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Culture key to success of company mergers

By Monicah Kihia | November 27th 2020 at 00:00:00 GMT +0300

The decision to drive strategic growth through a merger is alluring. Numbers often drive a hard argument. But as everyone who has experienced the reality of a transaction knows, the road to living up to financial expectations of a merger can be fraught with land mines. And one of the more overlooked derailing factors to consider is cultural integration.

According to collated research and a recent Harvard Business Review report, the failure rate for mergers and acquisitions sits between 70 and 90 per cent largely because of incompatible cultures post-mergers. Like most things in life, there is no secret recipe for successful mergers. A well-etched strategy, astute management team, and an eye for detail are what encapsulates the essence of the successful merger.

While the strategy is important for most mergers, cultural compatibility is the soul of the merged entities. Not only are you asking two companies to integrate under one corporate vision and mission, but you are also bringing together large groups of people with different personalities, ambitions, behavioural traits and ways of working.

From the outset, it must be understood that people and cultural integration is everybody’s business; it is not just another item on Human Resources’ function to-do list. To ensure a cohesive culture, first, a culture integration team must be put in place to offer technical support. Their first mandate is to perform a culture audit to establish a clear fact base and understand the existing company cultures that would then identify the areas of similarity and disparity.

It is important to understand how work gets done in both companies: Their management practices, working norms and organisational values. How do they make decisions? How do they motivate their people? What is their performance culture and how do they hold people accountable—individually and collectively?

The audit provides empirical data to assist the merger integration team to utilise the best of both organisations. Being open to exploring different points of view is the key to the human factor in any merger. The next step is to efficiently and frequently communicate the reasons for every action undertaken during cultural integration. It could be simple things such as changing the company dress code to match that of the new company. 

Some may not like some aspect of the proposed new way of doing things, but if they see that it has an important purpose, they are more likely to embrace change quickly. Throughout the culture journey, the leadership must ensure that it provides psycho-social support to all employees as they go through the transition. This helps them to accept and adopt the changes faster.

The cultural integration team must also ensure the desired culture messages and behaviour are cascaded throughout the new company from the top. For instance, the “Go Getter” culture at NCBA was led from the leadership team that committed itself to the culture effort. The team began role modeling the change in behaviour from the onset when a merger was announced. A compelling, consistent change story was developed centrally and collectively, and all leadership team personalised it with their own experiences, creating a sense of shared endeavour.

Brand promise

The leadership team then used this story to engage with employees at every opportunity to communicate and embed the desired culture more broadly as well as proactively addressing pain points. This is how you are able to retain talent and boost employees’ confidence and trust in the process.

As the saying goes, culture is brand and brand is culture”. Excellent culture integration always enables the organisation to deliver its brand promise and build a great legacy. Likewise, legacy is dependent on how well you treat your people during the integration process and the care you demonstrate to them ensures their loyalty and dedication.

“People will forget what you said, people will forget what you did, but people will never forget how you made them feel,” said Maya Angelou. You can have a great strategy but if you have the wrong culture the strategy will remain a dream.

Culture integration is serious business. The ultimate goal is to mitigate risks in shaping a new organisational culture in line with strategic priorities and to ensure its health and performance for years to come.

-Ms Kihia is the Group Director, Human Resources at NCBA Group [email protected]cbagroup.com

 


Company mergers Harvard Business Review report
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