After Mergers and Acquisitions – Defining the Culture

    Ajinkya Deshpande

    After striking and following through with a merger or acquisition, it is crucial for your success to be culturally aligned with the new environment. If culture is overlooked, it can lead to poor results that can be tasted in a few months. Here, we aim to address how culture can be addressed for better effectiveness. 

    At the time of striking a deal, at the CEO-level, visions and values might be clearly defined – however, at the employee level, there could be several reasons for misunderstandings and friction. Here is how you can prevent them.

    Diagnose workflow

    At the early stages of the merger, leaders should learn about the culture of each company and not just on paper. This involves a strategic understanding of each other’s “secret sauce” and other crucial factors intrinsic to the respective cultures. The understanding should also give each other the benefits of the different cultures.

    This understanding begins with knowing how work gets done at both companies, including management practices, working norms, decision-making processes, motivation strategies, and accountability strategies. Working with focus groups and carrying out one-on-one interviews can help eliminate misperceptions about the other company and facilitate better adaptability. 

    The goal of this diagnosis should be the creation of a common language that complements both companies and ultimately, serves the clients better. More importantly, it can give you an idea about any possible friction you can expect.

    Set priorities

    Once the cultures are understood by both parties, you can begin to set cultural priorities based on two aspirational points. The first is to create a culture that will help maximize the value of the deal to meet more ambitious targets. The next one is to manage meaningful differences in ways of working to build a single high-performing organization. These shifts can be easy to communicate if you can accurately draw inputs from your diagnosis of the work cultures. 

    This can be done by understanding the answers to a few questions like “What have we done well? What can we do better? And does the culture we want to drive going forward even match the culture we’ve brought into this?” This will allow you to codify a set of behaviors or practices that will strengthen the company and bring in practical changes. It is also important that each of these themes cascade into initiatives that can be monitored through key performance indicators. 

    It is important that these initiatives contain a mixture of hard measures like structured incentives and soft measures like appreciation and celebrations.  

    Hard-wire change

    Once the changes are converted into rewarding-initiatives, they have to be hard-wired into the company’s operating model and daily practices. This involves the redesign of company policies, processes, and governance models that reflect the changes. By mutually reinforcing these initiatives, companies can change their behaviors quickly and establish the new normal. 

    Through all these processes, ensure that you also identify the real influencers of the company and give them the training and skills they need to be effective as a messenger. 

    On paper, these measures might seem hard-to-implement. However, once implemented, they can ensure the seamless success of your M&A. After establishing all the aforementioned initiatives, ensure that you monitor and track their effectiveness. At Markets and Partners, we go beyond the technicalities to facilitate the complete integration of the two cultures. Get in touch with us to know more.