Culture clashes in M&A
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A significant number of M&A transactions fail and many of those failures are due to cultural differences. How have your organisations managed this aspect and what would you recommend from your experience as successful mitigations of culture clashes?
A major challenge is also the ability to adapt flexibly to different cultural contexts, particularly in managing conflicts or designing work processes. We observed this during a legal merger a few years ago. One culture, characterized by agile and dynamic work processes, encountered another with conventional and thoroughly planned procedures. Since both cultures were geographically close, the differences and the resulting issues were initially underestimated. I do not have THE answer, but I always recommend conducting a thorough assessment, even if the cultures appear very similar at first glance. You should never underestimate these differences.
From my experience, I feel that the cultural differences exist in any 2 organizations, whatever the context. In fact, we stress and endorse on forming strong culture driving the “purpose” of each entity. That being the case, I see it that the bottom line is to have a convincing enough “purpose” and roadmap that could override those thoughts of differences and endorse buy ins from stakeholders that are able, but at the same time, understand that those who do not buy in will not be the driver of PMI efforts any way and that you just have to let them go. I understand that you would want to increase the number of those buy ins, but often times it is simply a matter of whether the idea resonates with the individual or not, and whether they see a bright future for themselves and the organization (enough so to overcome the differences). We always hear that the leadership communication is essential, and I see that applies the same in this context.
I think that understanding the underlying values and motivations driving behavior in each firm are important. For example, differences in the decision-making process and attitudes toward risk-taking should be considered. There could be significant variety between departments or locations. I agree with being flexible and open to modifying integration as cultural challenges emerge.
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