“When two companies merge, cultural conflicts are inevitable, which may undermine the best-laid integration plans. It’s important to identify cultural differences through a preliminary culture analysis, such as leadership styles, decision-making processes, receptiveness to change, work-styles, personal interactions, and beliefs around personal success.”
~Deloitte M&A Institute
Case Study: An Integration of Two Cultures
“Culture has emerged as one of the dominant barriers to effective integrations. Companies with different cultures find it difficult, if not impossible, to communicate and operate effectively.”
~Deloitte M&A Institute
A highly successful company acquired a distressed company. This acquisition resulted in the “new” company having employees in multiple states and countries. There were many differences in these two companies including HR practices, markets served and leadership philosophies. The CEO quickly saw the issues and brought us in to help.
We implemented an approach to address the critical aspects of the shift within their culture.
- We started by helping them develop their mission, vision, values and behaviors reflective of this “new” company.
- At the same time, we did a needs assessment with employees to get their concerns. Not surprisingly, a perceived lack of communication was the top issue.
- From there, we worked with the leadership team to establish a year-long communication plan that adopted multiple communication channels.
- In addition, the organization had doubled in size shining a light on management and leadership. Neither organizations’ management had ever been provided with training. So we started by working with leadership to identify the needed management competencies and then implemented a full scale management university to address critical management gaps. In conjunction with this training, we provided one-on-one coaching to the senior leaders.
We worked with the organization to strengthen its HR processes in support of its culture. For example, values-based interview questions were developed and included in the interview process along with updated job descriptions focusing on behaviors needed to support the culture and objectives. In addition, a new and improved company overview was added to the orientation, new compensation plans were established, and a recognition program in which employees could recognize their peers and management was introduced.
failure rate for mergers and acquisitions
Case Study: A Roll-Up of Small Businesses
“Culture must be a focus of efforts to integrate companies, because when left to itself, culture will often undermine value creation..”
~Deloitte M&A Institute
A private equity firm funded the roll-up of multiple small businesses (all less than $10 million) and appointed a CEO to lead the newly created firm. The founders of the acquired firms had always led their own firms, with their own distinctive cultures. The new CEO’s objective was to create a single umbrella culture that unified the founders and their employees, and give them a single core value system, mission and vision to follow. The eventual purpose of the roll-up is to create a single entity to be acquired by one of the industry giants, so healthy financial performance across all businesses was critical.
SCI applied its proven model to establish an overarching culture and unify all disparate businesses:
- The CEO chose to start from scratch to create a new set of core values, mission statement and vision statement. To ensure buy-in, we included all founders in the process. We sent out surveys for all three of the foundational elements and then worked through our proprietary process to create the statements.
- We facilitated an offsite retreat to educate the leadership team on the connection between culture, values, and leadership and rolled out the new identity elements.
- We trained the founders how to take the new information back to their employees.
- We instituted a strong, proactive company-wide communications strategy to reinforce the values, mission, and vision and to continue knocking down the silos between the individual businesses.
- Concurrently, we launched an anonymous organizational assessment with the leadership team and their direct reports to get candid feedback about what is and is not working.
- We implemented one-on-one coaching with all of the founders to work on what was holding them back from being fully engaged and to thoroughly understand their personal motivations for staying with the company. Some were motivated by money, others were not. Some were motivated by meaning and purpose. Others had difficulty letting go.
- Because the company has ambitious growth plans and hiring needs, we re-engineered their recruiting, hiring and onboarding process to be values-based and culture-centric. This will ensure that all future hires align to the overarching culture.
of mergers fail because of simple culture incompatibility.
Case Study: Positioning an Industry Disruptor for Success
A disruptive firm in the medical industry invested millions of dollars developing its platform over the first three years of the company’s life. They focused only on the technology. When the time came to launch, they wanted to attract the very best developers and leaders in a highly competitive space that would be committed to the company for the long haul. They also wanted to be known for a standout culture.
We applied our proven model to define and strengthen the company culture and to establish a culture-centric recruiting and onboarding process.
- We used our processes to define the company’s values, mission and vision.
- We rolled them out to the entire company and educated the company on the connection between culture, values and leadership.
- We led employees through an exercise of “shared responsibility” in which they collectively defined the desired and expected behaviors for each value and then committed to living them.
- We led the company’s recruiting process alongside their COO to ensure the company hired for technical and cultural fit. We wrote the job descriptions, formulated the interview questions, attended job fairs, conducted interviews and made recommendations. We formally onboarded all new employees in satellite offices.
All corporate cultures share a common framework consisting of three elements:
- Vision & Strategy (where are we going, and how are we getting there?)
- Leadership & People (who is leading us on our path, and who is essential in executing our vision?)
- Processes & Organizational Structure (how will we perform our work and engage with one another?)