By Chris Cooper
One of the biggest reasons for merger failure is not
understanding culture. Bringing two companies together with
different cultures and sub cultures with no cultural integration
plan can be a recipe for disaster. This represents a lack of
cultural awareness by business leaders.
So why is it that businesses bring in experts to undertake
financial due diligence before buying a business? However, rarely
consider culture? This makes no sense, when financial success can
be seriously put at risk, if cultures cannot be effectively
integrated.
So what do we mean by culture? At a simplified level Culture can
be defined as 'the way we do things around here'. It is often a
consequence of the thinking of past and present leaders. Developing
culture starts with the leaders.
Recently a CEO was very honest in saying to me that he had been
shocked by the cultural clashes that occurred when merging his
businesses. This inspired me to write this article.
Understanding and developing your culture and carefully
understanding the culture of any business you merge with is
essential for financial success. It is the secret that the most
successful business leaders understand.
Here are some top tips if you are considering merging with another
business:
1. Plan a very well thought through integration strategy.
View Culture as an absolutely critical component in the success of
your merger. Cultural differences and weaknesses have been
the downfall for many mergers. Think of it like brain
surgery. Would you want a brain surgeon to start making incisions
on you without careful planning? In a merger you need to win over
the brains and hearts of people if you are going to succeed. Or at
least minimize the damage.
2. Undertake a cultural diagnostic survey of your
existing business and the one you are merging or integrating with.
This will enable you to see what you are dealing with. There are
effective tools and methodologies to do this. Best do this when the
staff know of the merger.
3. Accept you may need to change your thinking - to
change culture the leadership team almost always need to change
their own behaviour first. Cultural change always begins with the
leaders.
4. Do not assume that your existing business has a
stronger culture than the other. There may be many
strengths in the other organization that could bring great synergy
benefits. Do not lose these during integration. Recognize that
achieving one culture may not easily be possible. However, an
appreciation by both parties of each others differences can be
helpful.
5. Plan all communication carefully.
Companies who are taken over may see themselves as about to be
asset stripped by the new owner. Great communication is essential.
Plan every conversation carefully.
6. Treat the staff of the new organization with great
respect. Why not give them a 'red carpet'
introduction to your business. Make them feel special and welcome.
Help them understand the benefits that may ensue from the
situation. Put out a red carpet, give gifts and make employees
integrating into the new business feel very welcome. This helps
turn fear into energy. Some people may still lose their jobs,
however, it may well improve how they feel and talk about
you.
7. Be a great leader by committing to develop a high
performing culture. That means putting people who
ultimately deliver the revenue very high on the priority list,
during such periods of high change. Bring people together for
cultural awareness workshops. Help them understand how they best
interelate and get things done.
For support with Cultural Integration contact
Chris@cc1consulting.com or call 01455 824233