Merging Companies Means Merging Cultures

Despite prospects for growth and gaining a competitive edge, more than half of all mergers and acquisitions fail, research shows. But poor sales or planning aren’t always the main culprits. More often, the problem is a lack of cultural integration.

The key to a smooth melding of company cultures lies in proactively addressing potential conflicts and consistently communicating with employees, customers and other stakeholders at every step of the process.

Successful companies especially understand the valuable role of human resources (HR) during such a crucial period, as fear of uncertainty surrounding a merger or acquisition can lead to employees feeling defensive and negative. And that could result in the loss of the combined company’s best workers and sometimes clients.

Start with the Basics

A company’s culture lies within its values, attitudes and beliefs. Executives and managers must look at the differences, strengths and weaknesses of the cultures before the merger, and potential clashes should be identified and resolved. Ignoring this important task may prove detrimental in the long run.

Next, development of a mission statement that defines the combined company’s core values will help employees better understand any new direction. When aspects of both cultures are considered, employees should feel less apprehensive about the new environment.

As with any transition, communication is essential throughout a merger or acquisition and can help alleviate unfounded rumors and unnecessary fears. Weekly e-mails or company meetings allow managers to set the stage for upcoming changes. A monthly newsletter or intranet also can be beneficial. Address common areas of concern, such as benefits changes, reorganizations and the overall impact on employees, customers and other stakeholders. Senior management must be candid about all changes during this sensitive time.

Forming an employee council also can give people an outlet to address their concerns and give managers important feedback. The council should include representatives from both companies.

Tools and Resources to Succeed

Training and development plays an equally important role during times of change. Pre-merger training will provide management with a perspective of what to expect and how to effectively handle sensitive issues. Employees will gain yet another opportunity to talk and learn about all sides of the transition in an open environment. Ensuring that employees are up-to-speed on new company processes and products can help avoid potential misunderstandings, as well.

In addition, strong feedback and a reward system can help retain top performers from both sides. Employees need to be reassured about their job functions and feel recognized by management for their commitment to the new organization. This also helps motivate new employees hired after the transition.

Ultimately, an organization’s success comes down to the people who define it. Adopting high-performance HR practices and resources before, during and after a transition can help companies achieve long-term success.

Pat Ryan is a district manager with Administaff in Atlanta. Administaff (NYSE: ASF) is the nation’s leading professional employer organization (PEO), serving as a full-service human resources department that provides small and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 51 sales offices in 24 major markets. For more information about Administaff, call 800-465-3800 or visit http://www.administaff.com

Pat Ryan with Administaff of Atlanta is a Trusted Advisor of the BUSINESS HOUSE, inc.^SM