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How to turn a financial fire-sale into a people-centric merger

Published 26 April 2023 in Leadership • 10 min read

Breaking up is hard to do but bringing together two different organizational cultures can be even tougher. Merete Wedell-Wedellsborg, Adjunct Professor of Leadership at IMD, explains how leaders can turn a shotgun merger into a success: give employees space to grieve and actively involve them in creating a new shared identity.


It’s an arranged marriage that neither side particularly wants. In March, Swiss authorities announced that UBS, Switzerland’s largest bank, would buy its smaller rival Credit Suisse to avert further financial banking turmoil and avoid a run on deposits.  

Even when there are mutual motives for a merger, marrying different corporate and organizational cultures can be as complex and challenging as integrating IT systems. When a takeover happens fast and without warning, the risk is that people feel powerless, threatened, and deeply frustrated. Besides all of the legal, financial, and political requirements, the psychological and emotional work involved in mergers is enormous and complicated. 

In the case of UBS-Credit Suisse, the hurdles are even higher since many of the levers leaders rely on to build a shared corporate identity – such as a mutual enemy or a strong strategic motive – are absent. At a shareholder meeting this month, UBS’s Vice Chair  Lukas Gähwiler described the merger as a “Herculean task”. 

Nevertheless, there is an opportunity to turn this financial fire sale into a wider success if the management think of it as a people-centric merger rather than a one-sided takeover.  

The latter might sound like an attractively fast and efficient maneuver compared to getting people on side, but it often vastly underestimates the cultural risk of making it work.  

As noted by Professor Anne-Marie Søderberg, who studied a complex merger of four North European banks that led to the formation of Nordea: “If senior management does not listen to critical voices, and does not offer convincing arguments that support their own decision making, it can be difficult to get everyone to embrace the new organization.” Even a brief engagement with top management made a huge difference to how employees felt about the merger. 

Over the past 20 years, I have worked on large mergers in the defense, banking, and pensions sector and have identified seven ways in which leaders can help foster a shared identity, strengthen morale, and yield unexpected benefits when combining different units and cultures. 

“ I once worked with a company where people were informally characterized as 'swimmers' or 'non-swimmers'. This was not only terrible for morale but pitted employees who were ultimately meant to be working together against one another.”

1. Allow space for grief (yes, grief) 

Perhaps unfairly, bankers are not renowned for empathy. But empathy and emotional intelligence are in massive demand during a merger because most people are wedded and connected to the identity of their company – often with a strength and depth not dissimilar to fans’ devotion to a football team. So, any merger or takeover is filled with reactions of disbelief, emotional numbness, and loss. 

Leaders make or break a merger process, so top management needs to put constructive coping strategies in place to help employees to deal with grief, and to turn that grief into a source of value. Each side, and each team, needs to understand that things have changed, even if acknowledging this is not always easy. It’s important to provide comfort that some  things and values will survive the merger, otherwise employees may resist it if they feel the company they love is dying. Show them it is growing into something better, and that it’s not an option to simply repress or ignore the changes.  

One way to do this is to actively involve them. For example, I worked on a merger of two financial institutions where management set up a series of workshops with the purpose of “hitting the ground running”. Before the workshops, a large number of employees and leaders were interviewed by psychologists and anthropologists who worked on understanding the losses and gains employees were experiencing as a result of the merger.  

During the workshops, employees were then mixed into groups and sent on action walks where they worked on important assignments that really mattered for the merger. Employees were encouraged to share their views, as well as their hopes for future cooperation. Notably, top management participated in as many of these workshops as they could. 

2. Pay careful attention to language 

Language and discourse reflect the mentality of the merger. If the acquisition is perceived as a one-sided takeover, it will skew the “people-centric merger” mindset. Be careful about splitting – that is, making one side the “good and clever team/the saviors/the winners” while the other is the “bad/lazy/incompetent losers”. To avoid slipping into an adversarial environment, top managers should start encouraging all staff to use words like “we” and “ours” and quickly crack down on situations where they see splitting occurring in one organization. For example, I once worked with a company where people were informally characterized as “swimmers” or “non-swimmers”. This was not only terrible for morale but pitted employees who were ultimately meant to be working together against one another. 

“Whether Credit Suisse gets absorbed into UBS operations, or the bank preserves its name and identity, management will have to work hard to develop an overarching identity and culture in which both groups can thrive. ”

3. Create a strong shared identity  

For the acquiring company, the easy route to a shared identity is to foist their identity and culture on the target. But this approach is both a lot harder than it sounds and misses the potential for adopting the “best of both worlds”. One way to foster a shared identity is to focus on an external enemy, be it a significant competitor or rival, that helps the top management define and demarcate the merger’s corporate identity. This “us-versus-them” dynamic is often instrumental in supplying a strong new “we-are-in-this together” feeling.  

In the UBS-Credit Suisse case, however, the risk is that one side sees it as a humiliating absorption rather than two companies joining forces to diversify and achieve scale. Whether Credit Suisse gets absorbed into UBS operations, or the bank preserves its name and identity, management will have to work hard to develop an overarching identity and culture in which both groups can thrive.  

