The mixing of cultures: acquisition integration

Fostering a strong culture is key to long-term success in any company. And when two companies are coming together, culture deserves as much scrutiny as the balance sheet. 

Mergers fail for many reasons, among them, a clash of cultures.  At Synchrony our culture is deeply important to us -- we care that people feel they belong here, we care that they embrace and live our values and we care that they want to achieve success here. Just as HR leaders and hiring managers evaluate if a new hire could be a cultural fit within an organization, CEOs and M&A leaders need to look at potential acquisitions as a culture fit or culture clash. 

Last month, Synchrony acquired Pets Best, a pioneer in pet health insurance. The acquisition helped us diversify our capabilities, providing more options for consumers to pay for pet care. In completing this acquisition and two others recently, we looked deeply at how to evaluate for culture fit:

Common values - Measure how a company instills beliefs and values in what they do. This is more than looking at a mission or purpose statement; take the time to understand how the organization behaves. Synchrony’s corporate culture engages our employees, and it also extends to how we work with our partners and consumers. Upon spinning off from our former parent company, Synchrony created values to ensure our long-term success: honest, passionate, caring, responsible, bold and driven. 

During our due diligence, we saw how Pets Best behaved – from how inclusive they were in meetings to their laser focus on the customer and pet parent. That kindness and people-first mindset continued during the negotiation process as Pets Best reinforced how they wanted to ensure their employees were top of mind during and after the transaction. These traits, while not always documented on paper, were incredibly important. They highlighted how Pets Best’s beliefs and behaviors mirrored Synchrony’s beliefs of diversity of thought and creating a caring organization. 

Fostering a strong culture is good for both organization’s employees, and is also good for business. Studies have shown that highly engaged employees and a strong culture can contribute to business growth. In addition, studies have shown that employees who have a high-level of engagement at work increased operating income by 19 percent and earnings by 28 percent at their company.

Leadership styles – Leaders play an important role in shaping a company’s culture -- from management behaviors, to how decisions and policies are made, to the organizational structure. What is the “human element” that is pervasive across the organization to be acquired?  For example, do the leaders engage employees in decision making on key issues, or at staff meetings can any employee speak up.

The leadership teams of the acquired company are key to help retain their employees. The trust and responsibility of the leader of the acquired company should not be underestimated. 

When Pets Best brought in a team to work on the transaction, it was the president who talked about how humbled he was that Synchrony wanted to buy Pets Best. He discussed long-term learning and development opportunities along with short-term employee incentives. The transparency, thoughtfulness and mindset of leaders on both sides help ease an integration.

The leadership traits of your own team are just as important as those you are seeking to acquire. Clear communication and a collaborative understanding of what each party can bring to the table to achieve outlined goals is essential during the entire journey from due diligence to transaction and beyond. 

The way you work  - Nearly 90 percent of our employees say that Synchrony is a great place to work. It is the way we work – from the processes we follow because we are in a regulated industry to those we have developed for innovation and inclusion --  that makes us different.   

Great Places to Work recently completed a survey highlighting how companies that build inclusive innovation cultures generate more high-quality ideas, realize greater speed in implementation, and achieve greater agility. We couldn’t agree more and Synchrony has created Innovation Stations across the company to accelerate innovation and solutions for our partners.

Evaluating the work process – both formal and informal - and participation of employees in those processes are key in an acquisition and integration. A mutual mindset will lead to better ideas and outcomes in the future.

Culture is pervasive – it is the backbone of every organization. It is critical that when you are seeking to acquire a company that you explore the cultural compatibilities starting at the due diligence process and continuing through the journey of ongoing operations.  This early work will help foster a strong, joint culture to ensure both success and strong employee engagement.