There is so much pressure in acquisitions to deal with immediate financial and operational issues that the talent & culture side of mergers is often under-managed. This costs organizations millions of dollars in:
- reduced employee engagement, productivity, and retention
- declines in work quality and customer service, and
- opportunity costs
What kinds of risks and costs can you expect? And what can you do about it?
Where the costs come from:
Here are some metrics to help you (i) budget for some of the costs, (ii) build your case for action, and (iii) focus your merger integration efforts.
Risks and costs of poor integration management:
- Reduced employee morale, motivation, focus, effort, and productivity
- Poor work quality: sloppy work, errors, poor service
- Potential safety issues (stress and lack of focus can effect process/procedure)
- Employee absenteeism & turnover: losing talent, expertise, relationships…
- Time to full productivity
- Time to new employees living your core values
- Under-leveraging talent, economies of scale, and potential synergies
- Low trust, respect, and loyalty to the new organization and its leaders
- Poor communication across boundaries; confusion about roles & goals
- Poor teamwork, e.g., sloppy hand-offs and conflicts
- Lack of alignment due to turf wars, silos, egos, and conflicting & old agendas
- “Us vs them” mentality; heightened internal competition
- Opportunity costs: so busy putting out fires that you miss business opportunities
Reducing these costs—the impact of these problems—can be worth millions of dollars when merging organizations.
The British Institute of Mgt. surveyed executives involved in a number of acquisitions and concluded, “The major factor in failure was the underestimation of difficulties of merging two cultures.”
In a study by Coopers & Lybrand of 100 companies with failed or troubled mergers, 85% of the executives polled said that differences in management style and practices were the major problem.
(Both stats reported by Robert J. Carleton, “Cultural Due Diligence,” Training, November 1997.)
What you can do:
Where should you intervene? What kinds of actions are most valuable? Here are the big practice areas you need to consider:
- Pre-merger cultural due-diligence: identify key challenges, leverage points, and synergies so you can be more prepared.
- Foster communication, teamwork, and relationship building across boundaries.
- Facilitate speedy compliance with your core values: “living the values.”
- Help employees deal with and make the most of the change.
- A little extra transition management support around care for self during change + dealing with rapid, non-stop change.
- Customize your orientation and on-boarding practices to speed up time to full productivity and loyalty to the new organization.
- Talent management analysis: identifying, deploying, engaging, and retaining new talent.
- Learn from the acquired company: investigate what they do best; actively look for ideas and practices you can use to improve your culture—and in the process earn their respect and loyalty.
- Review your culture to ensure it is aligned with vision, strategy, and core values—and adjust as necessary.
Look for our upcoming blog on merger integration secrets.
- When to change your culture
- Culture and the bottom line
- Aligning culture with strategy
- Anchoring core values in culture
- Change and transition management
- The real cost of employee turnover
Advanture helps organizations align culture with strategy, bring core values to life, and improve leadership practices for enhanced business performance. Let us help you manage the people side of your merger integration. Performance by design!
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