According to a report by PwC India, mergers and acquisitions (M&A) in India rose by 52%. With 2,606 dead and a disclosed M&A value of USD 71.5 billion, it is undeniable that companies in India have started to move towards acquisitions to further their combined objectives.
While the decisions made by the leadership during M&A conversations lean heavily on financials and end goals, the cultural aspect of the process is often overlooked, despite the impact it can have on employee morale.
Undeniably, financial and strategic alignment are the backbones of any M&A conversation. However, difficulties in cultural integrations can often be the straw that breaks the profitable camel’s back.
Why Culture Matters in M&A
Every company, even within those in the same industry, often have unique cultural practices. These differences, although they may not seem monumental at first, can lead to a divide that is hard to bridge.
Consider that another has acquired your company. In your previous company, you had an unlimited leave policy, but the new management is not willing to let it continue. For many, the unlimited leave policy might have been a huge factor as to why they joined the original company.
The change in the cultural practices and norms during mergers and acquisitions can often make employees feel undervalued or even deceived. As such, it is important that when combining two workplace practices, the opinions of employees be taken into account over factors that directly or indirectly affect them.
Air India and Vistara: A Cultural Mismatch in Merger
In November 2024, the Air India Group officially completed the merger of two major Indian airline brands: Air India and Vistara. The integration, as expected, led to major changes in the country’s aviation sector, but also within the workforce of the two companies.
One of the major benefits that Vistara employees were happy about was their retirement age. In Vistara, the retirement age of the pilots was set at 65 years. On the other hand, pilots in Air India had to retire at 58 years of age.
The mismatch in the retirement ages became a major issue after the airlines merged. Many pilots of the now combined airline were unhappy that Air India had stuck to the retirement age of 60.
However, in August 2025, Air India increased the retirement age of its pilots to 65, while the retirement age for other employees was increased from 58 to 60.
“Since Vistara merged with Air India last November, the retirement age for pilots has been aligned at 65 to ensure uniformity across the combined workforce,” a source told the Times of India.
“There had been some dissatisfaction among pilots from both the former Air India and Vistara teams, partly due to differing retirement ages. This change has addressed that concern,” the source added.
The Cultural Fault Lines You’ll Likely Hit
Every merger or acquisition is unique and often presents unprecedented challenges. However, there are some common obstacles that you should be aware of to make sure you are ready to overcome them when the time comes.
Leadership and Decision Styles
With new and varying styles of leadership and decisions emerging daily, the differences between the practices of two companies can directly affect performance. If company 1 is used to a hierarchical setup while company 2 practices an agile approach, chances are high that the teams containing members of both companies will find it difficult to reach a consensus.
Similarly, if company 1 is used to consensus-based decision-making while company 2 follows issued directives, both the team members and leaders might be in for a jarring transition.
Communication Norms
The difference in how company members communicate can often be the make-or-break point for many employees. For those used to a more informal way of communication, shifting to a completely formal setup can be jarring.
Likewise, some employees might be used to a more transparent approach from their original company and might find newer restrictions on information and processes to be frustrating..
Work Models
In recent years, working models have become a priority for many employees. As such, when two companies with different policies about work locations and timings come together, it is bound to create some issues.
Consider how drastic a change it would be for employees who have always worked from home to be required to come to the office under a new management structure. Alternatively, if employees from a newly acquired company are allowed to work from home, the office-goers may find this arrangement unfair.
Identity and Loyalty
Many workers feel strongly about their company’s brand and name. After an acquisition, different employee groups may emerge under different company tags.
Some employees may feel passionately about not letting their old symbols and rituals go. Similarly, established working groups may struggle to integrate new members due to company loyalty, established connections, and existing working patterns.
The Human Impact in Company Integrations
When two workplaces combine, it is only natural that the move will impact the involved employees. Depending upon the nature and scale of the merger and/or acquisition, the transaction might either affect only a small portion of the workforce or it can impact the company at large.
Anxiety and Uncertainty Among Employees
With the change in management and goals, many employees might feel that their place in the company is in danger. Alternatively, they might find the change in leadership to be nerve-wracking, wondering how much they will have to change their way of working in accordance with the new requirements and demands.
Resistance to Change and Productivity Dips
A change in management often leads to a change in working conditions. However, some employees might resist the established pattern, which can lead to a decrease in productivity. The resistance to change can often be addressed with discussions, but it can also lead to increased tensions.
Increased Attrition If Culture Mismanagement isn’t Addressed
Expecting a perfect assimilation of culture between two workplaces is indeed unrealistic. However, management and HR must productively address any cultural mismatches to assuage employee concerns. If such problems are not addressed, employees may choose to leave for a workplace that offers the benefits they lost during the transition.
Building a Shared Culture
When building a new culture for an integrated company, the management needs to keep in mind that:
- Creating a unified vision and mission means blending both legacies, not giving one precedence over the other..
- Keeping some elements of each culture alive is more beneficial than imposing one over the other.
- Starting new rituals can mark the beginning of a new chapter, but that does not mean tossing out older beloved traditions.
- In case of opposing practices, it might be best to have a consensus about what all the workers prefer, rather than creating a division.
Strategies to Overcome Cultural Challenges
With a few simple steps, companies involved in mergers and/or acquisitions can very easily overcome any cultural barriers that might come their way.
- Cultural Due Diligence: Assess the working culture of both companies before signing the deal. Do not consider culture as an afterthought, but rather make it a dealbreaker when it comes to essential practices.
- Clear Communication: Be transparent with the employees about the reasons and steps of any merger deals. Maintain an open communication channel to keep employees updated on the process and address any concerns or doubts they may have.
- Leadership Alignment: Leaders of both companies, particularly those who might have to interact with employees from either company, need to be in sync about what practices are to be followed. A cohesive leadership can go a long way in creating a unified workforce.
- Employee Involvement: What better way to keep the employees engaged than by involving them in the process of cultural integration? Be sure to ask employees for their ideas and keep them actively involved in any processes that can affect them in the future.
- Retention Strategies: Identify the cultural ambassadors and key talent of each company, and ensure you hear their concerns and ideas. Losing such a talent during the integration process can significantly hamper productivity.
- Integration Programs: Following a merger or acquisition, initiate programs such as cross-company workshops, joint team projects, and cultural exchange sessions. Provide employees with as many opportunities as possible to familiarise themselves with their new team members in a non-work setting.
In the End…
Workplace culture directly impacts the success of any merger and/or acquisition. The best mergers don’t erase the identity of one to superimpose another. Instead, they take the good parts of both to create a better, more hospitable environment.
A successful cultural integration is not a day’s work. It requires immense patience, a critical eye, a sharp mind, and a zeal towards the betterment of the company at large. While an integration may look ideal on paper, cultural practices are truly what can help them become a reality.
