Culture Integration during M&A

The absence of culture integration during M&A, is a common reason cited for deal failure. The SVP of a newly merged entity said “Buying is fun.. Merging is hell”.

In our experience, during the pre-combination phase, there is pressure to ‘do the deal’ and cultural differences are typically not considered. During the combination phase, integration is seen as a distraction from real work and culture differences is often denied or ignored. The problems appear during post-combination phase, where cultural differences hinder performance and a culture takes shape more as default rather than by design.

Culture integration plays a critical role in bringing the two organisations together and shaping the future culture, rather than merely accepting the emergent default culture.

Our approach to culture integration involves mapping existing cultures, defining the future culture, and determining a clear path to institutionalise it. What hinders this process is the notion of competition between two organisational cultures. We focus on bringing out the best of both cultures by building on the cultural strengths of both the merging organisations.

Our approach to integrating culture

  • begins with articulating a clear picture of desired culture outcomes, i.e. patterns of behaviour we want employees to demonstrate in the combined entity.
  • measuring the ‘as is’ i.e. current culture, in the two organisations.
  • laying out a step by step plan towards the ‘to be’ i.e. desired culture in the combined entity.
  • suggesting ways to monitor and measure and
  • finally motivating and rewarding employees to demonstrate desired behaviours.

We recommend specific interventions such as changing leader behaviour, redesigning the way people work, revamping processes, developing employee skill sets, recognising and rewarding behaviour/ mind-set change and adopting enabling technology.