Executives considering any type of merger or acquisition do their due diligence. They pore over balance sheets, scrutinize operational procedures, evaluate budgets and forecasts, and conduct numerous other analyses. But how often do they pause to consider the people. Bringing together two companies also brings together two sets of people. And the corporate cultures within which these people operate may be significantly different.
What can you do to overcome any differences and smoothly blend corporate cultures? It’s important to plan ahead, because the early days of a merger are so very precarious. It’s the time when employees on both sides are most nervous about the new relationship and how it is going to play out.
John Hren, business director for a multinational basic minerals and marketing company, has seen corporate mergers from both sides of the fence. In one experience, one of the merging companies was very focused on short-term profits, cash flow, and the marketing program while the other company’s culture was much more focused on the long-term investment and basic research. “It almost turned into a civil war,” he recalled. Figuring out how they were all going to get along consumed the organization.
What lessons did he learn? “If you don’t set out a strong harmonious vision early in the merger process, it just degenerates into individual fiefdoms. If you don’t have a vision that both sides believe in and can work towards, then you’re already a step behind.” The vision has to be authentic and effectively communicated if you want employees from both merging companies to truly buy into it, he said. And it’s vital to get quick wins. “Get both sides focused on tasks and sub-tasks that can be achieved quickly. Having common goals to focus on—and completing them side by side—helps to bring the two different cultures together in the early stages.”
While that’s certainly true, doing effective “cultural due diligence” avoids the dreaded “culture clash.” Gary W. Craig, Managing Partner and COO for Vector Group, says that in over thirty years of handling M&As across the world, he’s never seen two organizational cultures that could not be successfully integrated. “M&A failure due to culture clash is just a way of describing management negligence, arrogance, ignorance, or some mix of the three. Dysfunctional culture clash need never occur.”
And, at the end of the day, it all comes down to how you integrate your people.