How to Survive Mergers & Acquisitions by Nurturing Company Culture

By Katie Lynch, CAHIMS | Chief Operating Officer | February 18, 2020

Company culture is critically important as it defines the character and attitudes that model day-to-day operations, communication habits and the general image of an organization. Having a mission statement and a set of core values is immaterial if both are not intrinsically woven into the fabric of the organization and embodied sincerely and consistently by every team member across ranks and departments.

This practice becomes particularly critical when a company is working through mergers and acquisitions, which can be quite destabilizing for a business. At these times, there is an intrinsic instability created by the complex interaction of different business models and operational structures and, more critically, by cultural issues within and between each entity. Streamlining operations and replicating procedures could be easier said than done when merged management teams disagree on the basis of a different set of values and believes which have been perpetrated by evolving company cultures within each of the organizations.

Therefore, it is imperative to first understand and dissect the belief system of each of the merging entities to get at the core of the differences in style and approach. Only by evaluating how strong and deep-seated the core values of the company culture are at all levels of each organization, will we be able to manage the transition and decide which direction it should take to make sure the new entity that surfaces from the merger or acquisition is in line with its vision, ethics and goals.

The Importance of a Shared Belief System

Reconciling differences and building a common platform for the future should precede any other objective because it is at the very core of developing a healthy and successful organization. Everyone, starting from the top down needs to believe, live and practice the ethical framework and values of the merged company, the essential recipe to make your business unique and successful.

When two highly incompatible cultures compete in a merger or acquisition situation, difficult choices are often to be made regarding personnel fit within the new structure, and an unpleasant and costly restructure often ensues, leaving resentment and everlasting discontent, issues that most companies tend to set aside. These issues will resurface again and again, slowing down productivity and dampening the winning attitude a company needs to always maintain to be successful.

Therefore, it is wisest to have a deep understanding of the cultural issues inherited through a merger and pro-actively plan the steps necessary to re-align the company to become a new, positive and forward-looking team of compatibly-thinking people with the appropriate skills and attitudes to match the ethics and goals of the organization. Here at John Lynch & Associates we pride ourselves in helping companies like yours achieve this on a daily basis.

First Impressions and The Value of Employees

To assess the starting point, it is important to evaluate every aspect of the two merging entities, beginning with Hiring and Onboarding practices. Your Human Resources Department is the go-to resource, if you have one. If you are a smaller business you, the owner, or a couple of senior managers may be the ones fulfilling this role.

Hiring people that will prove to be dedicated to the mission of your business, that genuinely believe in it, and that will be pro-active in bringing new ideas and excellence to their role in the company is going to build the foundation of a successful relation. Remember that the hiring process is not a one-way street. As you are evaluating candidates for a position, they are evaluating you and your company and deciding if they want to work for you. Earning their loyalty and their respect can be critical as you want long-term productive relationship.

The first impression is crucial. You certainly evaluate your candidates on punctuality, presence and confidence, attitude and demeanor, in addition to evaluating their skills. At the same time, your company is being evaluated to assess if it is a good place to work. A disorganized, unprofessional and impersonal interview process may turn-off the best candidates. Once you have hired the right person, the first few days within the company will make a lasting impression. Employees value education, being engaged and heard.

An employee relationship with the leadership is one of the most critical elements of retention. A culture of fear of the “boss” can lead to employees avoiding contact and be focused on compliance rather than innovation. Employees in the lower ranks of a company carefully watch the behavior of their managers and determine whether their behavior, attitudes and decisions embrace the stated values and goals of the company. If dissonance is perceived, employees will stop believing in the message and their behavior will become a survival response to a system that says one thing, but does another.

Employees enjoy being valued above and beyond financial compensation and positive attitudes can be fostered with the appropriate incentives. However, if the incentives are given with false intent, they can fire back and become dis-incentives. John Lynch & Associates specializes in understanding what motivates your work force above and beyond a paycheck and can help you design incentive packages that work.

Human interactions forge company cultures more so than any other factor. Understanding workplace dynamics is critical. An environment that fosters personal relationships values respect for the ideas and opinions of others, fosters healthy interpersonal relationships, team cohesion, dialogue, cooperation is a healthy place to do business. These intangibles are easy to pick up by other people interacting with your team. A “positive atmosphere” in a workplace is a rather intuitive feeling which can be felt from the moment we walk into an office.

Employee feedback is critical to get the pulse of the health of office dynamics and the appropriate questions at the appropriate time can provide valuable intel. Understanding how employees at all levels of the organization handle stress is a wise strategy, as stress can be at an all time high during mergers and acquisitions as fear of being laid off is a primary concern. John Lynch & Associates worked with many large and small companies in situations of stress due to mergers or acquisitions and we can provide you with a variety of customized strategies to minimize stress and emphasize positive outcomes.

Surviving Mergers is All About Culture

In summary, surviving mergers and acquisitions starts from taking care of the new entity’s culture. A culture is the sum total of all the values, beliefs, attitudes and behaviors shared by a particular group of people. Interactions among the members of this group are mediated by the generally unspoken rules that best uphold this belief system. In business terms, organizational culture is the sum total of leadership structure, core values and mission statement, office environment, interpersonal relationships, team management, and communication style. These components make up the image the organization portrays, both internally and externally. A strong and positive organizational culture makes a strong and positive impression, which, in practical terms, means more business and happier and loyal employees. Confidence, stability and productivity are the end product.

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