M&A Series: Culture Eats Strategy. Feed Your M&A

With global M&A activity expected to rise in 2016, it’s important to remember that people and culture are the keys to success, and they need to be addressed early and strategically. Low employee engagement and a misaligned culture can pose a serious threat to the success of mergers, holding back or even derailing growth plans.

We’ve all heard the phrase “culture eats strategy for breakfast.” While culture is often misinterpreted as a fluffy component of business that belongs to HR, it’s actually one of the most important drivers that a business has to be aligned for long-term, sustainable success.

Deloitte’s 2016 Human Capital study states that culture and engagement are THE most important issues companies face around the world—virtually exploding to the top of its ranking. Gallup research shows that just 13 percent of employees are “highly engaged” globally. This means that only one in eight workers are psychologically committed to their jobs.

During a transition, it’s even more important for an organization to align the brand, people, and culture with the vision for the new business. Your brand is the red thread that connects employees to customers, and the one thing that will differentiate you over time. When the people inside an organization understand who they are and what they stand for, they can nurture, evolve, invigorate, and truly bring the brand—and the business—to life.

In an M&A situation, you need to protect the equity you have in the current culture and examine existing strengths. You want to bring those forward to create something completely new and inspiring that will help employees as they grow through a period of tremendous change.

M*A and Culture Carolyn Ray Interbrand

 

So what is the role of brand in this?

1. The brand can provide clarity and sense of purpose. Research shows that high-performance businesses have a stronger sense of purpose. As we consider changing demographics in the workforce—for example, the influx of millennials who seek stimulation and authenticity—as well as the escalating “war for talent,” an M&A presents an opportunity for employees to understand the answer to the question, “Why am I here?” This can be a powerful method for attracting and retaining younger employees, particularly during times of change. With a shared purpose, leaders can unite a new and diverse organization with a single, global rallying cry.

2. Your brand can help align the dots across the organization. As the business changes, its people must adapt. With an M&A, you have a rich opportunity to connect the dots for your employees, helping them to understand the bigger picture. This means investing in those everyday moments, like informal recognition, that are aligned with business strategy. Employee engagement needs to be a priority for the entire organization, not just the HR department.

3. Your brand can give leadership a fresh platform for storytelling—one that is inspiring and helps employees to understand their roles in the new organization. It’s the leader’s role as chief storyteller to bring people together and capture their hearts and minds. Communications is often noted as a barrier to change; In fact, Dr. John Kotter, business and management thought leader, estimates that most companies under-communicate during change by a factor of ten, with the communications market share at only 0.58 percent. Ultimately, senior leadership must “walk the talk” and become credible examples of the behavior they are seeking.

In an M&A situation, culture needs to become an inseparable part of your business strategy. Those firms that develop a well-informed and brand-led approach to culture will gain a crucial competitive edge. While a merger or acquisition changes the status quo by definition, it’s also an opportunity to create a new culture that is strongly aligned to business growth and strategy.


Check out our whole M&A Series:

ARTICLE: Don’t want a flop? Consider your shareholders’ stake
ARTICLE: The Magic Trifactor for upping your odds for success

VIDEO: Three paths to a purpose-led identity
VIDEO: Opportunities that make up the Anatomy of Growth
VIDEO: The Magic Trifactor to Integration
VIDEO: A people-first approach to success

DOWNLOAD: The Full M&A Handbook – “Building a Market-Ready Brand”

Contributors

Managing Director, Interbrand Canada