Integrating Brand and Cultures: Are the New Employees Ready?
By Jahan Mirun Jaganmohan, Integration Leader at TIBCO; and Mark Herndon, Chairman, M&A Leadership Council
Brands and human capital are fundamentally important assets of any M&A transaction. Yet many acquirers fail to effectively prepare and align employees of the target company to embrace and adopt the acquirer’s brand and organizational values. As a result, what should be an important “win/win” for both acquirer and target turns into a missed opportunity and change management deficit at the very time they can least afford disruption.
Employees tend to love their company’s brand. They are proud of it. It demonstrates team, community, the value proposition, and their collective hard work and successes. Our pride swells and our spirit lifts when we see our brand recognized and logo displayed appropriately. Generally, that same emotional connection is felt, and felt just as strongly, by our target company employees for their own brand. Whether expressed or not, there’s an important “me issue” and potential cultural flashpoint associated with brand transition during integration. You can’t expect those strong emotional connections to simply go away and adhere to the acquirer’s brand when the target company’s brand is transitioned.
Unlike a new hire, the employees brought in through acquisitions come with a variety of mindsets. Some might be excited and optimistic about the deal; some might be worried about the job security; many will be “fence-sitters” until you demonstrate the advantages to them; and finally, some will even be opposed to the deal. Like any change management or cultural challenge, an ounce of thoughtful planning and solid implementation are worth a pound of damage control. The following ideas will help you and your team manage this all-important transition.
- Create a “woke” announcement and Day 1. A skillful and effective leader would never interact with constituents in a “tone-deaf,” arrogant, self-absorbed or unempathetic way. Yet, in many transactions, that’s exactly what happens with brand transitions and company swag. The parent company leadership team distributes a variety of the acquirer’s company swag and talks endlessly about its culture and core values to the exclusion of any meaningful discussion about the target’s company’s own desirable attributes. Swag is great, and ultimately of value, but remember that that it might not resonate the same way for the target company employees – at least initially. One solid practice is to give a small welcome gift to the employees, and gradually introduce swag along with meaningful events, processes, accomplishments, and activities throughout the integration lifecycle. Appreciation for the acquirer’s brand will grow over time and in proportion to direct experience with the people, values, and capabilities of the acquirer. Some acquirers’ eschew providing company swag until trusted relationships are established. For example, instead of sending the counterpart work-stream lead an impersonal piece of company swag, send a handwritten personal note along with nice, but inexpensive item reflecting something unique or distinctive about your hometown or immediately surrounding geographic area. Another option could be to co-brand the swag as an artifact specifically relating to the transition period. Transition logos and slogans have sometimes been used for this purpose and to clearly communicate that both companies and their collective assets – brands, people, IP, capabilities, etc. are coming together to make something better and establish alignment to common ways of thinking, working and relating.
- Build brand and culture into your M&A lifecycle. Best-in-class acquirers do more than just talk about brand and culture. They build brand and culture into the overall M&A lifecycle with practical, meaningful steps to address brand and culture through each phase of the deal and integration. When this is done, there will inevitably be some documentation, discussion and analysis of the target company’s brand/values/culture that had merit or were especially in-sync with those of the acquirer. For each phase in your company’s M&A lifecycle, evaluate how and when the consideration of brand, culture and values occurs, and identify at least 2-3 checkpoints, actions, or requirements for each category in each phase of the M&A lifecycle. Keep it simple, practical, and useful. Make sure there is at least some discussion and decision-making about transition and alignment of brand, values, and culture in each phase of the process. As new team leaders or team resources migrate in or out of the deal for their specific roles and responsibilities, make sure there is a briefing to provide context and continuity of understanding as a bridge between the various phases. When possible, rather than just “out with the old and in with the new” conduct a variety of interactions to illustrate, link or potentially incorporate relevant elements of the target company’s brand, values and culture into those of the acquirer.
- Seek first to understand. Something as simple as asking important, high-gain questions of the target employees in a townhall or small group meeting communicates that we are not simply blindly assimilating them to our way, but we want to learn from them. For example: "What would you want us to know about you, your brand, and culture?; What is it that you especially like about (this company, your brand, and your culture)?; and, Describe an event where (you, your team, your company)…overcame a major challenge and ultimately had a huge success that became a big part of what makes this company so special?”
- Carefully map brand and culture as part of the operating model analysis. In the pressure to quickly realize deal value, some acquirer’s skip or short-circuit one of the most important elements of transitioning culture and brand – careful analysis and mapping of both companies operating models, and jointly defining what should – or shouldn’t -- be changed in them post-closing. An operating model is a representation of how an organization delivers value and operates itself. Brand attributes, values, key drivers of culture, “secret sauce” and other unique distinctives must be captured, discussed and understood before designing the end-state operating model. Most operating models routinely address the “trinity of organization success,” namely, structure, process, and people. Yet brand, culture and values are each deeply and significantly intertwined throughout the philosophies, policies, practices codified in the operating model. Only when these core elements of operating model are understood can the organization make optimal decisions on the transition-state and end-state operating models and have confidence that proposed integration decisions will not have unintended negative consequences.
Writing in her award-winning book, Fusion: How Integrating Brand and Culture Powers the World’s Greatest Companies, author Denise Lee Yohn, effectively summarizes the importance of getting this aspect of M&A right. “Independently, brand and culture are powerful, unsung business drivers. But when you fuse the two together to create an interdependent and mutually reinforcing relationship between them, you create organizational power that isn’t possible by simply cultivating one or the other alone.”
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Jahan Mirun Jaganmohan is the Post-Merger Integration leader at TIBCO Software Inc. where their mission is “to solve meaningful human challenges through technology.” She earned her Certified Mergers & Acquisitions Specialist (CMAS®) designation in 2020 and her MBA from Hult International Business School in 2015 with a focus on Business Analytics, Project Management, and Supply Chain and Logistics Management. Mirun holds additional certifications as a Scrum Master (CSM), Honors in Diploma of Software Engineering (HDSE), LOMA 290 and is a Management Consultant Institute Certification MCIL1-Analyst.
Mark Herndon is co-author of The Complete Guide to M&A Integration: Process Tools to Support M&A Integration at Every Level, Third Edition (Jossey-Bass, 2014); and serves as Chairman of the M&A Leadership Council, an educational consortium of global professional service firms, experts, and corporate practitioners in the art and science of mergers, acquisitions, divestitures, and joint ventures. Over the past eleven years, the M&A Leadership Council and its partner organizations have trained nearly 5,000 executives, representing over 700 best-in-class companies from every industry sector in the art and science of MA&D. The M&A Leadership Council actively supports corporate M&A practitioners through a variety of proprietary research initiatives and publications, online and onsite training programs, best practices; and an industry-first certification for corporate M&A practitioners, the Certified M&A Specialist (CMAS®).