Kathy Flom-Greenspan is President of Pomerantz Marketing , a full-service B2B agency serving local, national and global small and medium-sized businesses.
Mergers and acquisitions have taken place at a rapid pace in recent years, with companies breaking records to create value, acquire new technologies or open market access.
Despite their importance and popularity, many mergers and acquisitions do not produce the desired results. According to one study, only 17% of attachments found value, 30% made no "noticeable difference," and a staggering 53% actually reduced value.
While mergers and acquisitions fall short for many reasons, a recent Deloitte report finds that culture is responsible for 30% of failed integrations. As such, business leaders must consider cultural influences along with other factors to ensure the M&A process produces the expected results.
What is corporate culture?
Unlike many business elements, corporate culture is hard to define and even harder to measure. In general, corporate culture is a fuzzy mix of shared values, priorities, goals, vision, and norms. In other words, a company is defined by what it produces, and company culture is defined by how those results are achieved.
It is very important for employees. In a Glassdoor survey, more than half of respondents said culture is more important than salary, and 77% rate culture before applying for a job.
With employees who value corporate culture so highly, it becomes clear that disrupting (or destroying) an established culture through mergers or acquisitions can be detrimental to an organization's long-term success.
Best practices for cultural marketing after mergers and acquisitions
Following mergers and acquisitions, cultural marketing best practices can help leaders address employee concerns and develop a more dynamic, resilient, and supportive culture for the future. Based on our agency's experience of helping clients with their M&A marketing efforts, here are some best practices that we've consistently found effective:
1. Put corporate culture clearly in the foreground.
Organizational culture is a broad field, so leaders are unlikely to achieve optimal results by accident. Instead, business leaders need to make culture a clear priority in the M&A process, ensuring that decisions are made first, policies are enforced, and expectations are set.
Making corporate culture a clear priority starts at the top and begins at the very beginning of the M&A process. It encompasses vision and values, labor standards, leadership strategies and environmental elements that together make up corporate culture.
2. Use of external voices to assess corporate culture.
It can be difficult to identify and analyze the characteristics of a culture from within. As Deloitte's analysis helpfully explains, "the most astute observers of culture are often strangers because cultural information is not implicit to them."
By turning to outside voices to assess organizational culture, leaders can make cultural issues a regular part of meetings and other conscious efforts to drive positive outcomes.
3. Develop internal communication strategies to create visibility and drive engagement.
Internal communication is vital and requires a well-coordinated effort by multiple departments within an organization, including management, human resources, IT, and marketing.
The process can be difficult and humbling, especially for employees who have experienced a failed merger or acquisition. This is especially true when communication is inadequate. In response, a concerted effort must be made to win the hearts and minds of existing and new employees through the M&A process.
Ultimately, leaders need to get approval from their employees, and communication is at the heart of that effort. This can include:
• Send newsletters and internal emails.
• Use strategic replays with intelligent graphics and videos
• Establish clear and concise communication with various internal departments.
• Post content for messaging on the corporate intranet.
• Presentation of virtual and face-to-face events.
• Distribution of gadgets to employees and stakeholders.
Effective internal communication is a controllable element that can help leaders shape the vision and increase engagement in the M&A process.
4. Create an internal brand.
A company's brand is critical to the long-term success of its customers. The same goes for internal branding, which helps companies attract and retain top talent.
Internal branding can reflect career opportunities, employee benefits, and collective identity. Creating and developing an internal brand at the outset of M&A supports internal critical employee outcomes.
Even before the recent pandemic and its associated "bulk layoffs," MIT's Sloan School of Management estimated that a third of full-time employees would quit their job within a year. Today's hiring environment is even more uncertain for companies, which is why it's important to create an internal brand that encourages existing employees to stay and attracts new talent.
5. Build your brand with employee engagement in mind.
Employees who feel connected to their colleagues and to the company's mission are better able to thrive in the face of changing circumstances or shifting norms. For this reason, communication should be a top priority when creating new internal and customer-facing brands.
To drive that success, consider each company's existing culture and brand strengths and create a list of “great achievements” that can drive cultural differentiation and brand development.
As the M&A business continues to gain momentum over the next year, paying close attention to company culture can mean the difference between success and failure. It's an often-overlooked, predictable, and powerful element that enables executives to get in the driver's seat and lead their company through a fruitful M&A process.
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