Merging Workplace Cultures

Amid the complicated, layered process of mergers and acquisitions (M&A), one crucial element often gets overlooked until it's too late: company culture. As financial services leaders know, merging two distinct corporate cultures can be as challenging as aligning balance sheets. Nevertheless, there’s a way to smooth this transition.

“M&A can be one of the biggest drivers of workforce change of any circumstance in the marketplace,” said Sam Franklin, a senior director in JLL’s Consulting practice, with a focus on the financial services industry. In fact, a recent report showed that 61% of financial services real estate leaders anticipate growing revenue through expansion, M&A and penetration of new markets as a critical corporate objective over the next five years.

A strong M&A integration program can be mutually beneficial for both businesses. But how does it transform your workforce and workplace?

For M&A to be successful, leaders must establish a strategic, comprehensive process to determine how the new operational model will affect their internal teams as well as the external brand.

When two companies join forces, it's not just about combining assets and streamlining operations. It's about bringing together two unique workplace ecosystems, each with its own set of values, operations and workspaces. This cultural merger can be a significant hurdle, impacting everything from decision-making processes to employee engagement.

“Once you start integrating, you’ll need to do it in a way that it doesn't feel like you're forcing one company culture onto the other,” said Vijay Jesrani, a managing director and Financial Services lead for JLL Consulting.

In fact, neglecting to strategically address cultural integration can lead to:

• Talent loss and knowledge drain
• Resistance to change and misalignment across teams
• Decreased productivity and engagement

“M&As can lead to a lot of discomfort that permeates throughout a culture on both sides that makes things more difficult than they would be in a typical business-as-usual environment,” said Franklin.

The best way to solve for this: start as early as possible. “Establishing trust early is so critical from a cultural standpoint with your team, but also the team that you're bringing on,” said Franklin. This begins well before “Legal Day 1” through change management preparations.

Savvy business leaders can get a head start on preparing for M&A by consuming public information about their counterpart enterprise, leveraging industry and market trends to develop informed assumptions, and bringing in external support. A workplace strategy team can help you prepare the right processes and ways of working so that you can start integrating successfully.

You might be wondering, “What does real estate have to do with company culture?”

The answer: “Everything.”

Your workplace is the physical manifestation of your company's culture. It's where your employees spend most of their time, collaborate and bring your brand’s value proposition to life. Often enterprise financial firms and banks have crystal clear vision about how their brand is reflected in their spaces for the customer. Ideally, this continues behind the scenes for the employee experience as well. And this is where an experienced partner can enhance your efforts.

“We have unique change management nuances within CRE — the location, environment and people are all a vital part of your company culture,” said Jesrani. Whether the goal of M&A is to leverage financial synergies or to expand geographies, offerings or market share — there can be cultural mismatches, spanning from primary language to decision-making or performance measurement. The right plan can help you strategically address each challenge as an opportunity to enhance the business.

A critical step is to determine what you want the experience of your workplace to be. Start thinking about what you’ll retain from each company, what aspects blend and what is phased out during the transition period. Plenty of leaders think about this in terms of brand and customer experience. But to minimize disruption internally, you’ll want to think about this from an employee experience as well.

The earlier in the M&A process that you bring in a real estate advisor, the smoother your cultural transition will be for your workplace. Here's why:

1. Transition speed

M&A decisions can have long lead times before their benefits are realized, especially in real estate. The sooner you align your strategy, the faster you can start making impactful changes. A proactive CRE partner can help you streamline the speed and scale of your integration to help you reach your desired outcomes sooner.

2. Employee experience and retention

Early planning allows you to map out the employee journey in the new, combined organization. This includes everything from new employee operating models to wayfinding to technology integration. Keep your best talent engaged by communicating as much as you can as soon as you can.

3. Change leadership

By involving change management experts early, multiple levels of leadership can collaborate on a comprehensive plan that goes beyond tactical changes to truly transform your organization.

“You're going to have a lot of people asking you questions as a CRE leader because real estate impacts the people on every team,” said Franklin. “What we see a lot of times is CRE leaders do a great job of responding or reporting upwards to leadership. Where they get overwhelmed is when they get ad hoc requests from the head of a business line or a market leader that's asking very specific questions about the impact to their workspace or what this is going to mean for their people going forward.”

During M&A, it's crucial for CRE leaders to not only manage up, but in all directions. “Keep an eye on all of the various work streams with comprehensive tools, trackers and status reporting so that you're able to stay current and up to date on where everything stands,” said Franklin. “You don't need to get into every single detail, but you at least need to be informed enough to be able to provide a headline view to any team member that needs to know where something stands.”

Yes, this is shouldering a lot of responsibility on CRE leadership. But you don’t have to do it all on your own. A trusted real estate advisor can amp up your efforts with any of the following:

• Cultural assessment: understand the cultural nuances of both organizations and identify areas for compromise

• Change management: transform how your organization operates

• Experience design: create a workplace experience that reflects your new combined culture

• Integration planning: develop a comprehensive integration plan that aligns with your business objectives

• Implementation: support you every step of the way, from day one planning to long-term optimization

As a CRE leader in the financial services industry, what can you do today to prepare for the impact of a future M&A on workplace culture? Here are five key steps:

1. Set cultural direction early and align it with deal goals.

2. Get stakeholder buy-in and have them model desired behaviors.

3. Develop a clear, actionable cultural integration plan.

4. Establish metrics to measure cultural integration progress.

5. Measure, reflect, iterate and optimize.

Remember, the goal isn't to completely overhaul either company's culture overnight.

In the complex world of M&A, cultural integration can make or break a deal's success. By bringing in real estate and change management experts early in the process, you can turn potential cultural clashes into opportunities for growth and innovation.

Don't wait until the deal is signed to start thinking about cultural integration. The time to act is now. After all, culture isn't just about how you work — it's about where you work, too.