“According to a KPMG study, 'Eighty-three percent of all mergers and acquisitions [M&As] failed to produce any benefit for the shareholders and over half actually destroyed value.' Interviews of more than 100 senior executives involved in these 700 deals during a two-year period revealed that the overwhelming cause for failure 'is the people and the cultural differences.' Difficulties encountered in M&As are amplified in cross-cultural situations, when the companies involved are from more than one country. …
“Companies routinely underestimate the value of integrating cultures and its stickiness. Increasingly companies have realized the folly of this approach. Low morale, resignations, unionization, expensive retention Band-Aids, political infighting and outright conflict lead to a sapping of energy and an inward focus rather than competing in the market. …"
Merging companies requires merging company cultures as well as bridging the geographic cultures in global acquisitions. In some M&As, this may involve new geographic cultures never before encountered, which creates potential for serious cultural gaffes and misunderstandings.
I’ve written before on five steps to unite company cultures and goals on acquisitions. But in geographic cross-cultural M&A scenarios, it’s just as important to create and offer a single “language” of recognition that communicates consistently and clearly to all employees, from both original organizations, the company values and objectives.
Use a merger or acquisition as an opportunity to launch a new culture of recognition for all employees.