Post-merger Integration: Why Culture Matters

Not long ago in an article in the Harvard Business Review titled “The Leader’s Guide to Corporate Culture,” the authors made a compelling case for why leading organizations are able to sustain their success over time. In their view, it is that rare combination of a compelling and clearly articulated strategy along with a high-performance culture.

The idea that operating culture is a critical success factor should not come as a surprise. This is especially true when companies are merged/acquired and it’s a major reason so many challenges, problems, and obstacles surface during post-merger integration. According to the authors, “Cultural dynamics represent one of the greatest yet most frequently overlooked factors in post-merger integration.”  It’s easy to see why.

Consider all the factors that go into preparing for and implementing a merger or an acquisition. The parties involved pour over financial spreadsheets, customer lists, supplier contracts, physical locations, equipment capabilities and unique processes to name a few. When it comes to personnel, the discussion typically centers on duplication and redundancy and the cost savings to be realized by a reduction in head count. Rarely if ever is their conversation, discussion, dialogue, or even debate about the operating cultures of the two organizations, whether and to what extent they are aligned, and where there are gaps. Also lacking is consideration of the type of culture that will best serve all stakeholders in the new, combined organization.

If a lack of alignment between cultures is among the major reasons why mergers and acquisitions fail or at the very least, do not live up to the expected outcomes, wouldn’t it make sense for the parties involved to take steps to measure, evaluate, and understand the prevailing culture of their respective organizations, identify the relative strengths of each and move to create the best combination?

It may well be time to consider adding organizational culture assessments to the pre-merger toolkit.  Doing so just may put the post-merger integration process on a smoother path.

For more information on ways to measure and improve your organization’s operating culture, contact me at joe@ajstrategy.com.