This article originally appeared in Marketing Magnified. 

Given the current climate around the pandemic and global market conditions, mergers and acquisitions are on the rise. This uptick in activity will likely sustain as industries continue to be impacted, and innovation drives the search for efficiencies, consolidation, supply chain adjustments, evolving service models and increased scalability. Embracing change and acquisitions that help across these areas is a priority for many companies. One thing is clear—the success of these deals ultimately hinges on the people inside the organization, not the balance sheet.

M&A is categorized as a financial transaction. According to a recent Harvard Business Review report, the ​failure rate for M&A sits between 70% and 90%. Poor M&A culture integration is recognized as a significant attribute for this rate. As many companies see a 23% increase in “actively disengaged employees” after a change event. M&A audit phases often overlook culture and focus on the numbers and legal dimensions of a deal, even though employee accomplishments are the key to the growth that makes an entity desirable.

Start by avoiding the following four mistakes that undermine success and performance.

Mistake: M&A is just numbers.

Solution: It’s people and purpose. Align on priorities. 

Just as one does a comprehensive financial audit, the same in-depth analysis must be done when it comes to evaluating teams, positioning, values and all the components that comprise enterprise culture. Assess the type of talent that exists and what motivates varying job functions. To grow talent strategically, identifying values that will contribute to the combined business model’s success is critical. It’s also essential to look at recruitment and onboarding; and identify opportunities to build on valuable processes.

Leadership’s ability to use cultural due diligence to align on priorities from an internal standpoint and give people a sense of purpose unlocks the numbers and moves the needle toward long-term success. As these organizational elements spanning employee structure are evaluated, management can align on values and key drivers to enhance motivation and performance collectively across the portfolio. It doesn’t have to be one culture or the other in a merger. Cultural components of both environments can co-exist to scale. The key is to reach a consensus on what elements support the desired values and behaviors to unlock the future with any merger.

Mistake: Transaction transparency is dangerous.

Solution: Connect with Employees.

There will always be some resistance to change. To reduce that factor, ensure employees understand each stage of the merger and feel connected to the brand’s vision. Transparency is your friend. Secrecy promotes distrust, the opposite of what leadership wants when it comes to its people and how they feel about the brand. Management will often keep everything under wraps fearing that the murmurs of a merger will have a negative connotation. Therein lays the problem. Prevent the rumors, which can lead to misinformation and speculation. Connect with employees and provide insight into the transaction strategy and roadmap.

Transparent dialogue and allowing for questions eliminate the ability for a toxic environment to emerge. This two-way conversation lends itself buy-in and camaraderie that is critical to the process. Employees never want to feel as if something has suddenly changed with no context. If involved and allowed to look behind the curtain, the willingness to help and team spirit increase, and the intimidation factor drops.

Mistake: Relying only on words.

Solution: Develop Brand Stewards.

Not only is it vital to stay connected and share information, but it’s equally important to ensure it’s being shared in the right way. It’s crucial to “show” and not just “tell” when it comes to effective communication during a transaction. There are two major facets to achieving this.

First, don’t only rely on just written words. This approach can be perceived as being told without consideration and have the opposite effect on engagement. Bolster written channels with experiences that cultivate discussion and allow for an approachable leadership platform. Also, ensure the information flow is ongoing and consistent, not one or a few moments in time. In this case, less is not more. More is desirable, even if it’s repetitive or simply providing an in-person forum for open discussion.

Second, leaders must map behavior to thinking. Modeling the desired behavior is the best way to shift employee mindset. The most effective approach is for managers to become more visible stewards of the brand and information. Management can then educate, empower and inspire employees to become champions in their own right, helping usher in a new chapter, while also embodying the brand values and tenets. Influencing from within is the most potent and authentic path to seamless integration. 

Mistake: The market doesn’t want to hear about culture.

Solution: Merchandise Every Day.

With the transaction and the combination of cultural attributes, comes new and exciting value to prospective employees. It’s important to not only tell the story of the financial wins of an acquisition but also amplify the value from an employer brand perspective to continue to grow talent. Marketing the culture story is appealing, as it shows the brand cares about its people. It also allows the enterprise to compete for best-in-class talent and stand out as an employer of choice post-merger.

Culture due diligence needs to become the norm with M&A. Culture integration must be considered on a parallel path with financial aspects. Employees are the most critical part of enterprise growth. Keep performance levels high and create a pathway for seamless integration, by continually evaluating the deal process through the employees’ lens. Cultural due diligence drives employee purpose and allows for a more comprehensive understanding of the implications of melding two businesses together.