to deliver cultural values every day – both internally and externally. It’s also important to note that even in an acquisition scenario: one culture does not replace the other. Company leadership should look at the best-practices of each organization and develop a dynamic hybrid to ensure employees and leadership from both companies feel they have a say and a stake.

“In our experience, brands that thrive in the post-merger landscape have two things in common: learning and listening.”

Once merging companies have developed their culture teams, they provide opportunities for learning through workshops and other settings, away from the day-to-day work. This allows employees to see how important culture development is to their leadership, since they are taking company time to do it. Listening is also critical. Developing rigid programs without the opportunity for employee feedback will create a top-down, ‘do as I say’ structure that disincentives employees from speaking up and jumping in. Positive culture, on the other hand, is developed by empowering employees to be an intrinsic part of the process. What they see and say matters.  

Culture Aligns to Brand

Understanding that culture is an ever-changing, iterative process does not mean that it’s not critical to identify post-merger brand values and begin to track toward those today, before the merger happens. A value-set exercise should incorporate the best attributes of the merging brands to create something new that everyone can rally behind. Again, this doesn’t all come from the top-down. Some of the best values bubble up from employees interacting with customers or clients every day. What you’re looking to develop is something that everyone – regardless of role or responsibility – can rally behind and incorporate into their work every day. Company culture should highlight both existing and new brand values and illuminate why these are important for everyone to live out. 

In creating a new brand promise, executives should be honest about identifying and fixing existing gaps. Perhaps it was the process – like the way service or products were delivered – or something more intangible – like not being a fun place to work. Regardless, the general rule of thumb is to take the best, leave the rest. When you do that, you’ll realize that those gaps that exist are exactly what culture programs are designed to fill. Ask your culture team what some of the most pressing problems are in their day-to-day work. Don’t see these as dings in your brand armor, but as opportunities to reconstitute and reconstruct. Developing a holistic culture integration plan both prior to, during and following the merger are pillars upon which all employees will proudly stand with brand pride as their rallying cry. 

Are you merging with another company? We’d like to learn more about the culture challenges within your organization. Our experts develop programs specifically tailored to each company’s specific needs and provide sustainment programs that bring real value to organizations. To learn more about developing culture programs, contact Adrenaline at info@adrenalineagency.com

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