It is well-known that merging two companies is a difficult undertaking, and international mergers count as some of the trickiest of all to pull off, as here you are not only merging company cultures and office structures, you are also combining cultural heritage patterns, both big and small. And while the reasons for why mergers don’t live up to expectations (or fail outright) can be many, integration is generally considered to be one of the biggest hurdles. To put some numbers on it, between 50-85% of all mergers fail, and a study by A.T. Kearney concluded that total returns to shareholders on mergers and acquisitions are negative.

Considering that integration issues encompass everything from company hierarchy to performance drivers to internal and external communication, it makes sense that it’s an important piece in ensuring a successful merger. The results of failing to address integration matters span the spectrum of, at best, an inefficient work environment to one that is downright toxic. Nowhere on that scale is there a positive outcome.

Because the topic of integration speaks to the very fabric of what makes a company function, it is vital that cultural integration is part of discussions early in the process of a merger and that the leadership have clear action plans for how to address it. Ideally, it should be an ongoing effort that has employees actively involved.

A famous example of a merger gone wrong is the one between German automaker Daimler and US-based Chrysler. On paper, this was a match with all kinds of positive upside — they operated in the same sphere and produced the same products. However, the two companies had completely different cultures. Daimler was conservative and known for having low risk tolerance, while Chrysler was diverse and creative. One was formal and the other looser in its structure. It didn’t take long before employee satisfaction dropped to all-time lows, and within a couple of years, they were recording major losses. What was thought to bring fortune to both companies ended up bringing chaos instead. Daimler eventually sold Chrysler. 

As an intercultural services company, Globiana has seen firsthand the difference cultural integration training makes. A recent survey conducted after completing trainings for a large international company based in Germany, which had merged with a large company in the US, highlighted why it’s so important to be intentional about integration training. 

As an example, take this observation by one of the participants when asked about future learning topics to cover: “The other company has a results-driven culture where compensation is tied to personal results, this is not the case in our company, and I’m not even sure that’s allowed by our workers’ council. What does that mean for our combined workforce?” And an answer to the question of what new perspectives had been gained through trainings was: “Most important to me was to learn why Americans are more focused on short-term results, which is different from how I am acting.”

Looking at these two responses, you get a good idea of why integration is so important, and also why it’s so thorny. Because, of course, not only do the answers reflect divergent compensation systems (which in itself can become a problem) but they also bring into focus the questions of larger cultural tendencies such as performance drivers and goal setting. It’s not hard to imagine the collaboration difficulties that can spring from leaving issues like these unaddressed.

A common mistake in mergers is to task employees, often managers, to lead the way in integration. This is problematic because they typically lack the expertise to address all that integration entails. And in addition, they most often don’t have the time, or the resources, to spearhead this type of effort in a sustained way.  

Using an expert is a cost-effective way of getting targeted training. Globiana for example has a global network of trainers, who in addition to country-specific knowledge also have expertise in how to bridge the cross-cultural aspects of a merger and how to facilitate collaboration and communication between groups.

Further proof of the impact of integration training can be found in Globiana’s post-training survey where 84% responded that they “Strongly Agree” or “Agree” with the statement: “I am confident that I can apply part of what I have learned today in my upcoming work.” On the question about interest in a facilitated follow-up, 80% responded that they would like to see that happen.

Perhaps the most important point of all brought forward in the survey was the sentiment that simply knowing that intercultural integration is prioritized by the “new company” gives employees confidence that it’s important for the company to not just merge business but to merge people as well. One participant said: “It felt good to see that my passion for intercultural awareness and the importance of culture, diversity, and inclusion is shared by others and is top focus for ‘the new company’”. And another employee said this: “The effort and thought being put into the integration of the two companies is refreshing. Not only is it teaching me and others, but it is also instilling a sense of belonging in a very short span, which takes years to achieve.”

By: Felicia Shermis

Sources:

https://dealroom.net/blog/challenges-during-m-a

​​https://www.impraise.com/blog/employee-engagement-challenges-with-mergers-acquisitions

https://www.cbsnews.com/news/why-mergers-fail/

Diversity, Inclusion, and Sustainability — In the Workplace and Beyond