Council Post: Protecting Company Culture In A Merger Means Leading With Love

Mitch Luciano is President/CEO of #1 Ocean Carrier Trailer Bridge, the #1 Place to Work in Jacksonville and an Inc Best Workplace for 2020.

Mergers and acquisitions are an excellent opportunity to unite talents, create efficiencies and accelerate growth, yet 70% to 90% of mergers and acquisitions break down. Why is that?

Far too often, the failure to protect and build positive company culture is to blame. Analysts have been telling us for decades that M&As most often fail due to incompatible company cultures, yet it is an issue that plagues companies even today.

As president and CEO of Trailer Bridge, I’ve turned around the company’s culture by injecting love into each aspect of the business. This has led to substantial business growth, which I believe shows just how important leading with love is in an organization, especially during M&As.

Failed M&As come with a huge cost.

The cost of failed mergers and acquisitions can be substantial. Remember when HP had to write down $8.8 billion of its $11.1 billion acquisition of British data firm Autonomy?

When you get company culture right, though, your newly merged teams can move mountains for you. Look at Disney and Pixar or Google and Android: Some teams are simply better together. The good news is that creating that laser-sharp, unwavering focus on culture is 100% attainable. 

Create a culture club instead of culture shock.

Culture shock and misalignment can have a massive impact on the value of the deal. In fact, according to a survey by PricewaterhouseCoopers, 65% of business leaders attribute culture issues to adverse effects on value creation in alliances. Despite this, just 8% of organizations prioritize talent retention while evaluating M&A possibilities, PwC’s survey also said. 

The impacts on employee satisfaction, engagement and retention are massive; just 10% of respondents in PwC’s most recent M&A Integration Survey report post-merger success in employee retention. Employee morale and team members’ understanding of the company’s direction are particularly abysmal at just 19% and 22%, respectively. 

It can be dangerous to concentrate too heavily on the financials, particularly if it means taking your attention away from your people. After all, if you protect and build up your employees and show them you care by genuinely listening and leading with love throughout the M&A process, they’ll take care of the financial success of the company for you. 

The benefits of positive company culture are real, measurable and tangible. The risks are clear. Failing to respect and honor the best parts of your culture can tank the whole deal.

We need to consider our people early and often throughout M&As.

Today, it is considered a best practice to form a dedicated integration team to guide critical decisions through the M&A process. Yet many companies involve this team too late in the process — usually after signing, between the announcement and the final closing date. Understanding and planning to protect culture should be part of the due diligence process. In fact, culture needs to be the litmus test by which the deal may move forward at all. 

Will the culture of the organization you are looking to merge with or acquire blend seamlessly with your own? If not, can you create a new, blended culture and make it work? If still not, what are you getting yourself into?

When I’ve seen mergers and acquisitions fail in the past, it’s most often assumed the financials were the reason for failure, but those are the results, not the reason. People are at the center of a successful M&A at every level, from the frontline to middle management all the way to the C-suite. 

When culture is not considered a major element of the deal, everything else collapses. Companies need to hold themselves accountable, understand why there is employee friction and ensure it’s not impeding business success when uniting these people into your company.

Lead with love to preserve the best aspects of your company culture. 

How can you protect the best parts of your culture and foster the culture you want within your new organization?

• Listen, then act. You must genuinely and consistently listen to what your team needs in order to be supported through this major transition and commit to doing this every single day. Then you need to do something about it and act on their questions, concerns and feedback. This does not mean you have to say “yes” to everything, but you do have to explain why or why not.

• Reach out. The best ideas come from those who are doing the work in all levels of the organization every day. Don’t wait for your employees to bring ideas or complaints to you. Give them a forum and encourage them to speak up. The best ideas come from your newest team members, as they see things through new lenses. This is especially important for the new company you are acquiring, as you’ll want to learn what ideas they have for your company. 

• Champion your employees. Give your team a dedicated space to share their achievements and build a culture of positivity. Use communication mediums to share these wins; try an online networking forum, a companywide newsletter, in-person and online events or an awards series. Get creative. You’ll be amazed at how your employees will show up for you when you show up for them.

• Give employees room to grow. Motivated and driven top performers don’t respond to being stifled and locked into one role. If you don’t give your team opportunities to learn and grow continuously, they’ll outgrow you and move on. This is especially important as new employees are brought into the mix. It’s critical that you show both sides and each individual that you are 100% committed to their success.

At the end of the day, it’s all about putting your people first and leading with love. Don’t get hung up on the financial aspects of your merger or acquisition. Yes, logistics and numbers are important. But the key to the success of the deal is in integrating the talent and nurturing the culture, and your financials will prove it. 

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