Cultural alignment while integrating two companies is a hot topic in the M&A world. For instance, CFO.com recently quoted Jonathan Chadwick as saying, “The number-one reason I think deals fail is because there was not an agreement or a matching of cultures.”
Should you have any doubts, read about Kidder-Peabody inside of GE. Those cultures did not mesh, and I don’t know if anyone could ever make them work together.
It’s important to assess the cultures of the prospect and your own organization before closing the deal. That does not necessarily mean only acquiring companies whose cultures are the same as your own. Successfully acquiring a company with a different culture does happen more often than you would think. In fact, the prospect’s different culture may be the very reason for the deal.
Years ago we were working on an acquisition for a manufacturing company in the Midwest. Our client sought a high energy, visionary and artistic organization to produce a more creative environment. Together we found a company in California with a radically different culture. . Our client was a coat-and-tie company; the California company was very relaxed. The CEO of the acquisition prospect told us, “I have a hard time getting employees to wear shoes sometimes.”
Obviously integrating the two cultures was a challenge, but we found the right blend. One concept we incorporated from the acquisition prospect was a 9/80 work schedule, where you work 80 hours over nine days and then get every other Friday off. At first, our client thought it would never work; there was no way they could have people out of the office every other Friday.
But, since it was so successful with the California company, our client tried it with a small group of employees. They found absenteeism went way down and morale went way up. Employees scheduled doctor appointments, car repairs, etc. for every other Friday so it didn’t interrupt their work day.
Just because two cultures are different doesn’t mean one is right or the other is wrong. You need to be a good listener—and stay open to the concept that both cultures can work well together.