In a recent McKinsey survey, a whopping 92 percent of executives surveyed said that past acquisitions would have “substantially benefited” from greater cultural understanding prior to the merger.
Indeed, “the number one reason for a merger’s failure to achieve the promised value is culture clash,” confirmed Bill Kaiser, Senior Consultant at AD HR service provider High Performing Culture in Medford, NJ.
In a community of AD independent distributors that have acquired more than 130 companies over the last 5 years, the ability to integrate two cultures seamlessly post-merger is essential.
Below are the 5 key pieces of advice compiled from AD leaders, industry experts, and independent distributors that will help you have a successful merger without alienating the new team.
No. 1: Have a Plan in Place
Before you follow through with a merger or acquisition, make sure you’ve planned ahead and have a process for integrating the two cultures.
While “companies often have good processes for managing the financial and operation aspects of an acquisition, it’s just as important to have a cultural assessment and integration plan and process,” shared Neil Cohen, AD Senior Vice President of Human Resources.
“Build time and budget into your schedules for integration, because even if you want to minimize change out of the gate, there’s a lot of work to be done. Be patient, roll up your sleeves, listen intently to your team, and work the plan,” agreed Renee Lytle, CFO of AD member E.B. Horsman & Son in Surrey, British Columbia.
No. 2: Maintain Cultural Discipline
After a merger or acquisition, it’s important to integrate the new team into your company.
“Onboarding is a difficult and emotional process on both sides and often, in an effort to welcome the new team, acquiring companies go out of their way to maintain aspects of the previous culture,” said Ed Crawford, President of AD Electrical Divisions & Chief Marketing Officer. By doing that, “you risk creating cultural silos that can be extremely difficult to break and can have significant negative consequences. I recommend that the acquiring company not change its mission or values. You acquired them, and most employees of the new company will expect there to be some changes.”
A big part of this is making sure you fully understand the incoming company’s culture ahead of time. “If the company has the right DNA, we know that the chances of a successful integration multiply. Integrating two companies can be challenging but checking the ‘fit’ box from the beginning makes the process much easier,” said Lytle.
No. 3: Encourage Cross Fertilization
For a successful alignment, Crawford recommends being inclusive from day one in the form of welcome receptions, mentoring programs, HR processes, holiday parties, etc. “It’s equally important to encourage ‘cross fertilization’ of employees at all levels of the two organizations,” he said. Not only does this promote teamwork and communication, but it also shows a willingness to embrace the new team and provide additional career opportunities, which should be highly motivating.”
Lytle agreed, sharing that E.B. Horsman & Son encourages “feedback, functional group e-mails, fundraising, and branch activities in coordination with the rest of our branch network, such as family BBQs, Christmas parties, and our Annual General Meeting.”
No. 4: Clear Communication on Core Values
At E.B. Horsman & Son, communication is a large portion of their integration plan and being clear on expectations and core values is paramount. “We expose the new employees as quickly as possible to customs like our ‘thumbs up page’ and ‘Everyone Builds Horsman’ water bottles and we talk about our core values throughout the onboarding process,” Lytle said.
Cohen concurred, saying that the behaviors expected of associates within the acquired company should be as clear as possible and that the acquiring company should put processes in place to support this. “This could include hosting workshops with employees to learn and practice the expected behaviors, communicating examples and stories regularly via e-mails and meetings, building the assessment of core values into your performance review processes, and celebrating and rewarding employees who exemplify these behaviors.”
No. 5: Measure Your Success
In order for you to know whether you’re successfully merging the two cultures, there needs to be a way to evaluate performance, and experts agree that continuous engagement surveys can provide a great benchmark for company’s culture.
At E.B. Horsman & Son, “we have a confidential employee survey each year where we ask 12 benchmarking questions and a few open-ended questions. It provides us with the pulse of our company in terms of what’s working and what can be improved on. The results are shared with everyone in the company and this transparency strengthens our culture,” shared Lytle.
While financial and customer-facing results are important gauges, Crawford also believes that success is often best measured by employee engagement and retention. “Hopefully your company conducts an annual engagement survey which can serve as a benchmark for future results,” shared Crawford. “Similarly, as a secondary measure, evaluate if employee turnover has increased since the acquisition. Conduct formal exit interviews, be open to the feedback, and develop a specific action plan.”
How do you know if you’re trending in the right direction? For one, “you start to see and hear the common language of the culture being spoken/written by the new company employees in terms of ‘us’ and ‘we’ rather than ‘me’ and ‘them,’” Kaiser said. “You also see new teammates/departments/divisions including and sharing information with each other and collaborating rather than competing.”
While there are some tangible steps you can take to integrating a new culture into your company, Lytle concludes that “it’s a journey that takes time and requires constant focus because culture is an art, not a science.
Bill Kaiser is a senior consultant for High Performing Culture, an AD HR Service Provider that helps companies create, drive, and maintain high performing cultures with a proven system that’s straightforward, practical, and easy to implement. This article originally appeared in the 2018 edition of AD Today Magazine.