Mergers, acquisitions and the cost to culture

27 September 2020

Large organisational changes such as mergers and acquisitions cost companies an estimated 12% to 15% of revenue, largely due to leadership failing to consider the impact of cultural changes on employees.

When we join an employer, we enter into a psychological contract with them. It’s the unwritten ‘deal’ between employer and employee and our mutual expectations of each other. This includes everything from the way we work together to expectations around pay, promotion and career development.

Too often companies breach the psychological contract with employees in the process of a merger or acquisition

Particularly affected are:

  • Reward and recognition
  • Pay increases
  • Promotion
  • Career development
  • Bonuses
  • Job security
  • Job responsibilities

Mergers and acquisitions change the company landscape.

A business comes together with new leadership, the new leadership set out a strategy, put in a new operating model and of course shape the team to meet their requirements.

This is logical – and of course critical to the future of the organisation. But it takes time and means some tough questions. While  the leadership is setting out its strategy typically in the first 100 days, it is natural for people to wonder what will happen and build trust in the new leadership.

How do I know if I will be doing what I’m doing, in the future?  Will I get that pay rise or promotion?  Will I have the same opportunities as I thought I did?  Is it going to be the same as I thought it would be?

Leaders often look down the lens of mergers and acquisitions and only perceive advantages such as more scale or greater opportunities. But behavioural science teaches us that most people are more likely to focus on what we are potentially losing than what we might gain. Loss aversion is likely to be primary driver of our perception of any merger and acquisition.

So here are seven steps to succeeding through a merger or acquisition.

Beware of vacuums

If you don’t communicate what is happening (even if that means not much), people will start to fill the vacuum with their own fears and assumptions.

Leaders, get out there

Okay, so you’ve got a new strategy to focus on, but now’s not the time to sit in meetings all day; people want to see and hear from you.

You don’t have all the answers

Leaders, managers, communicators, you don’t need to have all the answers.  Be clear that answers will come in time; just keep the conversation going.

Be wary of OneCompany programmes

Leaders love to announce a new OneCompany programme following a merger. These rarely deliver results because they don’t address the fundamental issues people have about their role, prospects or pay.

Find your cultural alignment

Two cultures coming together can create a collision.  Focus on the shared values and characteristics and involve your people to help shape the new company.

Communicate, sleep and repeat

You just can’t communicate enough in these circumstances. Find the balance between showpiece communications that showcase the new company and the more discrete engagement opportunities that matter to individuals.

Feedback is everything

Encourage feedback at every opportunity and make sure you respond, whether in person, through a dedicated Q&A through the merger process or by empowering managers to discuss the issues and opportunities.


106 Communications is an award-winning communications consultancy on a mission to making work better. We create communications to engage and inspire through our three expert-led practises in Internal Communications, Change Communications and Branding & Marketing.

If you’re going through a merger or acquisition and would like employee engagement advice, contact Henry Davies on


*The Hidden Cost of Mergers and Acquisitions By Kristie M. Young, DBA; William W. Stammerjohan, Ph.D.; Rebecca J. Bennett, Ph.D.; and Andrea R. Drake, Ph.D.


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