To work on a mutual identity, you need a strong vision and story about the merger beyond a white knight stepping in to save the other from collapse. What can both organizations achieve together that could not have been achieved separately? What vision do you have for the merger of the organizations, and how can you communicate it to external and internal stakeholders? How will evident conflicts and opposing interests be handled?  

If people don’t believe in the overall story, the merger doesn’t stand a chance.  

4. Invest in team gatherings 

Banks understand financial capital better than most, but often miss the value of social capital – the emotional glue that ties people together and provides robustness, commitment, and energy in teams.  

The “new” top management needs to invest in projects where the two merged cultures must work together. And the social component is just as important as the work at hand. So, if you need a merger to work quickly, you need to invest in team gatherings that enable employees to build mutual trust. 

It’s important to plan activities that will help team members get to know each other on a deeper level to secure true commitment and build strong morale. The team gatherings should allow space for people to share their personal stories and life-shaping events with each other, rather than just anecdotes from last week’s meetings. 

5. Live and breathe a common culture

“Culture” is a catch-all term for the norms and rules that apply when top management is not around. Even though most corporates have gone through the process of articulating their “espoused culture”, these documents rarely capture the “lived culture” – that is, the hidden rules and norms, the dos and don’ts. So top management should not only talk about the values they wish to see after the merger, they should also show it – verbally and non-verbally.  

It can be quite demanding to create a common culture after a merger. Often, employees and leaders feel isolated or left behind when things change suddenly and their routines go out of the window. Inspired by work from multinational military units, one newly merged company carried out an exercise called “The Museum”. The purpose of the exercise is to observe and learn from the best of both worlds in the merger and create new cultural aspirations in an energizing way.  

Like national flags, the symbolic aspects of a merger matter immensely: names, titles, logos, visual identity. These artefacts are important to create psychological safety and a feeling of belonging and pride

Teams from both of the merged companies were brought together and were asked to answer three questions: Which parts from each of the previous cultures should be left behind and stored in “the museum”? Which parts of each company’s culture are worth keeping and carrying forward? Which new cultural ways and aspirations should the merged company adopt from scratch?  

All three questions should be answered with practical examples: habits, rituals, tone of voice, ways of cooperating, and social events rather than empty headlines. As is often the case, the process itself and the network it fosters may turn out to be the most valuable outcome of this exercise.  

6. Create mutual symbols

Like national flags, the symbolic aspects of a merger matter immensely: names, titles, logos, visual identity. These artefacts are important to create psychological safety and a feeling of belonging and pride. In one newly formed NATO unit, soldiers kept their old unit crests and attached them to the inside of their NATO berets while wearing the official crest on the outside. People have their company’s logo on everything from fitness gear to backpacks, cups, and pens.  

Let people keep these items for the museum back home, and make sure to create new ones together. Top management should start using these objects, and explain why it’s important to have mutual symbols by creating a sense of community and a feeling that we are in this together. This may sound like glossing at first, but with time these artefacts become laden with meaning and tokens of belonging.  

7. Align desired behavior with incentives

This may sound trivial – especially in banking – but put your money where your mouth is. Look at the incentives and bonus schemes with a wider view. This is not just about monetary rewards, but generating a feeling of fairness, hierarchy, ethics, and culture. Research shows that incentives are counterproductive when used as individual bonuses. Make sure that you don’t just reward individuals, but also team efforts – and that bonuses and incentives are linked to the ethical compass of the company right away. 

When you are paid handsomely and celebrated for your work, you begin to develop a strong sense of entitlement that makes you think you can “walk on water”. The higher you climb, the fewer people will tell you the truth. So, when you merge two cultures, make sure to really address, with examples, what kind of behaviors you want to see – and which ones are unacceptable.  

Most companies have articulated company values, policies, and codes of conduct. These are sensible measures for preventing and dealing with ethical lapses. However, they rarely address the psychological and cultural root causes that drive people to slip up, make shortcuts, or turn a blind eye to misconduct. During a merger, responsible boards and management teams can start out by recognizing that even trusted leaders with high integrity are at risk of tripping up.  

Leading a people-centric merger  

In any merger situation, management is under pressure to demonstrate that they are moving ahead quickly to realize the synergies and benefits of the deal. On the surface, leaders may ask: How should we look? How will we integrate? What are our new routines and ways of working? What are the costs and benefits of joining?  

But leaders will also have to answer more fundamental questions: Why are we here? What’s important? What are we about? What’s sacred to us? What is in it for each of us? 

When the pressure is on, it’s the people leaders – those who spend time talking about purpose and authentically communicating with staff, by keeping eye contact, truly reading the room, and supporting their teams – who will pull ahead. While the to-do list is no doubt endless, you will never get to the bottom of it if you don’t spend time strengthening and reinforcing relationships to make your people come with you too. 


Merete Wedellsborg

Merete Wedell-Wedellsborg

Adjunct Professor at IMD

Merete Wedell-Wedellsborg is a clinical psychologist who specializes in organizational psychology. As an executive advisor, she has more than two decades of experience developing executive teams and leaders. She runs her own business psychology practice with industry-leading clients in Europe and the US in the financial, pharmaceutical, consumer products and defense sectors, as well as family offices. Merete is the author of the book Battle Mind: How to Navigate in Chaos and Perform Under Pressure.


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