Last December, The Wall Street Journal officially declared 2015 the “Biggest M&A Year Ever," consisting of numerous mega-deals worth over $5 billion. USA Today reported that $4.85 trillion in “corporate wedding vows” were exchanged. And The Atlantic’s review of what it calls the “Merger Bonanza” points out that we may very well be in the middle of the 7th major wave of rapid merger activity over the last century—other notable periods being the early 1900s during the consolidation of steel and oil, the diversification wave in the 1960s, and the shifts caused by deregulation and globalization in the 1990s.
Yet lying behind those big numbers is an equally big fact: big groups of people are now coming together to work in new teams, navigate new corporate cultures and establish new roles and responsibilities. Even though M&A is down in Q1 this year, the corporate world will be navigating the cultural implications of the 2015 frenzy for years to come.
Mergers and acquisitions = corporate culture shifts = friction, fear of change and new expectations
Long-term, a host of workplace cultural shifts threaten any company that is absorbing another, that is being absorbed, or that is combining with another large, successful company on a global scale.
So, what can be done to make the chances of success and long-term profitability better?
- Integrating IT systems: Ask any M&A team about what keeps them up at night concerning a deal and you’re sure to hear about integrating IT. Invariably, there are technical hills to climb, unforeseen software challenges and delays that threaten every timeline. No matter how much planning goes into schedules and protocols, there will inevitably be tense moments, questions and problems.
Knowing this in advance means that the M&A team can proactively tackle the equally monumental task of understanding and integrating cultures between companies. If leadership teams, marketing teams and IT teams think ahead and start working together from the get-go to resolve unforeseen challenges, how much smoother the merger will go. Wouldn't it be better to build bridges across internal cultures rather than begin the marriage with ugly finger-pointing over IT problems?
To begin, I advise starting with a baseline assessment of the existing culture in each company, department and leadership team involved. To do this, an excellent resource that we use with many of our clients is the OCAI online assessment, a validated corporate tool developed by professors Robert Quinn and Kim Cameron of the University of Michigan. It’s a powerful tool that starts even more powerful conversations, and has been used by over 10,000 companies worldwide.
- Getting on Top of Details Early: What’s the plan? That’s the first question any employee on either side of a merger or acquisition will start asking themselves and everyone else they work with—not to mention the first question everyone on the outside will start asking the employees. NOTE: One big mistake that can sink many a deal is letting the big ideas and the money take center stage at the expense of the individuals on the inside who are expected to work together and make it all happen on the ground.
The sooner a plan is set in motion for integration, even if it’s before the deal is official or announced, the sooner the integration work can begin. That means less questions, less confusion and less looking backward. Instead: more hope, more clarity and more looking forward. And ultimately, more productivity.
One corporate anthropology tactic that can really help here is Deep Hanging Out. While it sounds simple, it is molded in the vein of classic anthropology, which is based on participant observation. Once an M&A deal is in motion, set aside time to visit leaders and top talent on key teams involved, and just hang out, take notes and learn everything you can. Use what you've learned for smoothing transitions that are sure to be bumpy but that in the long run, can be in everyone’s best interest.
- Clarity Around Roles & Responsibilities: Once an M&A deal is public, or even beforehand, it’s reasonable to expect that top performers will start getting offers from outside companies. One nightmare scenario for an otherwise promising merger is for top talent to be sucked away by good offers that look even better when the future at home is unclarified and uncertain.
Circumvent this by being proactive. Right away, start the process of talking to key people about what their roles will be in the new merged landscape and what kind of culture and company you want to build. Not doing so risks losing the very people you thought would be helping lead the transformation.
Tools You Can Use!
One of my favorite tools from the corporate anthropology quiver which is perfect for successfully blending two (or more) corporate cultures is the Culture ChangeMap™. Extensive Research shows that the difference between effective and ineffective change is the use of several sources to influence establishing a new culture, not just one source. Building a roadmap to make sure those influences are in place and communicating the same message is critical to communicating and establishing new roles and responsibilities within and across departments.
In M&A deals, especially large ones, friction and challenges are inevitable. Companies that look ahead and spend as much time thinking about and planning for the cultural implications as they do for the financial ones will find more long-term success and more profitable results.
Want To Read More?
I discuss all of these points at length in my book, “On The Brink: A Fresh Lens to Take Your Business To New Heights.” You might also find this blog of value:
From Observation to Innovation