Senior Strategists

Mergers, Culture Shock, and Communications

By Andrew Goldberg and Tim Orr. Metropolis Group 360 and Senior Strategists.

M&A activity is again poised to grow as the global pandemic recedes. Historically low interest rates and lots of available cash makes M&A an attractive short-term work-around for companies facing slower growth, risks to market dominance, and various internal barriers to change. Like all change activities, M&A objectives collide with a big barrier--the inability to harmonize business cultures. One reason for this, we would argue, is a misapplication of communications as an enabler of culture change. Communications should play a significantly greater role than it generally does in fostering a culture that delivers more improved and efficient post-merger results.

Culture and Communications

No M&A event is precisely the same. But what remains consistent is the importance of understanding cultural challenges, particularly through an emotional and psychological lens. Communications can be the connective tissue between top management’s strategic and operational priorities, and the heightened emotional concerns of employees who may feel at risk, unacknowledged, disempowered, and defensive after a merger.

In prior articles, we focused on three areas where communications and management behaviour can play a significant role in the culture alignment process:

understanding and utilizing influencer networks, generally comprised of a small percentage of employees with an outsize impact on the behaviour of their peers.
communicating through more emotional and empathetic language and narratives.
and bringing together influencers in a “no-fault” environment to co-create the purpose, strategies, values and communications of the change the company must execute to succeed.

An M&A Communications Framework

Communications planning for culture integration begins even before the merger closes:

Identify and enlist critical influencers early. Top management of large firms often find it difficult to see the organizational hierarchy to know who the actual influencers are. This situation is compounded in a merger where both sides lack sufficient transparency into each other. A methodical, premerger culture analysis is critical. And part of that process should be peer-to-peer surveys that locate those individuals seen as most helpful and empowering within the system. Those individuals should be brought together to help envision and build communications for the post-merger company.
Prepare management with people-focused communications. Commonly, management’s merger communication focuses on explaining the combination’s virtues to external audiences. Executives are often well trained for this purpose. However, the messages that are employed are not necessarily targeted or persuasive to internal audiences that may be under significant stress. Utilizing the collaborative, influencer process above, corporate communicators can help senior management convey messages that are more motivational and inclusive, and are also frank and authentic.
Balance speed with insight. Top management inevitably wants to realize efficiencies and synergies quickly. Yet effective change arises from allowing the necessary time to observe, listen, experiment, and act on communications coming back from the organization. Pulsing the influencer network through regular communication provides an alert and remediation process for dealing with employee disaffection, disengagement and defection.
Feedback, “fail early”, and the flexibility to change. Experience often shows that the latitude to experiment, even if it leads to early failures, is important to long term success. Not every company, however, has the flexibility to adopt a fail-early approach. This is where influencer feedback and a continuous communications loop is important. Management needs to have the courage and flexibility to react on anecdotal information from the system when a workstream is heading off the rails. The list of companies whose formal network masked critical weaknesses is long. Acting on communication from the Influencer network offers the opportunity to acknowledge mistakes, change early, and re-set as often as needed
Communicate transparently, frankly-and empathetically. Honesty and transparency are always important. But employees are not necessarily reached through the language of pragmatism. They also want to know whether they are valued, listened to, actually empowered to make change happen. Pulling in corporate communicators into the operational strategy and execution process is essential. Communicators understand how to shape business processes and objectives into compelling and persuasive narratives that motivate employee behaviour.
Management KPIs should reflect culture factors: Elsewhere we have discussed how management should be evaluated and motivated on not only financial results, but also on areas such as trust, values, and engagement. KPI’s can be constructed to gauge whether management is moving organizational behaviour in the right direction.

Ultimately, communications as a discipline and as best practice, can be better employed in the M&A process. Early incorporation of communications as a lever in post-merger culture change can make the difference between gridlock and transformation.

Mergers, Culture Shock, and Communications

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