Mergers Can Fail – When They Overlook People Factors

Difference in Corporate Cultures and Conflict Can Undermine the Success of Mergers

Credit: Flickr-Caston Corporate

A number of mergers have been in the headlines of late. QVC announced that it will acquire Home Shopping Network. Bigger still, Amazon indicated it would acquire Whole Foods. In these and other mergers careful consideration is given to the financial aspects of the deals. Yet, it a high percentage of cases the mergers fail to live up to their expectations. 

A key element of these failures is the people factor. People are often resistant to change and it can be difficult for them to adapt to cultural adjustments brought on by mergers. This, in turn, can create conflict and lead to demotivation and turnover. Loss of employee engagement can undermine much of the value of the acquired company.

These issues need to be addressed early on in the transition process. Integration teams need to be trained to incorporate these people factors into their planning to help smooth the transition. Communication plans need to address the inevitable concerns that employees (especially those of the acquired company) will have about changes. Dealing with the emotional aspects of the change are often the most critical. Helping employees remain resilient in the face of stress is critical. 

Improving employees’ ability to constructively address the inevitable conflicts that come about from a merger can make a big difference as well. The skills needed to do this include among others the ability to understand another person’s point of view, to express your own thoughts and feelings, and to develop and assess options for resolving differences.  The skills can be learned through training. They need to reinforced by creating a climate that supports their use.

When mergers fail the costs are high. Since people factors play such an important role, it is incumbent on leaders to make sure they are considered and addressed throughout the merger process.  

Craig Runde is the author of Improving Your Conflict Competence, a LinkedIn Learning course.