Mergers and Acquisitions: The Importance of Compatible Cultures

Culture is an integral part of the long-term success of any company. When two organizations merge, cultural compatibility has a major impact on the overall success or failure of the amalgamation.

Integrating merging companies requires a daunting degree of effort and coordination. There are many reasons mergers can fail, and cultural differences are one of them. Managers and CEOs need to ensure potential acquisitions have common beliefs and values, just as an HR Manager would evaluate if a new hire will be a cultural fit within the organization.

Common Values

It is important to measure how a company demonstrates its beliefs and values. This is more than a company mission statement, it also includes how they interact with partners and consumers as well as employee engagement and strategic philosophy. A strong set of shared values will ensure long-term success.

Promoting a strong culture is not only good for both company’s employees, but it is also good for business. Studies show that highly-engaged employees can increase an organization’s earnings by 28 percent and operation income by 19 percent.

Leadership Styles

Leaders have a responsibility to demonstrate the beliefs of the company and reinforce behaviors that reflect those values, from decisions and policy-making to management behavior and organizational structure. Does the company show it cares about employees? Are employees encouraged to speak up at staff meetings? Do employees engage in decision making?

The character of your own leadership team is equally important. The transparency, thoughtfulness and mindset of leaders on both sides help ease the integration process. A clear understanding of set goals, fluid communications and collaboration from each party is essential at every step of the journey.

Leadership teams of the acquired company are key to employee retention. The trust and responsibility of the acquired company’s leaders should be an important consideration.

The Way You Work

What makes your company a great place to work? The processes you follow, the tools and strategies you use to innovate, collaborate and organize are what sets a company apart.

A recent Great Places to Work survey concluded that successful organizations that innovate by boosting diversity and inclusion experience more high-quality ideas, increase agility and achieve greater speed in implementation.

Both a formal and informal evaluation of work processes and the employees involved are key in acquisition and integration. A shared set of values and purposeful ethos will result in better ideas and positive future outcomes.

When you are looking to acquire a company, it is essential that you research cultural compatibilities at every state of the process, starting at due diligence and following through to ongoing operations. Culture is the backbone of every organization. This early work will help develop a strong shared culture that will ensure a high level of employee engagement and overall success.