How to integrate cultures post-M&A

A merger or acquisition goes beyond the integration of technology assets. Having been through this at the enterprise level, I’ve seen firsthand that integrating the two organizational cultures in an M&A is just as important—if not more so.

To ensure a successful cultural integration post-M&A, it is important to use two key concepts to guide the process at every step:

  1. It does not matter whether you have just completed a merger or an acquisition. There is a dominant party at the end: the acquirer. The acquirer (you) is the one responsible for setting the tone and creating a unified culture.
  2. Honesty and transparency lead to the best outcomes. When people who don’t have the power feel they are being lied to, that ends really poorly. Behave with integrity at all times.

If you have an existing corporate culture that you prefer all acquired employees to assimilate into, make that expectation clear from the start. Keep in mind, though, that if culture and values are what is holding the acquired group together, it will be very hard to have them adopt your culture. It can be done…but it's really hard. 

In those cases, leverage the resources you have in place to gain buy-in. Teach your established best practices and even consider conducting formal onboarding training to introduce newly acquired employees to the way you do things.

 

Decide what to integrate by evaluating cultures

 

If, however, you are taking a more integrative approach, the first step is to decide what you actually want to integrate. When merging companies, spending time gathering information and evaluating the acquired teams for both culture and performance before taking meaningful action will yield a much smoother transition. Again, it is important to be transparent with your existing employees about your integration goals.

You are evaluating new employees and new ideas to figure out where you want to invest for the benefit of the company, so you will need to evaluate what “good” looks like in both organizations. Wherever possible, you want to find objective measures that allow you to show how a given practice or team is being successful in furthering the goals of the new merged organization. This will help you avoid the perception of personal bias and favoritism. 

The reality is often that the two organizations involved in an M&A will both have structural issues, in processes, culture, and technology, because most organizations are flawed in some way. Identifying and merging the best practices of each can ultimately  improve the overall business.

To evaluate culture at the team level, ideally you will appoint a team from each organization to evaluate the other—or form a joint team—with the aim to avoid as much bias as possible, and designate a trusted leader to come in and talk to people to better understand each culture’s strengths. Find out what engages employees in the work and which teams or areas might be performing better than others.

At an individual level, find out: 

  • What are their skills? 
  • What is their motivation? 
  • Are they interested in sticking it out with you or just biding time until their options vest? 

This can be difficult to determine, but working with a trusted leader or neutral third-party can help foster honest discussions. Asking each employee what they need to feel valued and successful can provide insight into their individual values, cultural fit, and motivation—and can help you reduce attrition.

You need to be methodical in determining where you have high performers, and slowly bring the organization to buy into those processes and values of the people who are high-performing. If individuals and/or teams are performing exceptionally well in the acquired organization—perhaps better than your own—rushing the integration process is really just breaking them.

 

Apply cultural insights to operations

 

Once you’ve identified the value-add processes, high performers, and strengths and weaknesses of employees in the acquired company, the next step is to identify fits between people and needs. 

  • How does the acquisition affect your current staff?
  • Do you need more engineers? 
  • More managers? 

While it might be tempting to simply identify resource and skill set gaps and fill those piecemeal by moving people around or hiring new staff into a management role, keep in mind that people leave jobs because of their boss, and/or because they don’t feel like they belong, even if the work is interesting. Try not to break everything that’s good about the acquired culture before you can incorporate them in.

Throughout the integration process, there will be a slow buildup to an official handoff. However, at some point there needs to be a clear definition of the new roles, responsibilities, and accountabilities in the merged organization and an established measure—whether time- or activities-based—of when the integration is “done.” Working together to agree upon those standards will go a long way toward a successful integration.

Focus on high-performing teams and not high-performing individuals. High-performance teams are high performing because of the team as a unit, not because a single individual is high-performing. That’s why I advise against taking people from these high-performance teams and spreading them out. That may seem like a good idea, but it just waters down the high-performing team.  

Instead, celebrate the team and call out their objectively measurable progress so that the company sees this is what good looks like. Then, find people from both companies who aren’t working this way and give them the opportunity to shadow that team and learn. Or, loan out people from these teams as coaches to other teams. Let the high-performing team self-organize to help solve this problem. Do NOT take away their autonomy.

The unfortunate reality is that there will likely be employee redundancy in the org structure, especially at the management level. When two employees become peers and both are not needed to fill the same role, it is important to have a clear process in place to determine whether one reports to the other, or whether a different transition needs to be made.

On the flip side, when it comes to retaining individuals, retention bonuses can be helpful. You might need to offer these bonuses to make a high-performing employee feel valued, to ensure a successful tech transition, or some other reason; however, retention bonuses might also serve only to give people a date at which they plan to leave. It’s a tricky balance and will vary by organization, according to a business’s specific needs.

Just as you did in the evaluation and information-gathering process, be proactive with communication as you start making process changes. Having ongoing, regular check-ins with employees to ask how the integration is going and how they feel about it can help manage expectations and raise issues before you potentially face mass attrition. Consider even establishing a new shared terminology to make sure everyone speaks the same language. Communication is key.

 

Measure post-M&A cultural integration success

 

These activities are more important than preserving legacy tech. Of course, every organization needs smart technical leadership. But the execution of technology integration, in many ways, is easier than the culture and people integration. 

So, how do you know if your integration is succeeding? Retention. If you have made people feel valued and created a sense of trust, that success will be reflected in a relatively low attrition rate. By maintaining strong leadership practices throughout–communication, honesty, and transparency–your post-M&A integration is much more likely to be successful.

 


About the authors

Ken Judy, CEO at Stride Consulting, is a husband, father, and software professional trying to do more good than harm. Eighteen years learning and applying Agile Software values, principles and practices as a developer, product owner, coach, and leader. Advocate for empowered, self-organizing, cross-functional teams. 

Michael Kellman has been building products and product teams at startups and enterprises, primarily in the education and media spaces, for 25 years. As Partner and Head of Product at Stride Consulting, he works with Stride’s clients to help them improve their products, processes, user happiness and business success and drives the continuing development of Stride’s Product Management practice.