Merging organizations almost always undergo financial, legal, and IT due diligence studies prior to the merger. They almost never do a cultural due diligence study. But yet the compatibility of the two cultures is a major factor in the success or failure of any merger or acquisition.
Mergers of two companies with similar values and similar levels of organizational consciousness have the best chance of success. “Values” are the beliefs and principles that are important to us. “Organizational consciousness” is the awareness of what makes the organization “tick” on a mental, emotional, spiritual, and performance level.
In the case of an acquisition, chances of success are better if a higher consciousness culture takes over the lower consciousness culture, although managers in the lower culture may have difficulty working in an environment that fosters employee empowerment. The least successful acquisition is when a lower culture takes over a higher culture, because talented managers and employees in the acquired company have a low tolerance for a dysfunctional work environment.
So why has cultural compatibility not been included in the due diligence process? Because until now, it had been considered an intangible that was impossible to measure.
We use Cultural Compatibility Assessments to measure the health of a company’s culture and its ability to perform, and to compare the cultures of merging organizations. Developed by the Barrett Values Centre, a pioneer in measuring corporate cultures since 1997, the Cultural Compatibility Assessment identifies specific areas of “culture clash” that can be addressed either before or after a merger.
How do we do this? We start with a simple 20-minute online values survey of the CEO and senior leadership team of each company. We map their values on a 7-tier framework that provides tremendous insight on the consciousness of the individuals and the organization, and the degree of values misalignment and organizational entropy (wasted energy). The comprehensive reports with unique graphical format enable us to compare the cultures of the two companies in a very measurable, visible, and meaningful way.
When done during the due diligence process, a Cultural Compatibility Assessment can uncover hidden issues that may affect the success of the merger. These insights enable the parties to negotiate the M&A transaction in a more informed way.
When used post-merger, the Assessment and the debriefing conversation can be the first step in the integration process. It will identify the most critical priorities for cultural integration and a roadmap to achieving the desired culture in the combined organization.
What’s possible for your combined company if everyone was as fully engaged and committed to achieving results as you are? We help you measure and compare your two cultures and work toward a seamless integration to leverage the strengths of both parties!