Integrating company cultures effectively is key to the success of any acquisition or merge. When two organisations come together there can be a range of cultural differences; namely working styles and processes, company values and relationship dynamics. Differences can create frictions, miscommunication and uncertainty for people. Subsequently impacting wellbeing, engagement, productivity and retention. Research by McKinsey & Company shows “companies that manage culture effectively in their integration planning are around 50% more likely to meet or exceed their synergy targets – across both cost and revenue synergies” (McKinsey & Company: the importance of cultural integration in M&A: the path to success).
With M&A being one of the main catalysts for organisational growth, accounting for almost $8.3 trillion of capital deployment, and responsible for driving almost 75% of growth targets (McKinsey & Company: Will 2024 be the year for M&A?) – how can businesses ensure cultural dynamics are managed well and importantly not lose top talent during the process?
We spoke to Victoria Gallimore, Group People and Culture Director at The Clear Group, on the strategy they employ to ensure a consistent culture. Having acquired over 50 businesses, and 15 of those businesses from July 2023 to June 2024, The Clear Group are well aware of the importance and challenges of any cultural integration. Victoria shares her insight on how The Clear Group have managed so many successful acquisitions, their sensitive yet effective approach to cultural integration and the essential strategies any people management team should employ.
During a typical acquisition does The Clear Group change the organisational structure?
At Clear, we’ve created a regional structure across the UK retail business, led through the appointment of Regional Managing Directors (RMDs). The overwhelming majority of our RMDs have joined us from the various business that we have acquired over the years, so are able to provide firsthand experience, a holistic viewpoint as well as being a fantastic intermediary between our newly acquired businesses and the existing group. We align acquisitions to this regional model, so RMDs can support business in the region, underpinned with support from the central support teams. It’s important that we minimise disruption for teams during any transaction; our goal is always to work with people collaboratively from day one. That way nothing comes as a surprise and people don’t experience a huge amount of change.
How do you manage the onboarding of a business?
From day one, we work with a business to understand what an effective integration looks like for them; ensuring all new businesses can meet their Regional Managing Director, our senior leadership team and the individuals that will support them during the transition phase. This takes many forms, such as invitations to relevant business events, access to the group wide intranet and charitable and wellbeing initiatives, along with participation in our training programmes. All acquisitions are also invited to complete our annual employment survey to ensure their voices are heard.
Feedback has confirmed that these initiatives help people feel part of the wider Clear family from the outset.
We also work closely with acquisitions to understand their systems, processes and approach – the ultimate goal is to ensure everyone is on the same broking platform (if relevant). Often this is a slow and considered integration, avoiding disruption as much as possible. Existing cultures are also hugely important – we look to buy successful businesses with a similar ethos to ourselves. This synergy reinforces our intention to always integrate - never ‘take-over’.
What people challenges do you experience during the change process and how is this managed?
Managing expectations can be challenging. Some people may want instant change such as a change to reporting structures/processes, others want as much information as possible in advance so they understand the future direction, others may want new career opportunities, and others are reluctant to change. Each acquisition is different, and we respect that. We understand that one size does not fit all. It’s important to evaluate and understand the people you’re partnering with and leverage the acquired leadership team to ensure people feel connected, engaged and informed. This minimises the risk of people creating their own understanding based on assumptions, rather than facts.
What is the impact on the teams and their culture, and how do you manage this?
We always focus on acquiring businesses that align with our culture and values. Our stringent due diligence process ensures that it’s the right match for all parties involved. All of this helps to manage expectations early on, ensuring everyone feels part of the journey. This helps people feel comforted that they know what is happening and what it means to them. Having the Regional Managing Director structure in place also ensures there is continuous support, and with a strong communication line to the central team, they are able to let us know what additional resources or tools they might need.
Do you create specific people engagement strategies during a period of change and if so, what does it entail?
Yes, as part of the wider change and engagement strategy there are a number of activities we put in place. A few examples are:
A robust internal communications strategy – Our intranet gives people a central place to learn about the business and their colleagues, plus an active forum to ask questions / share ideas. It’s also a great source of news with daily alerts, preventing people from missing out on key updates.
A people business partner structure – We have designated people and culture professionals aligned to each of the regions. Our people and culture team work closely with managers to support individual career trajectories to ensure people have the right tools to implement clear development plans, which is essential for retaining talent.
Culture champions –An effective network of Clear Group Ambassadors who provide information and news about our offices, events and initiatives to ensure everyone feels connected as a community.
Peer Group – Our Clear peer group introduces staff to relevant sector experts and peers within their business area, encouraging dialogue and cooperation.
Onboarding programme – This introduces teams and leaders to the business and provides them with dedicated time to understand the business and helps build relationships.
Do you experience increased attrition?
No, not to a concerning amount. The most important thing is to ensure you maintain an open dialogue. It’s no surprise that during any type of change people want honesty and transparency. It helps to keep the local leadership team the same, as this consistency makes people feel connected through association. And of course, we consciously move the integration at a pace agreed by all concerned. By keeping change to a minimum and by creating a relaxed and friendly working environment we have found that many people, especially vendors, have in fact stayed with us for a longer time than they might have anticipated. Sometimes after a planned retirement date.
What is your biggest learn?
Our biggest learn is doing as much as possible to make sure people understand the journey they’re on; regular communication is key to this. Staying connected with people through things like focus groups really helps to integrate teams, manage confusion (if necessary) and provide clarity. I genuinely think throughout any change process you can’t ‘over communicate’.
In terms of cultural alignment, what advice would you give to companies going through an acquisition?
There are a few things that I’d say are ‘non-negotiables’.
Set clear expectations from the get-go – This helps to ensure everyone is on the same page and there are no major surprises.
Understand the culture of the business you’re acquiring – Make sure it aligns with yours, otherwise there will undoubtedly be friction. Do your due diligence, what are your partner company’s values? Are they reinforced through processes?
Review people processes – Does your partner company conduct appraisals with their staff? Are there performance metrics in place? Be sure you know clearly how they manage people engagement and communication. Do they have high retention levels, what’s their people engagement score?
Make sure there are several communication avenues – People need access to leadership teams, colleagues and external sources to feel connected and to avoid creating a false ‘truth’.
Keep it simple, communicate regularly with everyone and treat people like adults.
If you’re looking to grow your business or planning an exit strategy, our specialist M&A consultants can provide some intel on market conditions and advise on your strategy. Get in touch.
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