People & Culture Challenges in M&A:
What are the stakes? How important is this? How much attention should you give it? Here is some astounding research!
I'm hoping you will find this useful for #MergerIntegration, #culture management in general, and measuring the impact of culture on the business: #Metrics.
You can’t underestimate the #stress and uncertainty employees experience during mergers: new roles, bosses, colleagues, processes, and cultures are all recipes for #conflict, confusion, and error. And there is so much pressure in mergers to deal with urgent financial, operational, and administrative issues that the #people side of merger integration is often neglected.
Why Mergers Fail: Neglecting Culture:
• Study after study puts the failure rate of M&A somewhere between 70% and 90%. (C.M. Christensen, HBR)
• 50% of executives cited org. cultural differences as the most significant post-deal issue they faced. (Marsh Mercer Kroll)
• 58% reported they did not have a specific approach to assessing and integrating culture in a deal.
• 0% reported that its cultural integration practices were effective.
• 33% blamed “cultural integration issues” as the reason their deal failed. (Aon Hewitt)
How much is your talent worth?
In a study by the Hay Group:
• 78% of acquired company employees opposed the mergers
• 38% expressed dissatisfaction with the post-merger climate
• 22% described the early months as “culture shock”
• 16% labeled it “trench warfare”
Many studies demonstrate that losing employees costs on average 100% of their annual salary, and at least 3x more for top performers (I've posted on that topic a few times). And when change is unbearable, you will lose your best players because they are the most employable. There is no magic bullet. If your talent bucket is leaking, it‘s not enough to keep filling the bucket. Fix the leak.
Finally, some data from participants in my own workshops on post-merger integration management:
Risks & Costs of Poor Integration:
• Dual loyalties, turf wars, silos, conflicts
• “Us vs them”; resentment; internal competition
• High stress, errors, and safety issues
• Low morale, productivity, trust, and loyalty
• Poor communication, teamwork, and alignment
• Employee absenteeism and turnover
• Time to full productivity for new employees
• Time to adapt to new culture and values
• Lack of clarity about roles, goals, and big picture
• Under-leveraging new talent and talent synergies
• Opportunity costs: busy putting out fires
• Negative impact on your reputation / brand
• Difficult to compete for talent
All leaders understand how expensive and debilitating these problems are, including your CFO. Use this data to make a strong case for excellence in post-merger integration in your organization, and engage everyone you can in contributing to your integration project. Happy to help.
#Leadership #Coaching #HR #OD #Mergers #Acquisitions #Engagement #LeadershipDevelopment
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