Corinne Canter, Senior Consultant, Human Synergistics Australia

Mergers, acquisitions and other forms of strategic alliances generally have two dimensions which are crucial to their success¹. The operational dimension, that is the business case for considering the merger in the first place, and the cultural and people dimension.

The operational dimension is what tends to captivate the attention of leaders. The promise of improved efficiency, enhanced product offerings, increased revenue and competitiveness. The cultural dimension is often overlooked, or in some instances neglected altogether in the organisations' enthusiasm for realising the stated benefits of the business case. There is an assumption that the cultural 'stuff' will take care of itself as the business gets integrated.

A growing body of evidence since the early 1990's shows that a substantial number of mergers and acquisitions either fail outright or fail to realise the stated financial or business benefits promised at the beginning of the journey. A number of articles and research studies have been published over the past twenty years on the fate of mergers and acquisitions. Many of these studies have shown that the majority of mergers fail to deliver on the business benefits due to the lack of adequate consideration of the cultural dimension and people issues.

FIVE POINTS OF FOCUS FOR SUCCESSFUL CULTURAL INTEGRATION:

1. Map the territory

None of us embark on a significant journey without doing our research on where we are going, what the climate and culture are like, traditions and customs we need to be aware of. The same applies to successfully integrating company cultures of the two different organisations. Insights need to be linked to the business rationale prompting the merger or acquisition to begin with. This information will enable you to determine what approach needs to be taken to the culture and also how this should occur. In the event that the business drivers for the deal require cultural integration, the data can be used to identify potential challenges and issues involved in this course of action.

2. Establish an Integration Team and collaborative planning process 

It is important to get leaders from both organisations involved as soon as is practicable and possible. The integration team includes leaders and staff from both sides of the organisation that have the knowledge and skills to facilitate and fast track the integration process. Involve the team in the planning process. Collectively they will be in the best position to use their knowledge of the organisation to inform key planning and decision making points.

3. Communicate, Communicate, Communicate 

Mergers and acquisitions can evoke a fair amount of anxiety and defensive behaviours in employees as people wonder whether they have a job, or whether their job will change; whether they will get a new manager and what this manager might be like; whether their conditions and pay will change or whether they will be asked to relocate. There are many examples of employees complaining that they get more information about the progress of sale/integration from the news rather than from their leaders.

In the absence of formal communication from the organisation, employees will either fill this gap with their own speculation or try and access more informal sources of information. In our high speed, broad band, wireless world, employees are but a finger tap away from being able to access all sorts of information from a variety of sources. 

Communication is key. Regular touch points with consistent messaging across all stakeholders.

4. Take care of your customers

Of course employees are not the only ones who can become nervous with the announcement of an acquisition or merger. Customers are also very important and interested stakeholders in the shape that the new organisation will take. A similar kind of considered approach needs to be taken to keeping customers on board. Companies who do this well also take it one step further, they go beyond informing customers of what is going on and take the opportunity to consult and involve customers in the process of integration. Customers can provide a wealth of information about what is working well and what needs to be improved.

5. Create opportunities for cross functional teams

Even in cases where the cultural strategy decided upon is 'peaceful coexistence', it is important to identify opportunities where cross functional teams can be established to work on key projects or processes. As well as being a visible and symbolic act of 'one company, one culture', cross functional teams are a great way of employees getting to know one another, building internal capability and knowledge transfer.

The principle challenge businesses face with overseeing a successful merger or acquisition is successfully balancing the here and now operational demands with the needs to engage employees so that productivity levels do not fall and indeed ideally increase.

¹ Gancel, C ;Rodgers, I & Raynaud, M Successful Mergers, Acquisitions and Strategic Alliances 2002 Ch.2 p. 22- 24.