How Different Company Cultures Can Hurt a Merger

Mergers are very common in today’s business world. For both organizations, it can be a positive way to expand and improve their businesses. Often though, mergers fail because of varying company cultures. On paper the merger might make sense, like peanut butter and jelly; but if there is nothing to hold it all together, bread or crackers, it will just slip into a big mess.

Company culture can vary in different organizations. One company may have very strict rules and routines. They may value orderliness, discipline, and be very rigid in their policies and procedures. Employees within these companies are typically monitored very closely, with tight, precise deadlines and requirements, and even punishment for failing to meet those requirements. Another company may value creativity and uniqueness, embracing and encouraging employee ideas and individuality. Employees within these companies are given extreme latitude in how they complete their assignments and praised for their ingenuity.

Merging the varied cultures of these two companies could prove to be very difficult. Harvard Business Review posted about a study that showed that with over 4,500 mergers, those with differing cultures saw their return on assets decrease by 0.6 percent within three years of the merger, or $200 million in net income per year. Those with very differing cultures saw yearly net incomes drop by over $600 million.

This does not mean all businesses with varying company cultures will fail. With the help of organizations such as Genesis Medical Management, companies can face the challenges brought on by cultural differences. There are several key components that must be addressed to ensure a positive merger of varying cultures.

Throughout the merger negotiation process, companies must include development of a new cultural integration plan. They must assess the culture of each company and determine where each company can be flexible in merging their cultures. They must decide in which areas of operations there can be compromise between the two cultures. A plan should be established that clearly outlines the new methods of operations to establish clear expectations for all involved, especially the employees.

Employees are the greatest asset of every organization. Employees, therefore, are key to a successful merger. Employees must be given the ability to provide input into the development of an organizational culture in order to buy-in to that culture. People often struggle with embracing change but are much more accepting and willing to positively approach changes if they are given input in creating those changes. Communication with employees is crucial when merging two organizational cultures.

Each organization must be willing to adjust some of their organizational practices to embrace components of the other organization’s operational procedures. Some companies must be willing to loosen their rigid practices and embrace employee innovation. Other companies must realize they will have to hold their employees more accountable and embrace specific requirements.  Compromise is a necessity.

Once a new cultural integration plan has been established, companies must also realize that they will have to adjust their plans throughout the merger and in the following months. They must monitor their operations and recognize when the employees are struggling with the cultural change. They must encourage communication and be willing to adapt as needed to ensure that employees feel valued and engaged throughout the process. Assessing the culture regularly throughout the process will ensure that organizations know when adjustments need to be made.

Allow Genesis Medical Management to help your organization through the cultural merger process and ensure that your merger produces successful results. Contact us today.