2020 will be a year high on mergers and acquisitions (Deloitte, The state of the deal: M&A trends 2020). 83% of them will fail (Forbes). Why? Most executives underestimate the importance of the clash between two different company cultures, and therefore they will not assess each culture's DNA and prepare a strategic plan for merging those cultures into a new one. Commonly, every employee will continue working with their own company's unwritten rules and will distrust any new colleague taking decisions differently based on their different company culture.
We could argue that c-executives are oblivious to the forces behind their employee's behavior. However, they are not, as 95% of executives (McKinsey & Company, April 2019) describe the cultural fit to be critical to the success of integrating merged or acquired organizations—yet a full 25% of these leaders cite a lack of cultural cohesion and alignment as the primary reason for failure.
To avoid entering the ranks of the 83% who fail their M&A, leaders need to understand the key similarities and differences between the two organizations’ cultures.
Then, they need the right plans to create proven conditions for both cultures to integrate successfully.
If employees don't trust each other, they will not collaborate nor put their efforts into succeeding the integration. Assessing each companies' culture DNA with a scientific measurement offers insights into the evolution of every key element and will successfully detect engagement and attrition trends.
In times of change, employees are likely to feel a sense of uncertainty about their long-term place in the organization. This fires their brain's center of fear, robbing their energy and resources to access brain areas in charge of complex decision making. As a result, employees react in a defensive mode, seeing those coming from a different culture as potential enemies, which in turn hinders the possibilities of collaborating and working towards business results. Assessing both cultures to see commonalities and differences, and putting in place the right plans to make both cultures blend successfully is key to M&A success.
Silvia Garcia, CEO
sg@feellogic.com