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Culture often cited for M&A failures: 3-phase approach can help sustain success

Most organizations and HR professionals know that mergers and acquisitions fail or run into trouble because of issues around culture and bringing together different organizations.

But it is also frequently overlooked as an important driver for the success of M&As, according to new research from McLean & Company, which found that strategic cultural integration can help turn failed attempts at integration into success stories.

“Few M&As consider culture pre-transaction, and even fewer have comprehensive plans for integrating cultures post-transaction,” says Kelly Berte, director of HR Research & Advisory Services at McLean & Company. “Traditional approaches to change and culture management cannot be comprehensively applied to M&A situations because of the confidential nature and legal requirements that delay communication with employees in most cases.”

Three-phase approach

It identified a three-phase approach to developing a strategic plan for cultural integration and sustainment following a merger or acquisition.

Assess culture and define future state: The first phase requires conducting a cultural assessment that shows the current state of culture in the organizations involved in the M&A transaction, selecting and defining the focus values that will shape the future culture of the integrated organization, and developing culture initiatives that align with the focus values and support the desired future state of culture.

Implement culture change: Phase two asks organizational and HR leaders to identify their respective roles in managing culture change after an M&A and learn how to prepare for the long-term process of culture change. Leaders must also recognize the importance of strong communication in supporting cultural integration and review the varying reactions to change and any culture clash or resistance.

Sustain cultural integration: The third and final phase involves reviewing the role of relevant metrics in supporting and monitoring cultural integration, establishing boundaries around selected metrics to signal the need for intervention, and identifying areas of opportunity within the integrated organization to sustain cultural integration.

“Successful cultural integration falls to leadership to promote effective change management strategies,” explains Berte. “Leaders must communicate transparently to improve employee engagement, reinforce desired behaviors, and create value within the integrated organization.”

Intentional, comprehensive planning

McLean & Company said bringing together organizations with similar cultures does not automatically ensure smooth cultural integration. Successful integration depends on intentional and comprehensive planning to identify, analyze, and manage cultural synergies and differences.

Integrating cultures is a years-long process that cannot be done successfully without intentional and sustained efforts across the organization, it said.

For more information, see McLean & Company’s blueprint — Implement and Sustain Cultural Integration Post-Merger or Acquisition.