Why organisational culture is key during a merger or acquisition

About the speaker

Caroline is Director of Culture and Engagement at Rubica. Her work sees her supporting leaders to create organisational understanding, belief and the behavioural shifts that are necessary for change to happen and last so it transforms a business. Learn more about Caroline.

Video transcript

Section 1: The challenges of workplace culture during an M&A

00.07 The difficulty integrating company culture

Many organisations who go through a merger or acquisition (M&A) struggle with integrating culture for three main reasons.

The first is that it’s not prioritised. So, it’s not given enough attention early enough.

The second is culture is very nebulous. So, its hard to make it practical and to know what to actually do about it.

And the third reason is culture is essentially about how we behave. And we know that human behaviour is very hard to change, so it can be difficult to tackle in the context of lots of other priorities.

00.43 Diagnosing culture early

It is important to diagnose culture early in the M&A process because it is an enabler of strategy – that is well accepted. So those two things need to be thought about from the outset.

It’s also important to get really deep into both organisations. So, a surface analysis won’t give you the understanding that you need for people to be actually able to affect change further down the line.

And finally, because it takes a long time to change culture. It really does take a long time. So, we need to start early if we are going to see the results of that culture change, impact on business performance as soon as possible.

Section 2: Where to begin with addressing workplace culture during an M&A

00.08 Where to start

So, when starting early as part of the process in an M&A, a great place to start is with what we call ‘cultural hotspots’. So, these are areas where every day, normal behaviours are consistently and frequently reinforced and repeated. Good examples are meetings or planning processes for example. And that’s important because they are areas where conflict and tension and opposing forces will be most felt most frequently and might slow down the pace of the merger of acquisition.

The other area to look is in high risk business performance areas, so for example, interfaces with the customer where actually differences between culture will be most felt. Another area may be an interface internally for example product development teams and marketing where there is a critical piece of hand over that needs to happen.

01.03 Be clear on the culture being sought

It is important that we get really clear on what the culture is that we are trying to create during an M&A process. To create that clarity, ruthless prioritisation is the first step.

So, it is all too easy to think about all the different things that could possibly be changed, especially in terms of behaviours. But actually, humans can’t cope with more than one or two changes at a time, so we need to be ruthless about the ones that are going to have most impact, most quickly and pick those and only focus on those.

We need to be thinking about role modelling. So, this is often talked about but rarely done. And that’s role modelling about what we do consciously, but also how we are behaving unconsciously and what signals that is sending about what is important, and what is accepted and tolerated in terms of behaviour in the new organisation.

And we need to design working practices that support new behaviours that we want to create, not reinforce behaviours that have perhaps served their purpose or aren’t useful anymore. So, we need to focus on the new, and design our practices around that.

Section 3: What to be aware of when addressing workplace culture during an M&A

00.07 Cultural watch-outs

The biggest watch out during an M&A process from a cultural perspective is that human nature quite often causes us to focus on gaps or problems and on things to fix in both organisations. Actually, that can be detrimental to accelerating towards the culture that you want to create. Instead we can focus on what the Heath bothers call ‘bright spots’. Those places where the behaviours that you want to create already exist in one or both organisations, amplify those and accelerate their spread throughout the organisation and help people see that success is possible, as quickly as possible.

00.49 People involvement

Involving people in forming the culture and as many people in both organisations is so critical because simply they are the culture.

You can’t tell people how to behave, or even what to believe. They need to form some of that for themselves in order for it to stick and be effective.

There is also bound to be a lot of expertise in both organisations that the people in the leadership team or in the exec or project team actually don’t have access to because of their position. So, involving more people allows more of that expertise to be applied.

And ultimately culture change is complex. It is complicated, because it is human behaviour. So, doing it together and allowing us to form our new normal together is absolutely critical.

01.39 Advice

So, the advice I’d have for anyone thinking about culture formation during an M&A process is to start early, and prioritise highly. Make it top of the agenda as much as your strategy or your organisational design is. Involve as many people as possible in the formation of the culture – they are the culture. And make sure we focus on the positives, the things that already exist in both organisations that can be amplified and made the most of.    

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