Successful Cultural Integration Of Acquisitions

According to McKinsey ‘95% of senior leaders describe cultural fit as critical to the success of integration but 25% cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail.’

For most family businesses, acquiring another business will be one of the most process critical operations they carry out. Aimed at delivering growth, it’s also one that demands the closest of detailed planning across your entire business, if it is to succeed.

During the acquisition process, cultural compatibility is likely to have been considered, particularly when it comes to overall vision and company values. However, as with many things, the devil is in the detail, and it is often when operating the new combined business on a daily basis and how the teams interact that problems can arise.

Many family businesses have strong, well-defined cultures which are viewed positively by their employees. Therefore, there can sometimes be an assumption on behalf of the family business owners that the people in any newly acquired business will automatically want to be part of that positive culture and will want to work together in the same way. That may be true but bear in mind that most people find any change difficult, even those changes that ultimately end up being positive ones. So be wary of dumping every aspect of the acquired business’ culture.

Cultural integration is not something that can be left to chance. It needs careful thought and planning if you are to maximise your acquisition efforts. If you’d like to ensure that you’ve ‘ticked all the boxes’ when it comes to successfully integrating your acquired businesses into your family business culture, here are the key considerations.

1. During an acquisition process, take steps to understand the culture of the business you are going to acquire. Go deeper than just the values; understand their cultural strengths. Which aspects of their culture do you want to preserve? Are there elements of their culture that can further enhance and strengthen your own?

2. Understand the detail behind their culture. How do people work together? How are decisions made? What kind of behaviours and achievements are rewarded? How are staff motivated?

3. Speak to employees from the acquired business. How would they describe their company culture? What elements mean the most to them and which are the areas for improvement? This will be vital information as you look to culturally integrate the new business with your own.

4. Based on the points above, create a clear understanding of the similarities, differences and potential friction points between the two cultures.

5. Develop and share a detailed cultural integration plan which builds on the similarities, leverages the strengths, and solves differences and potential pain points. This plan must be reviewed regularly and adjusted as necessary to ensure maximum effectiveness.

6. Welcome employees from the acquired business immediately. Acknowledge the strengths of the current culture, communicate the benefits of your culture in terms of ‘what’s in it for me’?

7. Be clear and specific about what your culture looks like. Provide examples of “how we work around here” to help new employees to understand what is expected. Ask your employees to share what makes your culture (ie. don’t have the business leaders do it).

8. Provide the support that allows your acquired senior managers to buy into and adopt the new culture as soon as possible. Set out the expectations in terms of their behaviours that will allow all employees to on board as quickly as possible. Identify influencers across both sets of employees.

9. Regularly seek feedback from all employees to help monitor how the cultural integration is progressing.

10. Identify your key ‘cultural symbols’ e.g. uniforms, dress code, signage and ensure that they are in place as soon as possible to signpost the change of culture.

11. Set clear measurements for cultural integration and monitor them regularly and course correct as necessary.

12. Keep an eye on staff turnover in the newly acquired business as this can be an indicator of how well your cultural integration is progressing. It is probably the best for everyone if people who cannot personally align with your culture, decide to leave the business. However, take care that you do not inadvertently lose good talent you wish to keep because you have failed to adequately support them on their own personal cultural integration journey.