Who Knows More About Corporate Culture Than HR?

The importance of culture in making or breaking a merger/acquisition has long been an interest of mine.

After spending 25 years at the top outplacement/career transition business, I’ve seen the best and worst of people practices in M&A – and the best and worst of culture awareness in M&A. So I read with interest the recent white paper by Mercer, titled Culture in M&A: We Know It’s Important, So Now What?

And I found some interesting nuggets.

We all know this, but Mercer’s survey data show that “failure to address corporate culture is the key barrier in up to 85 percent of failed M&A transactions.” Yes, 85 percent. I’ll bet even your gut is surprised by that high percentage. Good to have hard data on that one, right?

Corporate culture: The key to a successful M&A

This is a short report, as white papers go, so if there’s a merger or acquisition in your future, I encourage you to download the report because the data is pretty compelling that culture should be a primary driver during due diligence and integration execution in a successful integration.

And who knows more about culture than HR?mercer-org-culture-tops-elements-critical-to-deal-success

The relative importance of corporate culture as a driver of deal success as compared to customer relationship management, human resources, IT and regulatory compliance could be shocking to some – but not to leaders who have been on the wrong end of one of these deals.

HR need to be involved in due diligence

And by wrong end, I mean a due diligence process and integration execution plan that ignored the importance of culture and people, focusing solely on “cost synergies” and “accretive” value. In other words, a due diligence process and integration plan that didn’t have HR’s fingerprints all over it.

And if you need any more convincing, there’s this to consider:mercer-paving-the-way-for-deal-success

So even if your focus is on achieving operational efficiencies, addressing culture in deals is a critical success factor.

And who knows more about culture than HR?

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HR has the walk the talk of integrating cultures

Other topics covered (briefly) in the report include:

  • Identifying company culture;
  • Understanding target company culture;
  • Analyzing data on culture;
  • Using surveys to engage leaders;
  • Planning for integration;
  • Soliciting employee feedback;
  • Tracking the integration process.

As you prepare for the deal, remember that although your CEO, CFO, Chief Communications Officer and head of corporate strategy may talk the talk about culture in an acquisition or merger, it’s HR (you!) that usually ends up having to walk the talk for the increasingly critical dynamic of integrating cultures.

And by the way, the “cost synergies” and “accretive” value never happen if culture isn’t the centerpiece of the due diligence and integration plans.mercer-leadership-plays-key-role-in-culture

HR should be taking the lead

So look at it this way: since most organizations make HR largely responsible for the cultural integration piece in M&A activity, and failure to address corporate culture is the key barrier in 85 percent of failed transactions, HR has an enormous opportunity to drive up the success rate of M&A activity, quantify its value and participate as a full member of the organization’s strategic leadership.

As the economy improves and M&A activity begins to ratchet up at home and globally, HR is uniquely positioned to lead real bottom- and top-line impact by taking the culture integration mantle and running with it. And by running I mean creating the business case with hard data to ensure that culture issues are pro-actively dealt with even before due diligence begins.

Because who knows more about culture than HR?

This originally appeared on China Gorman’s blog at ChinaGorman.com.

China Gorman is a successful global business executive in the competitive Human Capital Management (HCM) sector. She is a sought-after consultant, speaker and writer bringing the CEO perspective to the challenges of building cultures of humanity for top performance and innovation, and strengthening the business impact of Human Resources.

Well known for her tenure as CEO of the Great Place to Work Institute, COO and interim CEO of the Society for Human Resource Management (SHRM), and President of Lee Hecht Harrison, China works with HCM organizations all over the world to enhance their brands and their go-to-market strategies. Additionally, she serves on the Executive Committee of the Board of Jobs for America’s Graduates as well as the Advisory Boards of Elevated Careers, the Workforce Institute at Kronos, and WorldBlu. Addtionally, she chairs the Globoforce WorkHuman Advisory Board and the Universum North America Board. China is the author of the popular blog Data Point Tuesday, and is published and frequently quoted in media properties like Fortune, TLNT, Huffington Post, Inc., Fast Company, U.S. News & World Report and many others.

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2 Comments on “Who Knows More About Corporate Culture Than HR?

  1. The population overwhelmingly see #culture as a barrier to successful M&As – AND – largely doesn’t recognize #culture as an integration environment until it requires troubleshooting…….but we all know barriers are opportunities, all of our entrepreneurial thinking promotes us to identify these situations, and our shared pain pushes us to accept the concept. But only the concept. Why not the practice?

    Every day social communities are sharing the value of culture through practitioners’ engagement, and values and stories are caught by consumers turned evangelizing contributors. Concepts are consumed, contested against the personal narratives of their and constituents’ experiences (internalized, if you will), and thus the concept of culture is made personally tangible. It becomes applied: to assessment, analysis, consideration, negotiation, presence, possibilities; at work, home, networks, personal brands, humanized interactions; for causes, values, intentions, objectives, visions, execution, inclusion; by ideas, memes, stories, collaborations, systems-interfaces, interests, motivations, partnership; through leadership, mentorship, scholarship, empathy, discovery, expectations, engagement, strategy, adjustments, and letting go to hold on to something it takes doing the work to actually see.

    Clearly, empirical pain isn’t facilitating widespread adoption of the benefits of cultural analytics in M&A. That’s why I want to be a Analyst Culture Executive (on the way to becoming a Chief Culture Officer, of course) – that is, an ACE at making corp managers the heroes they should be by equipping them with the cultural stories they should be able to uncover and macro/micro environment discernment they should possess or value talent to include as to avoid learning being burnt isn’t the only path toward leveraged understanding about fire being hot.

  2. Hi China — the companies I have worked for and with have recognized that culture is the most important ingredient. In fact they have formed cross functional groups to focus on this issue.

    Companies acquire other companies for the people or the product or the market. In every case people in the acquired company are extremely valuable because: 1)they want to keep key talent as part of the new team or 2) they want to keep talent for 6-12 months to get up to speed on the products/processes the acquired has.

    Usually it’s the desire of the acquiring company to KEEP key talent that concerns them and makes them focus on culture. Look at the practice of companies in Silicon Valley that buy companies to get the talent they need.

    So I say it is the “business” people in the company that have the most to lose — and again the companies I’ve worked with understand this and take the primary role with the “culture” piece in an acquisition. I don’t think HR can change anything —- same as engagement, retention, etc.

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