Purchasing a business to compliment existing offerings is a key strategy for firms looking to build capacity – but sealing a deal is only half of the battle. Angela Peacock, global director of diversity and inclusion at training consultancy PDT Global, explains how to harness the benefits of post-merger inclusion.
At first glance, the period of turmoil after mergers and acquisitions (M&As) may not seem the best time for an organisation to focus on diversity and inclusion (D&I). But, in fact, it is a golden opportunity to ensure the new culture that a merger brings carries with it a thread of inclusion. Business leaders are often inclined to postpone D&I activity until the dust has settled on a merger. But, although things may seem calm on the surface, there are likely to be hidden biases and assumptions that will lead to problems in the future.
M&As often lead to employees reporting feelings ranging from ambivalence to outright fear. Sweeping issues under the carpet is unlikely to help, whereas tackling the D&I challenges and opportunities to create a post-merger inclusive culture makes it possible to get the ‘best of both worlds’.
Various studies have reported that effective onboarding, along with clear guidance on attitudes, values and behaviours, are key components of a successful M&A. So, investing in D&I activity from day one of the new combined organisation will lead to valuable benefits in terms of culture and talent integration.
Times of change are a good opportunity to reset and re-evaluate your own organisation as well as those you are merging with. Practising some due diligence on both sides can make for a smoother process. Re-evaluating and reassessing your inclusion programmes alongside those of any new partner can help pave the way for future integration. Understanding the culture, processes and training in place when it comes to D&I will give you a clearer picture of the road ahead and help identify conflicts and similarities of culture and language as you move forward.
Cultural integration begins at onboarding – this initial touchpoint is an important place to lay out explicit expectations about the behaviours and values of your organisation. Taking the time to make implicit aspects of your workplace explicit can save issues down the line. This provides the perfect opportunity to look at where these implicit rules might not be inclusive and change them. Think about things like organisational philosophies, communication styles and valued traits.
One of the most pressing issues during M&As is the need to retain key talent in uncertain times. The replacement and reduction strategies that often come with M&As must keep one eye on diversity. You cannot control the demographics and values of companies you acquire, but you can ensure that your senior teams, hiring managers and those involved in any reduction strategies have the tools they need to mitigate and reduce bias in these decisions. One wrong step can reduce pay equity and gender balance, for example. Never have these skills and evaluations been more vital, with eyes on every decision after a merger. Evidencing a fair and inclusive process builds trust in the organisation to make equitable decisions and retain high performers.
When it comes to M&As, many organisations will be adding in a whole new culture, region or language to their work. D&I plays a vital role in ensuring that colleagues have the skills to thrive with people from other countries. You may need to think more globally about what tools are needed to support employees and leaders alike. Psychological safety training may be required to ensure risks are avoided – or greater support on managing biases when new regions come into play. The post-merger arena is a vital space to grow your tools and resources.
Culture of inclusivity
When organisations come together, it is inevitable that they will judge each other’s competence at both an organisational and individual level based on the ‘brand’ of the legacy companies. One party might assume that everyone in the legacy organisation is technically excellent but not so good at customer service – the other might see their new peers as salespeople with the gift of the gab. It is often easy to overlook real talent and be distracted by the myths that come with the legacy organisation – how their people dress, walk and talk, for example.
In these situations, it is important to respect and celebrate the past – after all, the businesses have been brought together to deliver excellence from both parties. You need to ensure you do not allow employees to be hijacked by assumptions and bias during these processes. One practical way of addressing this is to encourage everyone to stop and think before automatically reacting with ‘this is how we used to do it’ or ‘I’m legacy X…’.
The effect of a merger on clients should also not be overlooked. They may have concerns about whether the new organisation will continue to provide the prices and services in the same manner they have enjoyed – or whether things will deteriorate as employees leave or are distracted by the merger itself.
In spite of the benefits that merging organisations seek to initiate, client loss is still a possibility that needs to be addressed. The bias that your clients may carry about an acquiring or merging partner can affect how they see the next deal. If there has been no attempt at creating an inclusive environment for your teams, they may still be presenting their own legacy – perhaps making oblique references that suggest they are not in full support of the merger. This can then play to the client’s assumptions and ultimately cost you the business.
Deciding what parts of the culture make the most people ‘happy’ and declaring it via ‘mission statements’ and ‘culture relaunches’ has to this point been the order of the day post-merger for many organisations. This approach may have been, at best, ineffectual in the past. Today it is strategic suicide.
In the 21st century, with the emphasis on flexibility, a global approach and technological capability – and clients with their own new and changing needs – an organisation’s culture must be the driver of its post-merger strategy. And it is hard to imagine a scenario where inclusion would not be a critical element. Waiting for things to ‘bed down’ post-merger may be missing strategic advantage. Done correctly, post-merger inclusion can give you the best of both worlds.