How To Shift Organizational Cultures After a Merger

There are challenging things that people in corporations experience and one of those times is when there is a merger and acquisition with another company.

It affects people in so many ways and it can impact how you will proceed with recognition and rewards.

Consider that consulting firm McKinsey and Company found that “95 percent of executives describe cultural fit as critical to the success of integration following a merger. Yet 25 percent cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail.”

Getting culture right is obviously critical after a merger.

William Bridges, author of one of my favorite books, Managing Transitions: Making the most of Change, wisely said, “It isn’t the changes that do you in, it’s the transitions.”

What he’s referring to here is that change is situational, as in the case we’re discussing here with a merger. But transition is “the psychological process people go through to come to terms with the new situation.” Thus change is external and transition is internal.

Cultural Steps to Take After a Merger

Culture goes beyond the mission, vision, and values of an organization, no matter how well articulated they are or espoused by the CEO. It’s the way someone does things where you work. 

I base the following suggested steps upon a McKinsey and Company model outlined in Organizational Culture in Mergers: Addressing the Unseen Forces by Oliver Engert, Becky Kaetzler, Kameron Kordestani, and Andy McLean.

Step 1: Examine how work is done at each organization. This will require a careful examination of how leadership and teams function, and how work is uniquely performed and done differently at each organization. 

Neither is better than the other. But understanding how culture works daily will better prepare leadership and managers with understanding the differences between companies and why some things should not be changed.

From a recognition and rewards perspective, it will be important to assess what is recognized and rewarded at each company, how they are given, and how well they are received by employees. You may have to learn from them on how to improve your own programs. But at least you will better appreciate the attitudes and behaviors of employees that exist on both sides as you integrate.

Step 2: Setting clear expectations and priorities. With sensitivity to the differences of cultures you need to work with both leadership and management teams in setting what the new normal will be.

You must set priorities on how culture can help the merged organization achieve what made the deal an attractive proposition. What will be the common goal both organizations will strive to achieve? Second, you must define cultural norms on how both organizations need to develop one culture and way of working.

This relates to transition management in burying a past way of doing things and embracing a new way of doing things. It is about accepting signs of grieving, creating markers that show an ending, acknowledging emotions and grief, and continual and repeated communications at all levels of the organizations.

It’s the letting go that is the hardest thing for humans to do. Because two companies have merged does not mean a new company began right away when leaders signed the deal on the dotted line. Different people will start their “new beginning” at far different times than other leaders and employees.

They liken this transition to a Boston Marathon where some runners will cross the finish line while others are only just leaving the starting line.

Leaders must be the role models in this transition process. They must create physical symbols and ways to show the changes. Whether that is a new vision, mission, and values statements, or new initiatives that require everyone working in the new cultural way.

Step 3: Normalize the changes and support them.

You must integrate the agreed upon cultural changes so they are part of the standard operating procedures.

If you have a new set of values, they should become a part of the new performance management process. Likewise, you would make these new values something you recognize employees for living in your revamped recognition programs.

Another great way to support the merged cultural changes is to draw upon employee influencers within the organization. While leaders are great at declaring and positioning the reason for the changes, having employee ambassadors who “get it” to draw upon is a powerful asset.

These employee influencers can help educate all teams on how to manage their emotions and the transition that can take different lengths of time depending on the employee. Having these employees facilitate candid discussions with peers and make recommendations to management on essential changes and communications required is a huge help.

I always liken mergers to bringing together blended families. The biological parent needs to take charge of their children in the first year and not try to discipline the other partners kids until at least a year has gone by when trust and love are established. Coming up with common rules and ways of doing things takes time, effort, and consistency before it all comes together.

Companies are no different. Work on the culture first until trust and respect are in place. Then you will see all of your employees flourish.

Recognition Reflection: Look carefully at the different ways recognition and rewards are administered and experienced across merging organizations.

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