HR Administration

The Culture of M&A

By Todd Henneman

Nov. 10, 2013

Corporate bedfellows continue to rush through courtships and say “I do” to organizational marriages whose financial performances prove disappointing in the boardroom.
Decade after decade, studies find that the vast majority of mergers and acquisitions falter. One reason often cited: culture. More than 90 percent of mergers-and-acquisition professionals surveyed by consultancy McKinsey & Co. say that their deals would have “substantially benefited” from better understanding the organizational cultures before the merger.
Consultants offer these four tips for increasing the odds of a happy organizational union.
1. Know thyself, said Dan Avery, a principal with the mergers-and-acquisition practice of Point B, a management consulting and venture investment firm. Often, acquirers focus on assessing the culture of the target, he said. But the acquirer needs a deep understanding of both cultures.
2. Use data from your human resource information system, said Karen Bundy, a principal with Mercer’s mergers-and-acquisition business. “It can be very telling as to how your organization behaves, what employees actually ‘do’ vs. what they ‘say,’ ” she said.
One company looked at a potential merger partner’s internal labor flow map—a picture that shows how people move into, through and out of an organization —and turnover data. They showed that, though the potential partner said it had a performance-management culture, it was “managing out” its good talent because its practices were too black-and-white, Bundy said.
3. Focus on shaping culture rather than integrating it, said Kevin Knowles, principal at Deloitte Human Capital Consulting. “You can integrate people, processes and technology,” Knowles said. “But you can’t integrate culture—effectively.”
Mergers and acquisitions succeed when culture and strategy reinforce each other and enable an outstanding employee experience, a differentiated customer experience and superior business performance, he said.
“We have the ability to precisely define where behavior will inhibit or execute strategy, but more often than not I see clients using a standard one-size-fits-all approach to their culture,” Knowles said. “Shaping culture is more a science than an art — but unless it’s fully committed to enabling strategy and delivering value, it will always be a silent killer of value in M&A.”
4. Acknowledge the transition may feel scary and that your workforce may have questions that can’t be answered yet, said Linda Fite, vice president of training and consulting with Pritchett, a firm that specializes in change-management and merger integration. “Set their expectations to meet the reality that they’re going to experience,” she said. “Otherwise, they’ll see that reality as proof it’s not working out and that they should start looking for another job.”
 

Todd Henneman is a writer based in Los Angeles. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

Todd Henneman is a writer based in Los Angeles.

What’s New at Workforce.com?

blog workforce

Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.

Book a call
See the software

Related Articles

workforce blog

Compliance

Minimum Wage by State in 2023 – All You Need to Know

Summary Twenty-three states and D.C. raised their minimum wage rates in 2023, effective January 1.  Thr...

federal law, minimum wage, pay rates, state law, wage law compliance

workforce blog

HR Administration

Is your employee attendance policy and procedure fit for purpose?

Summary: Lateness and absenteeism are early warning signs of a deteriorating attendance policy. — More ...

compliance, HR technology, human resources

workforce blog

HR Administration

Clawback provisions: A safety net against employee fraud losses

Summary Clawback provisions are usually included as clauses in employee contracts and are used to recou...

clawback provisions, human resources, policy