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Measuring Workforce Culture Change During Mergers and Acquisitions Using Psycholinguistics

When companies merge, they not only combine their operations but also bring together their distinct cultures. This can lead to outcomes that range from harmonious and synergistic to fraught with tension and discord. The merging entities may cultivate a new, blended culture that incorporates aspects from both companies. Alternatively, one company's culture may dominate, causing certain cultural characteristics to fade while preserving those that align with the prevailing culture. Understanding how a company’s workforce adapts to these cultural changes is crucial for ensuring the successful integration between the merging firms. 


In this blog post, we explore how workforces reshape their work cultures when going through a merger or acquisition, and how psycholinguistics can reveal the markers of successful or at-risk mergers and acquisitions.


Symbolic Boundaries and Workforce Culture 


The theory of social and symbolic boundaries offers a lens through which to understand the dynamics of integrating two workforce cultures during a merger. When applied to the workplace, the theory suggests that companies have behaviors and routines, or “rituals,” that are unique to each particular organization. These rituals often serve as symbolic expressions of the organization's values, beliefs, and identity, shaping the way employees interact and perceive their work environment. 


These rituals play a significant role in defining what makes a workforce culture distinctive and memorable. Regular team meetings, annual company retreats, or recognition ceremonies are all examples of rituals that contribute to the unique fabric of a workforce culture. Rituals not only foster a sense of belonging and cohesion among employees but also reinforce the organization's cultural norms and expectations, distinguishing it from other workplaces. 


Rituals can also act as symbolic markers that delineate the boundaries between different social groups or hierarchies within an organization or between organizations. For example, certain rituals, such as weekly team meetings or annual company retreats, may be exclusive to specific departments or levels of management, which reinforces the social distinctions and hierarchies within the workforce. When two companies merge, they bring together not only their operational structures but also their distinct social identities and norms. This can lead to a reconfiguration of rituals that reshapes the social and symbolic boundaries within the newly formed entity.


In the context of a merger where a smaller company is acquired by a larger corporation, employees of the smaller company may initially attempt to maintain their symbolic boundaries by preserving their small company work culture. This effort to maintain culture is called “boundary retention,” where employees lean into their existing cultural norms to differentiate themselves from the acquiring corporation. However, if there is pressure to align with the culture of the acquiring corporation, employees of the smaller company may relinquish aspects of their culture as they integrate into the culture of the acquiring organization; this "boundary reformation" occurs as they create and practice new cultural norms, rather than retaining the norms of their former company.


Assessing Cultural Change with Language


Language serves as a powerful tool for reinforcing work culture boundaries. As a culture marker, it shapes communication patterns, signals insider-outsider distinctions, and perpetuates cultural norms and values. By analyzing the natural language of workforces, transformation consultants and company leaders can gain a highly nuanced understanding of workforce culture, how workforces maintain and reform boundaries, and insights that can predict the likely success of a merger or acquisition. Language is deeply embedded with cultural meaning, making it a natural choice for identifying and understanding the symbolic boundaries and cultural distinctions within a workforce or between two merging workforces.


Receptiviti and the Linguistic Inquiry and Word Count (LIWC) make it possible to analyze how workforce culture manifests by focusing on emotional, cognitive, and cultural aspects of communication. By measuring how content is communicated rather than the content itself, researchers can gain insight into how individuals use language to maintain symbolic group boundaries. 


A recent study demonstrated how language analysis can provide a detailed understanding of how the cultures of two companies change as they merge, the characteristics of employees who are best able to adapt, and indicators of risk such as the linguistic signatures of employees who resist assimilation into a newly merged company culture.


Predicting the Success of Mergers and Acquisitions


Researchers used LIWC to analyze the language of employees and management within three regional banking firms that merged (one acquiring firm and two acquired firms) before the merger commenced and after the merger was complete. LIWC was used to calculate the rates at which employees and management used a variety of psychologically meaningful linguistic markers. Machine learning techniques were then applied to help classify whether employees were more likely to use a language style typical of their old firm or a different language style that reflects the newly merged firm. Consistent use of pre-merger language indicated that employees retained their prior company’s cultural identity (boundary retention). In contrast, employees’ adoption of new linguistic patterns indicated the formation of new group identities and norms (boundary reformation).


Findings revealed that employees who were part of an acquired company were more likely to adopt a new linguistic style after the merger. This finding demonstrates how power and status within group dynamics play a role in mergers and acquisitions, where the company being acquired (the lower-power group) may be more likely to revise its cultural distinctions than the acquiring company (the higher-power group). In other words, those employed by the acquiring company may be more invested in maintaining the “status quo” of their existing culture, whereas employees from the acquired companies may feel pressured to conform to the more dominant acquiring firm’s culture.


Changes in workforce culture before and after company mergers

Results also showed how factors like employee tenure can predict the likelihood that employees in an acquired company will embrace the new, post-merger work culture. The study found that employees with longer tenure were more likely to retain their pre-merger linguistic style and were less likely to adopt a new linguistic style after a merger. This indicates that longer-tenured employees are more resistant to change and are less likely to adapt to the cultural shifts required during a merger. Organizations should recognize the challenges that some long-tenured employees may have during mergers and acquisitions.


Cultural assimilation during mergers and acquisitions is a complex process that involves the blending of distinct cultural identities and norms that can result in the formation of a new, integrated culture or the dominance of one culture over the other. Understanding and anticipating how impacted workforces adjust to these cultural changes is crucial for successful mergers. By analyzing language, consultants and company management can uncover insights that can predict the success of mergers and identify markers of successful cultural integration.


If you’re interested in assessing how a workforce is adapting to change, Receptiviti can help. Contact us to learn more.

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