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How to Merge the Cultures of Two Companies?

Some years ago, experts from Price Waterhouse Coopers Latvia came out with a study concluding that companies often neglect the phase that begins after mergers or acquisitions of legal entities. Moreover, one of the weak points identified is the section on integrating corporate cultures. The survey indicates that only a little over half of those who have successfully completed deals acknowledge that their organized culture and change communication program has received positive employee feedback.


Therefore, I would like to offer insights into the principles that every business leader should follow when implementing a merger or acquisition program. Despite the fact that cultural and communication issues might seem trivial compared to other aspects, in the end, everything turns upside down, and it is the employees who inadvertently undermine the deal! This stems from a common mistake made by half of business leaders—the belief that after merging two different companies, people will naturally understand how to work together and will do so happily! However, it is like taking two mugs, one with coffee and the other with tea, and pouring them together into a larger mug to drink!



Recognize that something has ended

In my opinion, one principle to follow in a merger situation is honesty with oneself as the company owner and with the employees. When companies merge, it is clear that things will never be as they were before. A significant phase in the company's existence has ended, and a new path begins.


This realization must be clearly communicated to the team being acquired or merged, and it should be done timely and gradually. Sometimes leaders make the mistake of thinking that employees don’t care about the company's name, bank details, or who will be the main person at the international level in the future. However, this is a huge misconception because employees will experience the reality that the team will no longer be independent, that the management might change, someone might be laid off, or someone might have to change roles within the company.


Therefore, the feeling of change must be created in advance, honoring the company's existence and achievements up to today and outlining a clear vision for the future.



Culture can and should be evaluated!


Culture encompasses values, beliefs, archetypes, norms, and unwritten rules by which a company operates. Practice shows that culture can be evaluated and clearly understood if the company’s management addresses it. In the case of a merger, this process is particularly important because, to successfully merge something, you need to understand what you are preparing to merge.


Generally, companies have a culture that has been introduced or has evolved, which manifests in various ways. However, if it is not sufficiently organic and employees coexist with it in their minds but not in their hearts, it may happen that during the changes, cultural traits that no one could have imagined may "surface," creating additional pressure on the ongoing changes. Or it may be that the culture and values are deeply rooted in employees and differ from the company being merged, creating obstacles to forming a unified culture.


Therefore, before a change communication program, I recommend exploring, examining, and evaluating the cultures of both companies to be merged. This way, it is possible to understand the extent of the expected resistance and what might be the causes of the resistance. Based on these causes, it is possible to create a communication and engagement program for employees.



Communication and more communication


When developing a change communication course for an audience, I came across insights from leaders after unsuccessful changes. One of the main regrets sounded like: “If only we had communicated more and involved more people!” This essentially says it all. Changes, whatever they may be, require the individual and group ability to reorient and accept the new situation. This requires both time and serious investment in communication, involving, training, and conversing.


If we know that for a person to accept change, they need to go through six phases (knowledge, understanding, involvement, acceptance, adaptation, engagement) to reach the feeling of joy in working in the new situation, we must also understand that these six phases cannot be experienced, for example, within a month.


For a vision of change creation, I offer a set of questions that can help any organization formulate change communication messages.



The phenomenon of Latvian culture—worth considering


Various intercultural studies clearly show that Latvians are individualists. Looking back in history, we have lived in isolated farmsteads, and cooperation with the outside world often causes us discomfort. Furthermore, history also proves that one can never feel safe, as someone has always wanted to oppress us as a nation and has done so. This freedom fighter's code is so strong in us that it reflects not only in the political environment but also in the context of companies, especially during buying-selling-merging projects. And this is precisely why many mergers fail because this aspect of the thirst for freedom, which lives subconsciously and hinders the acceptance of, for example, new owners, is not taken into account. It is perceived almost as oppression! In such a situation, there is only one solution—very high-quality communication that focuses on reducing fear and outlining a future perspective where no one is threatened.


Summing up all the previously mentioned points, it should be noted that if a company poorly utilizes the resources of organizational culture and communication, there is a huge risk that the changes will inevitably be accompanied by rumors and speculations, leading to a situation where people stop working but instead worry, gossip about the situation over coffee, and in the smoking area. In short, they stop working productively. And these are real losses that are clearly reflected in the company's financial results.

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