A great deal of research is usually carried out before a merger or acquisition. But financial projections and market research do not usually address one of the largest factors in the move's success or failure – culture.
What happens when culture is ignored during a takeover bid or merger?
Culture makes the organisation what it is. If staff are happy and motivated, they will "go the extra mile" for the new owner. Neglect the culture and things may slide. A successful company can become a dead duck overnight.
What can go wrong?
Problems can start when a small company is taken over by a larger concern. Small organisations are often successful because they reflect the energy and enthusiasm of their founder. Employees may feel part of a "family" and express intense loyalty to the firm. After a merger, such employees often feel a sense of loss and can feel that the new owners do not understand the business or the vision of the original organisation.
Another common problem is that employees of the weaker partner to a merger or acquisition feel they are being forced to accept the values of the dominant partner. This may result in open or passive resistance to changes in work practices and hostility to management and staff from "the other side".
How can this be avoided?
Trying to merge two quite distinct cultures is far more difficult, and can take much longer than bringing together two organisations that have similar cultural characteristics, so the best advice is to look for a congenial partner.
An understanding of both cultures' similarities and differences will provide a good foundation for a successful merger strategy.
The risk of cultural clashes can be minimised by following a few simple rules. Give employees as much information as possible about the benefits of the merger, empathise with their anxieties and give them channels to express any concerns they may have.
What if a merger or takeover results in redundancies?
Companies must work hard to minimise the damage. Managers need to reassure the employees that are left behind, explaining why any redundancies had to occur, and emphasising the strategies that are being put into practice to avoid further job losses.
Firms should also give as much assistance as possible to those being made redundant.
This can mean helping them find alternative work, offering opportunities to develop new skills and arranging counselling to help them adjust.
Compulsory redundancies should be kept to a minimum and firms should look at options for retraining, redeployment or more flexible working.
How to survive a merger
- Try to hold on to what is positive in the cultures of both organisations
- Do not allow the culture of the more dominant partner to simply take over
- Explain the benefits of the merger to staff to encourage them to be adaptable and to keep an open mind about the new regime
- Consult the workforce on new practices, procedures and working arrangements
- Remember culture may be invisible but it can present a potent barrier to change.