4 tips for combating M&A failure

2014 has been a banner year for merger and acquisition activity by volume – though 40-60 percent of those unions are expected to fail. Nationally renowned organizational culture expert S. Chris Edmonds offers four tips for top executives to position their change initiatives for success through the use of organizational constitutions.

A recent BusinessInsider.com article revealed the volume of global mergers and acquisitions has reached its highest level in seven years. “Companies have strategic imperatives to do deals, they have the cash to do deals, and they can borrow additional cash at record-low rates,” explained Frank Aquila, a mergers and acquisitions lawyer at Sullivan & Cromwell, LLP. “It really is a bit of a perfect storm when it comes to deal-making.”

Unfortunately, a “perfect storm” for big deals can quickly devolve into a crisis for employee engagement, as companies attempt to integrate not only operations, but also disparate organizational cultures. As cultures clash, companies can struggle to realize the efficiencies they need to improve their standing in the marketplace. The hard numbers tell the story of this disconnect: 40-60 percent of this year’s mergers and acquisitions are expected to fail.

“The problem is, most leaders have not experienced a successful culture change,” observed S. Chris Edmonds, organizational culture expert and author of the upcoming book The Culture Engine: A Framework for Driving Results, Inspiring Your Employees, and Transforming Your Workplace.

“And even fewer leaders have led a successful culture change. Leaders owe it to their stakeholders to become aware of and address the issue of culture alignment, particularly when they undertake major change initiatives.”

As the fourth quarter of 2014 (and year-end reporting) approaches, Edmonds urges top executives to familiarize themselves with his proven approach to designing and aligning organizational cultures.

“An organizational constitution provides top executives with the step-by-step tool they need to lead their organizations through major change, especially when the stakes are high and the timeline is tight. In 18 months, these constitutions can inform gains of 40 percent in both employee engagement and customer service scores, as well as 35 percent gains in net profits for the business. These gains can make the difference between a successful merger or acquisition or a failed one.”

How to lead your team to M&A success

Tip #1: Define desired values

Define what “great team citizenship” looks like for every leader and employee. These values form the foundation of an organizational constitution, as they reflect the ideals upon which the business operates. Values should focus on desired principles, such as standards for honesty, integrity, work/life balance or the meaning of organizational loyalty.

Tip #2: Identify valued behaviors

Specify the behaviors that every leader and employee should demonstrate, in every interaction, with both team members and the public. Be sure the behaviors are concrete, observable, and measurable. When taken in concert, people’s behaviors will serve as evidence of the organizational constitution. This evidence will be noticed by both internal and external stakeholders, and will be used to judge the quality and health of the organization’s work environment as well as the organization’s performance.

Tip #3: Examine current beliefs

Most people don’t examine their beliefs every day. They just do things that seem to make sense to them. A crucial step in creating an effective organizational constitution is highlighting “flawed” beliefs that may be driving undesirable behavior. For example, a work environment operating from a “competitive interaction” norm instead of a “cooperative interaction” norm encourages withholding of information and “I win, you lose” battles daily. Create a safe space in which leaders and employees can pinpoint and discuss negative beliefs and redirect them toward more productive ones.

Tip #4: Manage behaviors – not attitudes

Contrary to popular belief, people’s attitudes can’t be managed. By definition, attitudes are internal, inside each leader and employee. Even initial high performers can lapse into poor attitudes and lackluster production when they’re placed in pressure-cooker situations. Managing behavior is the only concrete, measurable way to encourage good/dissuade poor organizational citizenship.

In ‘The Culture Engine’, Edmonds expands upon these four tips and offers additional insights into building an effective culture that will weather both the daily moves of the marketplace and the toughest change initiative.