3 Tips to Successfully Overcome Culture Challenges During Mergers and Acquisitions

Mergers and acquisitions can be a stressful period of transition. Learn about three common pain points that can arise internally and impact culture in these events - and how to make it through them successfully.

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Mergers and acquisitions can be an incredibly stressful period of transition for companies, leaders, and employees. Keep reading to learn about three common pain points that can arise internally and impact culture in these events - and how to make it through them successfully. 

There are many reasons why business owners decide to merge their companies or have them acquired. Sometimes it's a way to eliminate competition. Other times, it may be to boost productivity, enter a new market, or even save their business from going under.  

Whatever the reason, one thing is certain: things are going to change. So, then, when two separate entities unite, how do you get two different teams, departments, cultures, and corporate styles to not only work together, but work well together?  

Research collected by Forbes found that mergers and acquisitions have an overall success rate of about 50%. Compatibility and integration issues are statistically likely to occur, especially if not enough attention is being paid to the integration process and how things will work internally once the ink has dried on the deal. In fact, according to the Institute for Mergers, Acquisitions and Alliances, 66% of corporate executives try to begin strategizing far in advance because of the risk of failure if integration issues are not considered. For a smooth transition, CEOs and leaders need to be able to honestly answer questions like:   

  •  Have you assessed the company culture of your acquisition and is it compatible with yours?  
     
  • Can you put adequate resources into the integration? 
     
  • Is the acquisition a better choice than all the other alternatives you may have? 

Ultimately, it's integral to understand the specific factors that commonly contribute to these types of issues so that you can develop a strategy to proactively mitigate them as you move forward with the merging or acquisition process 

Keep reading to learn about three common pain points of mergers and acquisitions for both employees and leaders - and how to successfully alleviate them.



Problem #1: Lack of Communication  

PWC conducted a survey on companies that had completed mergers and acquisitions. Its findings showed that challenges related to communication were one of the top reasons that they had failed. 

When there's no proper communication between managers and employees on what's going on - or lack of communication between colleagues who are newly working together - employees can be left asking questions like:  

  • “Why is the organization merging?” 
     
  •  “How will the merger affect my job?"  
     
  •  “What support will I receive during the merging process?” 

This kind of lack of communication can create uncertainty in the workplace, which leads to lower employee engagement levels and even distrust.  

In a big event such as a merger or acquisition, it’s important to keep all parties informed. Let employees know the updates on the integration process. These best practices can help provide some clear insight on what’s happening and changing: 

  • Give Context by Telling the Story - Make sure everyone understands why this is all happening - and as soon as possible. Give some background to provide context and what the hopes are for the future. It'll prevent rumors from spreading, help explain how the company will benefit, and why it makes sense.  
     
  • Make a Timeline of What's Happening - Create a timeline of the merger and acquisition process to share with your team. Be sure to include assigned roles and responsibilities, as well as various milestone dates and deadlines promised to key stakeholders. This way, everyone will have an understanding on what to expect and when.  
     
  • Create a FAQ Document - Undoubtedly, lots of questions will arise from across your organization. So, create a document that addresses various concerns. You can even send out an internal poll to your colleagues to get some of these questions firsthand. Ultimately, it'll help reduce uncertainty and confusion.   

After the merger or acquisition happens, you need to maintain momentum on communication. Here are three easy ways to do that: 

  1. Schedule regular meetings within your own department to touch base directly with your team 

  2. Set company-wide “town hall” meetings, so employees are given the opportunity to ask questions to members of the senior leadership team   
  1. Send regular email updates whenever something new happens or a change occurs   

Whether it be individual, departmental, or discussion with the whole company, having open communication before, during, and after a merger can make all the difference in helping employees feel secure and informed. Being aware of the questions, concerns, and fears that employees have, and, proactively giving them answers will help to build transparency and trust, and lead to an overall successful merger.  

Training programs, such as our own Clear Communicationcan also help you and your team work on their communication skills both before and after a merger. Learning different techniques, how pick up on non-verbal cues, and how to productively work through conflict are all extremely valuable skills to develop through the merger and acquisition process - and beyond. 



Problem #2: Losing Your Company Culture  

How can you merge two separate company cultures? Alarmingly, an AON/Hewett study found that there is a 23% increase in disengaged employees after a merger or acquisition – even if no one’s job is affected. These changes have an undoubted impact on employee engagement, which goes hand-in-hand with culture. In a merger or acquisition, cultural differences can arise and even become an "us versus them" dynamic as different approaches conflict.  

Company culture is something that requires an investment from everybody on the team. And retaining a healthy company culture will give you your best chances of fostering high employee engagement, better productivity, and even lower turnover. Here are three ways you can help to preserve your culture after a merger or acquisition:  

  1. Redefine or Reintroduce Your Company's Core Values  

A company's culture is based on its core values - and trying to merge two different sets core values can cause a clash. Leaders have three options here:  

  • Keep one organization's core values and share them with the other team 
     
  • Find the best fundamental elements from both sets of principles and work together to bridge them 
     
  • Create a new set of core values that speaks to the company's new direction 

Either way, you must be absolutely clear on what matters and why. Then, you can build your new culture together from the ground up. Read more about how to define and effectively live out your core values in our article, How to Launch Your Core Values and Make Them Stick.  

  1. Invest in Your Culture with Team Building and Training 

Mergers and acquisitions can be stressful on both the leadership team working behind the scenes, as well as the overall staff. Increased periods of stress and uncertainty can often lead to a decrease in engagement. Participating in team building activities is a great way to get to know new colleagues and encourage collaboration. Also, you can partake in some skill development training, such as Active Employee Engagement - exactly what Vision Credit Union did when they merged two separate credit unions to form the company. Read our case study to find out how the session helped them build a more connected and unified culture.    

  1. Frequent Check-ins with Employees    

Want to know where everyone is at? Ask them.  

Regularly send out formal employee engagement surveys to check in on how everyone is feeling. You can create your own surveys through a free service like SurveyMonkey or use an automated software solution like OfficeVibe to automatically collect feedback.  

Monthly performance reviews are also a way to focus on how each individual contributes to company objectives, to keep people feeling connected to the company.   



Problem #3: A Low Employee Retention Rate 

Mergers and acquisitions are a time of major transition - and often, a difficult one, especially for employees. They will be faced with some, if not all, of the following fears: 

  • Justifying their jobs or value to the company

  • Getting laid off

  • Being asked to re-apply competitively for their current role  

  • Drastic company culture changes 

The loss of employees during this process will inevitably affect daily business as usual and further demoralize an already compromised workforce.  

So, what to do? How can you maintain your employees’ trust during this period?   

Keep them engaged.  

Employee engagement is key when it comes to retention. Businesses with highly engaged teams have 59% less turnover, according to Gallup's State of the American Workplace Report. In a recent episode of Outback Talks: The Employee Engagement Podcast, we sat down with Tracey Topping, the Employee Experience Manager at Left - a multinational technology company with an impressive 97% retention rate. According to Tracey, core values, company culture, and communication are crucial in encouraging engagement and retention.  

And it's no coincidence they are all elements that are part of the previous two tips: they're all inherently connected. 

  • Culture drives employee satisfaction and is defined by core values 
     
  • When employees aren't aligned to core values, they are disengaged  
     
  • Open communication fosters a positive work environment and helps employees feel connected to their organization  

Without one, you can't really have the other. And they all come together to impact employee engagement and, in turn, retention.



Learn More About Employee Engagement
 

 For further support on how to keep your employees engaged during mergers and acquisitions, just get in touch to learn about our team building, training, and coaching solutions. 

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