Cultural Integration

Perfect Match?

It takes courage to create something new. Mergers and acquisitions are such ventures. Apart from standard economic criteria, there is one soft factor that carries authority: corporate culture. Mergers often fail when cultures are thrown together, rather than integrated. In her article, Silke Grosse-Hornke will explain how to create a successful combination.

The success of a company depends on its culture – are there managers out there who still deny this? Probably, not many! The maxim ‘Culture eats strategy for breakfast’ is often cited by managers. It is believed that this saying comes from the American management guru Peter Drucker. Regardless of its origin, it is a strong statement and is also supported by solid research which states, that cultural aspects are of high importance to companies, and up to 31 percent of its financial success is linked to it*.

When talking about corporate culture, we mean its shared values, the personal identification with the company and how everyone is working together. Those having experienced different companies from the inside will testify that adjusting to cultural differences takes time. For example, how are decisions taken in different companies? Let’s assume employees in company A are given a lot of freedom to decide themselves about the next steps; whereas in company B, every decision will be coordinated between several colleagues and line managers. If someone now moves from A to B, he or she will find the practices in place irritating to start with. Though, it goes without saying, neither culture can be determined as superior.

From emotional reflexes to constructive reflection

In the case of a merger between two companies, the question arises how the companies’ cultures can be united. Failing to answer this question will lead to deficits in daily performance. This is due to mergers or acquisitions being critical experiences for employees. Many wonder what their future will hold; furthermore, distrust against colleagues from the other company can arise. In the case where a company is ‘swallowed’ by a competitor, some employees may feel like ‘winners’, while others feel inferior. Management has to work against those destructive reflexes: it has to create a healthy environment for the common welfare of all employees, as well as for the day to day operations.

This basis includes a corporate culture that is accepted and an integral part in every activity. However, this is where the dilemma occurs: acceptance takes time – but the company wants to quickly focus on its operational activities. We often experience this, first hand, in our consulting activities: cultural integration is on the agenda, but companies want to clear this instantaneously. This is not realistic. Until the target culture is defined, and internalized by thousands or tens of thousands of employees, cultural integration cannot be achieved. This process may take years, not only months.

A short summary for a long journey

There is no blueprint for cultural integration; it is always complex and individual to each company. However, from our experience, we have condensed our learning into ten action points.

  1. Define a strategy for cultural integration early, with all the companies involved. Normally, there is three typical ways forward: the combined company should decide if it wants to create a new joint culture, keep one of the existing cultures or allow the existing cultures to remain in parallel.

  2. Analyze the existing cultures. Where are the similarities or the differences? Where does the risk lie? These aspects should be considered already during the planning of the integration.

  3. Start communication early. Impart the purpose, benefits and goals of the transaction to the employees and customers. It is crucial to highlight the similarities between both companies – including on a cultural level.

  4. Create touch points and foster overarching cooperation. For example, organize meetings to get to know one another, induce interaction between employees and encourage them to participate in work shadowing.

  5. Ask for ongoing feedback during the integration phase: include the essential stakeholders, employees and customers. By doing so, you learn who’s unhappy and the reasons for it – this is important to e.g. counteract employees who are considering leaving.

  6. Calculate enough resources into your planning to accompany the cultural integration over a longer period of time. 

  7. Create a network of sponsors and multipliers that will help to accelerate the cultural integration into all areas of the business, regions, locations, and at all levels of the business.

  8. Make the executive team take responsibility. Verbal agreements aren’t enough – managers have to exemplify the new culture. Leaders in the new organization should be those living up to being a role model.

  9. Define KPIs to measure the success of the cultural integration and its effects on the company.

  10. Allow time for the cultural transformation. This may well take two to five years until the new culture is fully embedded. 

* Hauser, F./ Schubert, A./ Aicher, M. (2008): Unternehmenskultur, Arbeitsqualität und Mitarbeiterengagement in den Unternehmen in Deutschland. Ein Forschungsprojekt des Bundesministeriums für Arbeit und Soziales, Forschungsbericht 371.

Silke Grosse-Hornke is founder and partner of Grosse-Hornke Private Consult. For about 20 years, she has been consulting and assisting major and medium-sized companies of diverse industries during change and post-merger integration. Change management and cultural integration are among Silke‘s focus topics – she regularly publishes related articles in specialized media