According to SHRM data, an estimated 30-70% of global M&As result in failure, oftentimes because the two companies’ cultures failed to integrate properly.
In order to prevent costly collapses and tarnished reputations, companies’ first step should be the process of cultural assessment and evaluation. While many assume that the target organization’s culture will naturally incorporate with the buyer organization’s larger or stronger culture, this approach is likely to fail.
“What I’ve seen work most effectively is companies taking the time to complete exercises to formally understand what are the differences between the cultures, what are the similarities, and taking the time to define what the new culture will be,” said Laura Croucher, national lead partner, advisory services, people and change practice, KPMG
The diagnostic phase should consist of such activities as exploring company websites, interviewing management and leadership groups, and conducting steps.
“The second step after research and analysis is to conduct a gap analysis,” said Chuck Moritt, corporate M&A consulting leader, Mercer. “Develop a risk profile that outlines where culture risks may exist between two organizations, from both the tangible side – such as business processes – and the intangible side, such as how leaders communicate and how work gets done.”
Once these gaps are identified, employers should start the process of assimilation. HR in particular needs to be readily involved in training supervisors on how best to answer questions and prepare employees for change.
HR can develop programs that educate management teams on what to expect in the operating styles of the other country, such as differences in:
- Time orientation
- Whether the firm emphasizes short or long-term results
- Business process orientation
- Whether goals revolve around outcomes or are more process-driven
- Decision-making hierarchy
- Length of a typical workday
In addition to this cross-cultural communication, HR should also formulate and then share a road map to help individuals understand how business will be conducted in the new entity.
Finally, if these processes are completed well and the business experiences optimistic results, those accomplishments should be celebrated with employees, clients, and when appropriate, the outside media.
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