The importance of company culture mustn’t be underestimated. Although implicit and intangible, making it challenging to precisely define, culture affects all aspects of a business. It influences how people behave, leadership styles, and all-round decision-making. In fact, cultural affinity is often the reason staff members may choose to join an organization in the first instance. The Covid-19 pandemic prompted a tremendous shift in attitudes towards what working looks like. Research carried out by the consultancy Global Tolerance found that more and more employees (particularly those of younger demographics) want to work for companies committed to strong ethics and values (read more about The Values Revolution). It should therefore come as no surprise that companies are more eager than ever to tout their progressive values and flexible company culture. To that end, addressing and reconciling two discrete company cultures has emerged as a critical barrier to effective integration.
To get started, you must create a culture diagnostic to assess both companies and understand their similarities and/or differences. This might cause you to pose questions like: How are decisions within the company made? Do they prioritize speed over thoroughness? How easy (or difficult) is it to implement change? How do teams work together? Are people individually target-driven, or is there a culture of team collaboration that motivates people? You need to uncover answers for both organizations, then you will begin to paint a picture of where your integration efforts should be focussed. It’s often easier for a third-party to observe and comment upon a company’s culture (rather than those inside of it, as they lack a frame of reference to compare against), so aim to involve the right stakeholders who can answer these questions accurately.
Culture must be a major component of your change-management programme, rather than leaving it to chance. It is crucial to be clear and deliberate when defining and communicating your new combined culture. After having performed your initial diagnostic, you should consider the strengths of both cultures, not just their weaknesses. Again, there are various questions to consider: Which elements would you like to see reflected in your newly merged entities? Where do your existing values overlap? Is there a need to shift away from informality towards process and structure, now that you are a bigger company? All of these answers will help you move closer to curating a set of shared values and behaviors to encourage in your new entity.
Finally, how do we turn these ideas into action? Much like many other elements of integration, you must develop an action-oriented culture-change programme. Cultural integration shouldn’t be discredited as a “soft” subject, you must set measurable goals as you would with any other integration KPI (for example, “Create a performance-driven integrated salesforce that collaborates on X cross-sells per month”). This culture-change programme must be owned and driven by senior leadership to ensure staff receive consistent messaging from the top, and that behaviors are role-modeled throughout the organization. You can gather useful intel by sending regular surveys to the employee population regarding cultural concerns, which can help to inform your strategy and timelines. For example, in one of Scion’s previous integration projects, survey feedback shed light on what staff were seeing as a key pain point: clunkily working across both Hubspot and Salesforce CRMs without a clear transition plan. Within our initial integration strategy, this was not due to be resolved for some time, but given how it was affecting morale, team collaboration and workflow, we realized it needed to be better prioritized within our integration plan and were able to change tack accordingly. This valuable staff feedback will help you to proactively address pain points, rather than leaving them to simmer and later boil over.
To conclude, culture is a clear M&A value-driver and must be recognized as such in order to deliver a successful integration programme. If left to develop organically, problems may arise and become exacerbated, which can lead to staff attrition. This subsequently reduces the effectiveness of your deal. By tying culture to M&A value-creation, you will be able to fully recognize the broad and far-reaching impact of cultural influences, and thereby harness culture as an effective tool for achieving your integration KPIs.
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