Mergers and acquisitions are a key part of many organisations' strategies. Unfortunately, up to one third of mergers fail within five years, and as many as 80 percent never live up to their full potential. Culture clash is the key culprit.--Dustin Seale
London (PRWEB UK) 19 November 2012
Dustin Seale, Senn Delaney Partner and Managing Director EMEA, of culture shaping firm Senn Delaney provides expert insights into the importance of culture integration in large mergers and acquisitions in the Report on Mergers and Acquisitions 2012 published in The Daily Telegraph.
Seale cautions that most mergers fail or do not live up to their full potential mainly because of cultural clash from the merging companies. He advises business leaders that a more emotional, mindful approach is needed for gaining real buy-in and synergy. The following is a version of the articles that appeared in the annual report. It can be also be viewed online.
View the report and Dustin's article on tackling culture integration in M&A.
Organisational culture, by its nature, is incredibly difficult to change. We all like the feeling of stable familiarity, and it is human nature to resist changing our habits and behaviours when change is trust upon us. Strategy can be, and often is, changed very easily. So, during mergers and acquisitions, why do acquiring companies tend to mould culture around strategy, and not the other way around?
Mergers and acquisitions are a key part of many organisations' strategies. Unfortunately, up to one third of mergers fail within five years, and as many as 80 percent never live up to their full potential. Culture clash is the key culprit. Most people we've worked with have done a very good job of looking at the strategy of the combined entity, the financial reasons for putting it together and how they're going to gain the results. But eight times out of 10, they've only given a cursory thought to how to bring two cultures together; it's mostly often the blind spot in terms of integration.
Acknowledging that culture clash is a real challenge is important, but acting to methodically address the cultural integration at a human level is critical to M&A success. Developing an approach for tackling this takes a different way of thinking.
No matter how strong your strategy, any newly merged organisation – whether it is the acquirer or the acquired company – will be impacted by pervasive fear and uncertainty. In M&A, the first thing to recognise is that fear is going to be a part of the equation, and you cannot change fear with logic. To gain real buy-in and stability from staff, a more mindful approach is required. Yet, most companies approach this with little success.
So, how do you address the human side of M&A to avoid culture clash? Senn Delaney, as the first firm in the world to focus exclusively on culture shaping, has guided major merger integrations, helping companies involved with M&A to bring two or more cultures together by a process that initially includes ‘unfreezing' – melting away old habits and patterns of thinking – and then aligning people to a unified set of defined values and guiding behaviors, starting with the executive leadership team.
The only way to unfreeze, because we're all pretty hard-wired in our ways, is to have an experience that creates insight deep enough to break the old thinking. This addresses the emotional part of the brain, which is the source of the real buy-in you need to deliver on the pre-merger promises.
Addressing culture shaping from a principles-based approach is essential in cross-border mergers
Right now Asia is the leading market in the world, with people and businesses all vying to be a part of that growth engine. But M&A in Asian companies means the issue of culture clash becomes doubly challenging. Organisations buying into the marketplace often abandon their acquisition principles. The same acquisition principles that have guided you in the past will work in Asia, with the addition of examining culture more carefully.
Standards around respect, formality and decision-making are also very different in Asian cultures. Communication issues arise even with the best English speakers and translators, so you cannot rely on all the same techniques to engage with people. Be assured that making the acquisition a success will require you as the acquirer to be 50% better in terms of communication and engagement.
You have to approach culture integration from a principles standpoint. There are human principles that exist everywhere in the world – I don't know of a culture in the world where they say 'listening' or 'working together collaboratively' or 'being accountable for results' is a bad idea.
Note that principles and behaviour are two different things, with acquiring companies often entering into integration with western behavioural statements, which will make perfect sense to the rest of the western world, but when translated are actually quite confusing or even disrespectful in an Asian context. But this is a challenge that can be overcome if you address culture at a principles level.
If you have a principle of accountability, and you allow for expression of accountability through the local culture, people can make sense of it in their own context. It requires a disciplined integration process, but approached this way, acquisitions in Asia can meet and even exceed pre-deal expectations.
About Senn Delaney
Founded in 1978, Senn Delaney is widely recognised as the leading international authority and successful practitioner of culture shaping that enhances the spirit and performance of organisations. Senn Delaney's passion and singular focus on culture, combined with decades of hands-on experience, have resulted in a comprehensive and proven culture-shaping methodology that engages people and measurably impacts both the spirit and performance of organizations.
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