Why do so many companies NOT see the value of Cultural Integration?
- This topic has 15 replies, 16 voices, and was last updated 2 months, 1 week ago by
.
-
Posts
-
Post Merger: I’ve seen so many companies acquire other companies and focus on the functional integration but they just don’t bother doing any work on the cultural integration piece. The assumption is that the target company will just adopt the culture of the acquiring company. Why is this the reality so much of the time? What have any of you done about getting the cultural integration on the radar of those leading the integration?
Like it or not, M&A deals are driven primarily by the financial metrics and if the numbers look attractive, there is an inclination to go ahead with the deal. The classic case in point is the merger of Daimler AG and Chrysler where the synergy benefits were never realized due to cultural mismatch. Culture must be a focus in efforts to integrate companies and this requires a mindset shift of the external advisors, management of target and parent companies. When left to itself, culture will often undermine value-creation.
I agree that money is usually the primary driver for M&A deals. When looking to see if a company will take cultural needs into consideration during M&A, I think how they handle their current business is a good barometer. If the acquiring company’s culture ignores the needs of their existing staff, it is safe to assume they’ll take that mentality into the M&A deals.
While I see that money is the driver for the M&A, I think there is more awareness now that to retain the value of the acquisition, culture needs to be considered. That said, there seems to be a lack of understanding of just what cultural integration is. I tend to see the assumption that a ‘check for fit’ means culture is taken care of – that if the two firms are a ‘fit’ the cultures’ are close enough’. I think more discussion on defining culture and ensuring the whole acquisition team agrees on the definition is a good first step.
The people at a company are the company, not the financial metrics. However, the financials are often looked at in a silo. It may sound like a good idea / seem like there are synergies, but if the cultural does not integrate well then it won’t work. Not sure how we will ever get past this error unless we start looked at M&A holistically which is hard. Company culture is often times not something visible pre-close.
I believe that one of the key drivers of not seeing the value of cultural integration is related to the attitude of the acquirer. If the acquirer does not understand its own culture, it is unlikely that it will put much emphasis on the target’s culture or the integration approach.
I also see it connected to the cultural attitude of the acquirer, i.e. in some cultures taking care of people’s needs is simply not paramount. Also, it seems cultural differences do not count anymore that much due to globalism, i.e. people can be work from everywhere, from every country.
Agree with many of the discussions above .. that it does depend on the attitude of the senior leaders of the acquiring company towards the target company.
Perhaps equally important is to consider the M&A integration strategy being considered. Culture should be aligned to strategy.
At the end of the day, the corporate culture should be one of “best fit” or complimentary to support the end-state company towards their future success.I think companies realize the value in cultural integration but in my experience, it always takes a back seat to the other areas of integration but as we all know, putting blinders on to the culture will often result in inefficiencies and good people walking out the door which will hit the bottom line at the end of the day
In my opinion companies often fail to see the value of cultural integration due to an emphasis on financial and operational objectives, underestimating its complexity, and insufficient leadership commitment. However, failing to address cultural integration can result in long-term issues that undermine the overall success of a merger or acquisition.
The acquirer may start with optimistic intentions to integrate cultures. Then, to avoid rocking the boat too early, delays some of that process to focus on stabilization. By the time new leadership is truly accepted, the people in position to act on the cultural integration have been too close to it for months to see it as objectively as they did when the transaction first happened. They now know individuals and collaborate in their manner. By that time, there’s already a 2.0 culture that functions in this bolt-on scenario. With all that entails.
Cultural integration is crucial for any company operating in a global marketplace, yet is often undervalued for several reasons, such as: (i) focus on short-term goals, (ii) lack of awareness or understanding, (iii) resistance to change, (iv) complexity and challenges, among other factors.
Companies don’t see the value of cultural integration because they focus on short-term objectives. Cultural integration is a long-term objective and very hard to achieve.
I Agree with many of the discussions above, i’ll add that making cultural integration a priority requires a shift in mindset, not just from the management of both companies but also from external advisors who may be more focused on numbers than on people.
Unfortunately leadership often prioritizes tangible aspects like cost savings, revenue growth, and operational efficiencies. These metrics are easier to quantify and measure compared to cultural alignment, which can seem intangible and subjective.
Influencing leaders to investing time, resources, and expertise in this area ensures smoother transitions, stronger employee engagement, and greater value realization.
- You must be logged in to reply to this topic.
