How to avoid cultural clashes that plague mergers
Offerings that look great on spreadsheets can still hit serious hurdles when companies struggle to merge their cultures and work together effectively. As the value of global deals hit an all-time high of $5.9 trillion in 2021, the business community is sure to hear more about the corporate culture clashes that lead to acrimonious breakups.
One of the most high-profile recent examples of how cultural dissonance can bog down mergers is Amazon’s takeover of Whole Foods. The online retail giant’s obsession with data-driven standardization and low costs has clashed with the grocer’s values of personal touch and an emphasis on quality and health.
With 30 years of combined experience on multi-billion dollar mergers in multiple countries, we have seen time and time again how a lack of cultural integration weakens and in some cases dooms M&A transactions.
CEOs sometimes don’t realize the extent of the problem until it’s too late, after problems have begun to corrode the fusion from within, resulting in stalled progress on key objectives, poor morale and high turnover.
The first thing CEOs need to understand is that mergers are as much about people as they are about numbers; it will be really difficult to achieve a numerical goal without people being fully involved. Leaders need to recognize the anxiety and uncertainty that staff members inevitably feel after an M&A announcement.
Communication is essential. Leaders should discuss the big issues for employees head-on. Reorganization, and its impact on each individual, is always at the forefront of everyone’s mind.
By holding regular town hall meetings that encourage meaningful two-way dialogue, leaders can get ahead of any merger-related issues that affect trust and morale. Honesty, transparency and openness go a long way in building trust with teams.
Some leaders may be uncomfortable with town halls. After all, few people like tough questions from unstable people.
The solution is to be very intentional about what the meeting should accomplish by setting clear boundaries around what is going to be covered.
Senior executives can avoid problems by ensuring that the merged company is aligned with its new vision and values. It is also important to agree on what the company no longer stands for. This helps avoid the wasted energy of going back to the “old way” of doing things.
While some uncertainty is natural after a big merger announcement, leaders should embrace the little things that build unity. Loot bags with new corporate badges, hats, and t-shirts can foster unity and reduce the “us versus them” mentality that is common after mergers.
It’s also crucial to remember that onboarding fatigue is real. Merge work is often on top of regular workloads, making it a recipe for manager burnout. Always keep a watchful eye out for signs of fatigue.
Wise CEOs will respond to merger fatigue by calling for a complete pause in integration work. It may take a week or two, but the break may be worth it. Teams respond positively when they know leaders are sensitive to their ability levels.
Managers sometimes rely heavily on a few star personalities to drive onboarding efforts, but that leaves companies vulnerable when those people burn out. Leaders need to ensure they are fully maximizing available talent, allowing more employees to “buy in” to the new culture and making the process cross-functional.
Mergers and acquisitions are designed to increase results, but the numbers will never be fully realized until people fully cooperate and embrace the new culture.