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Define ‘culture’ to avoid failure, warns M&A expert


Companies entering merger and acquisition (M&A) processes should define their workplace cultures before joining them to avoid failure later in the deal, an M&A expert has suggested.

Towers Watson director of communication and change management practice Andrew Walker made the comments last week at a panel discussion on Successful Dealmaking – a report by the M&A Research Centre at Cass Business School that found culture was the primary contributor to deal failures.

“Culture is quite a nebulous term,” Walker said. “You have to go through a process to understand what the culture is. When you start to give it a definition, you have something to work with.”

Walker described an energy merger he had worked on recently. “We looked at the cultural attitudes of the two businesses,” he said. “By understanding them and giving them a definition, we were able to start to give some implications to the leadership team in terms of things they might start to do going forward.”

He continued: “There is something in terms of cultural integration in terms of getting the best of both, but being able to define that so you’re directing people down a certain route, otherwise the culture just forms in to something that you have no real control over.

“The real importance about culture is making sure that it fits with the strategic ambition of the business.”

Cass Business School professor in organisational theory and deputy dean Cliff Oswick suggested culture could not be “managed” and that organisations needed to assimilate cultural values over long timescales.

“The idea of cultural management is something of a misnomer,” he said. “The culture is like your organisation’s personality. You can’t change personality overnight.

“One of the problems also is of cultural integration, which implies some coming-together of one culture. The challenge in terms of M&A culture is often to appreciate difference.”

Oswick said problems could arise when people tried to engineer or manage a culture, rather than appreciating difference. “If you try to impose the values of a dominant partner, or two sets of values to form one set of values, you’re likely to fail,” he said.

Global challenges

The issue of international organisational cultural differences was raised by an attendee at the event, Chris Roebuck, visiting professor of transformational leadership at Cass Business School.

Kodak Alaris interim HR director Gary Fisher said in global M&A deals, both sides had to understand there would be significant cultural changes. He gave one example as the different notice period expectations in US organisations compared to the UK.

Walker suggested organisations involved in international deals should attempt to find “an umbrella arrangement for culture that sufficiently describes some attributes that are common across the organisation”.

He continued: “But also an understanding that at a local level an expression of those attributes might be differentiated. Segmentation is key.”

M&A tips

During the panel discussion, which was moderated by HR magazine editor Arvind Hickman, panellists were asked to state what they thought was most important in achieving successful M&A deals.

Fisher gave two pieces of advice. “Get your senior leadership sorted first,” he said. “Then they can begin to work to deliver the business objectives of the merger.”

“Make sure there is a really solid business case for doing what you’re doing – because everything else stems from there.”

Walker emphasised the “human element” of M&A. He highlighted that processes often happened fast, which could make those involved feel nervous.

“Try to adopt processes, communications, and engagements that pay attention to the human dynamic – the feelings people are going through – this is really important,” he said.

Oswick called for “openness and authenticity”. “If you have information, share it,” he said. “If you have no information, share that you have no information. The worse thing at all is not to communicate at all.”

Click here to watch highlights of the Successful Dealmaking breakfast briefing, including a presentation of the report's findings by professor Scott Moeller, director of the M&A research centre at Cass Business School.