Business Game Changer: How to successfully merge business cultures following an acquisition

Date: November 14, 2019

Have you shed blood, sweat and tears to finalise the contractual and legal aspects of a business merger or acquisition?

Good. Now the really hard work can begin.

Agreeing the deal on paper is the easy bit – the real challenge to making a success of such a move is in how you unite two different company cultures.

Business leaders often fail to consider the tensions that imposing an unfamiliar company culture upon another can cause. It can create confusion, anxiety and resentment, leaving staff disengaged and demotivated.

This of course has a knock on effect on staff performance and thus ultimately hurts the new business’s bottom line.

For a smooth transition, business leaders must be careful to manage the human element sensitively and effectively.

The specialist tax relief consultancy, Catax, that I launched in 2008, has grown rapidly in the last 10 years through a combination of organic growth and acquisition.

As CEO, I’ve gained plenty of experience in how to approach the merging of two company cultures. Every merger and business is different so there is no one-size-fits all approach but there are some simple steps that can be followed which will help you achieve your goals:

1) Define what kind of company culture you wish to create

A company’s culture is the shared values and beliefs that determine the behaviour and conduct of employees at all levels of the business. The culture, which dictates how the company is run, is defined by three key elements:

– The tone and conduct of staff which is set from the top down
– How the company presents and sells itself and its services/products
– The company’s management structure or operating model

Decisions must be made about the most effective approach to each of these. All three must be directed and shaped to ensure smooth operations, efficient output and happy united teams.

Such decisions require careful analysis and must ultimately be made at senior level. But all staff must be engaged in the process with everyone invited to share their ideas, opinions and observations. This way, all staff will feel they have a stake in the process and are much more likely to support the outcome.

How you assimilate one business culture into another will depend on the reasons for the merger and where the most value lies in each business.

2) Identify where action is needed

The differences between the two companies should be studied closely to work out which ones are potentially beneficial and which ones could be obstructive or troublesome. Where the latter is a risk, senior managers must plan how to close these gaps.

Evidence gathering for diagnosis of areas that require attention can take many forms. It may include interviews or surveys of all staff, interviews or surveys of clients, mapping of the management structure and decision making, flow charts to show how contracts are won and completed, as well as research on which staff, teams and strategies are most vital to winning work and adding value.

Such research will also enable managers to assess the new skillset and any skills gaps that need filling. Business leaders should keep upheaval and change to a minimum which is why this analysis is so important. Where possible, let teams continue to function as they have before, altering only things which are necessary for the future success of the business.

Where two sales teams need to work together on a single project, for example, an agreed approach allowing everyone to unite and confidently carry out their jobs is vital.

3) Get going

You now know what kind of company culture you wish to create, you have identified the disparities and skills gaps that need addressing — it is time for action.

Senior management must clearly communicate their vision with the rest of the company. Give reasons for any changes to ensure everyone is engaged and committed to the new direction. During the roll out, highlight the strengths of each organisation to all teams so they get a full understanding of the benefits the merger will bring.

Working out how to practically implement any changes should involve the staff on the ground as they usually have the best insight into what will and will not work. This is also where managers must be sensitive to different personalities. Some people welcome change while others cling to familiar routine and find change disorientating – different team members may need different guidance.

Implementation is likely to require training and workshops that will upskill staff but also enable them to harness a vision of their future and how they can achieve it together. Inclusivity and involvement at each stage are vital.

Do not get impatient and rush the process. It should be steady enough to enable staff attitudes to keep pace with the change as it is happening. Suddenly imposing sweeping changes will generally be met with panic and hostility. A major shift in company culture takes time to fully bed in.

The key thing to remember about merging business cultures is that it does not happen by magic. It requires a well planned approach involving everyone throughout the business – don’t leave it to chance.

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Mark Tighe: How to successfully merge business cultures following an acquisition

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