They represent an important tool for corporate success by, among other things, helping companies diversify, add complementary offerings, and remain competitive through effective scaling. But having advised senior executives in transition for 20 years, I also regularly hear stories about how difficult it is to successfully merge organizations and how often mergers either fail or create less than optimal results because of missteps in the executions of how companies are integrated. However, repeatedly I hear stories from executives of different functions involved in mergers, including Human Resources leaders, that it is the softer aspects that typically undercut an effective merger. The issues coalesce around several major themes.
Typically, companies that plan for these things prior to the merger work through them more effectively. The goal of the post-merger stage is to establish a new business operation, flow and culture as quickly as possible.
Small businesses may have an advantage in that fewer employees are affected than is typically the case with larger organizations. Employee Attitudes One of the most challenging HR issues following a merger is the attitudes of the employees. Depending on the effect the merger has on their jobs, employees can become worried, disgruntled or resentful.
Some may have resentment if friends or colleagues were let go following the merger.
Others are worried about how their jobs may change. Change is a major cause of stress for most people, and job roles often change significantly. New Norms Every organization has a unique cultural makeup. The shared norms and values in a company evolve over time, are typically guided by leaders and are perpetuated by employees.
When two entities combine, they bring two distinct cultures. HR professionals must diligently work to build a new organizational culture without forcing employees to give up key values and rituals they have enjoyed.
Many newly merged companies conduct more regular employee meetings and try to organize company activities during the first few months. Compensation and Benefits Whichever organizations leadership remains in charge following the merger often influences the direction of pay and benefits in the new company.
Generally, if employees gain or experience consistency in pay and benefits, issues are minimized. If some employees are asked to take pay decreases or face significant benefits cuts, complaining and low morale will likely result. Team-Building Integrating employees from the merging organizations is critical to maintaining or improving production and performance quickly following the merger.
The first step is to introduce new colleagues and give them ample time and opportunity to bond. Team-building activities and scheduled department meetings strengthen rapport and enable work groups to formulate new ways of doing things. References 2 Health and Finance: He has been a college marketing professor since Kokemuller has additional professional experience in marketing, retail and small business.As a result, they almost always apply too few resources to the cultural side of the integration, often leaving it to human resources to lead.
For cultural integration to be successful, employees must view it as core to the business. More than anyone else in the organization, the HR staff should be able to take the temperature of the talent and be able to give top management feedback on what kind of talent management issues would be relevant and actionable if the merger or acquisition were to go through.
Mergers and acquisitions represent the ultimate in change for a business. Despite this, it is common knowledge that mergers and acquisitions do fail and they do not necessarily create shareholder. Four main issues related to the culture clashes are highlighted in this paper, ambiguity and communication problems within the merged entity, Many adjustment problems have been witnessed during the post-merger period Mirvis and Marks, According to Mirvis and Marks , these problems arise.
Page 2 Human capital and merger and acquisitions Disclaimer EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. The impact and importance of social and formal controls and cultural fit are issues still begging for an explanation.
Key words: cultural clashes, employee resistance, merger outcome.