Steps to manage cultural change after a merger

Monday, May 29, 2017 - 14:00
AIM Blog - Steps to manage cultural change after a merger

Company mergers are an increasingly common scenario as organisations attempt to create value by either acquiring new products and services, creating economies of scale or establishing a larger brand presence. Regardless of the impetus for merging two organisations, to really achieve the potential value of a merger it’s essential that both organisations are effectively integrated from the beginning, as this is where the seeds of long-terms success are planted.

While no two mergers are the same, there are some universal steps that leaders can follow to get the best possible results from creating a strong, unified organisational culture.

1. Culture is key to successful integration

Culture should always be considered before making any significant decisions about organisational change. Try to avoid communications about decisions that have already been made and asking change management teams to deal with the cultural consequences, change management teams should be appropriately resourced to allow for adequate consideration and management of cultural outcomes. When team members in each organisation see evidence that culture is being considered in every decision, they’re more likely to be engaged with the changes.

2. Nominate a ‘culture owner’ in each organisation

Each organisation involved in the merger should nominate a leader that can take ownership of culture. The ‘culture owner’ role is to report regularly to senior leadership on the change initiatives and provide an update on outcomes. The merging organisations should meet regularly to discuss the cultural progress and challenges they’re facing during the merger. This allows culture owners to share ideas and tackle similar problems they might both have, creating a sense of camaraderie in the process.

3. Use measurable outcomes, avoid vague statements

During times of change, it’s easy to pay lip service to the concepts of culture and teamwork. However, these times of change are arguably the most important to ensure culture and teamwork are measured in tangible ways such as improved efficiency, profitability or lower absenteeism. Do some research, find examples of teams that have successfully integrated their operations and keep an eye out for those that are struggling to integrate. Find out which factors are either driving or preventing successful outcomes and plan initiatives that replicate drivers and mitigate roadblocks in other teams.

4. Understand the strengths and weaknesses of both organisations

During a merger, it’s important to understand the strengths and weaknesses of each organisation. For a company to really bring a new and improved product or service to the market, it needs to make the best of both worlds so to speak. While integrating teams can drive efficiency, every function within each organisation should be viewed on its own merits. When Procter & Gamble bought Gillette in 2005, it was considered one of the most successful corporate mergers. The secret to their success? They focused on mapping the two companies’ processes to get the best of both.

Where one organisation may have a team or division that delivers a core competency that enables a competitive advantage, the newly merged entity should allow that team to continue its work unimpeded where possible. This means you aren’t making changes simply for the sake of change and you’re retaining the truly valuable components of either business.

5. Implement a decision-making framework during the merger

One of the biggest pitfalls of company mergers is the decision-making process grinding to a halt. With different decision and communication styles, mergers sometimes lead organisations to delay making timely decisions which can ultimately affect customer confidence and allows employees to become disillusioned with the organisation’s direction. Create a decision-making framework that will allow both businesses to continue delivering value to customers while the merger takes place. While your customers may notice changes at some point in their interactions with the new merged entity, they’ll appreciate that the changes haven’t been at the expense of their customer experience.

6. Build a balanced employee brand

A successful employee brand post-merger is imperative to successful cultural change. It’s important to ensure that during change, the newly formed business does not take one organisation’s existing culture and make that the dominant culture of the new merged organisation. Doing so will lead to disengaged employees who feel their needs have been ignored. Instead, conduct research with both sets of employees to find out which elements of the organisational brand they most identify with and build your culture around the elements that both sets of employees have in common.

Culture will ultimately determine the success or failure of a corporate merger. Regardless of the intended value that leaders expected to see from a merger, that value will never be realised unless both organisation’s employees are willing to work towards common goals. The most successful mergers are achieved when leaders make their internal culture as high a priority as their external brand.

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