Global Workplace & Sustainable Business Model Blog

ORGANIZATIONAL CULTURE PLAYS ROLE IN SUCCESS OF MERGER

Growing Your Business | Global Strategic Management Solutions

In a Merger and Acquisition (M&A), the leaders’ responsibilities include developing a complete understanding of the organizational culture is one of the key elements that promote cooperation between the merging firms.  The cooperation between organizations is necessary to increase the likelihood of postmerger success for the firm. 

Kanungo author of Ethical values of transactional and transformational leaders discuses that the transformational leadership process allows the followers’ capacity for self-determination to increase while pursuing the purpose embodied by the leaders’ vision for the organization.

Despite a steady increase in the number of M&As, researchers show that 90 percent do not achieve their desired goals.  Their failures can be caused from inadequate integration planning, lack of communication, cultural mismatch, or poor strategic match.  The strategic objective is normally known but the redefining of the new culture is often overlooked. 

To be successful, there is a need for managers to focus on the post merger integration issues that create a synergy within the newly formed organization.    There are several cultural assessments available that can be used to ensure a better understanding of the gaps within the new culture.  

Training programs can teach transformational leadership methods and create an organizational culture that promotes cooperation between the merging firms.   A culture of empowerment focuses on questioning the how and why things are done, and the managers constantly refine best practices and take risks. 

The correct culture increases the chance for success as defined by the original intent of the M&A. Transformational leadership methods have been associated with employee satisfaction, reduced turnover, organizational commitment, and overall employee performance.  

To ensure success of your merger, let us perform a baseline report of the existing organizational culture. Request a sample copy of our Generally Accepted People Metrics, GAPM.