Want to improve M&A success by a third? Prioritize people.

In business, the numbers may not lie, but they also may not tell the whole truth. That’s especially true when it comes to mergers and acquisitions.

Those vastly complex deals are often presented to the marketplace as primarily numerical transactions — valuations, market share, debt loads, and the like.

But behind all the financial details are the people who will have to run the combined firm, a firm that may operate in a vastly different way than business was done prior to a merger. And sometimes those people get lost in the M&A data.

Scale up, morale down?

“M&A activity is often motivated by providing some kind of scale in operations,” says Shideh Sedgh Bina, a founding partner at Insigniam, an international management consulting firm.

“But mergers and acquisitions also have profound and material impact on the people from both companies — from the senior leadership to the frontline worker,” she says. “These deals depend on the right economics. But the right execution depends on the people.”

That’s not easy, though. While an M&A is being worked out, all manner of people problems can develop. Productivity often drops. Pay may be cut. Healthcare plans may be changed. Leaders may lose their enthusiasm for the merger, or at least fail to communicate its goals.

The corporate culture barrier

Also, culture clashes between merged firms are common. In fact, Insigniam says failure to address cultural differences is often the single biggest barrier to M&A success. And that success rate is already low. According to one recent study, some 83 percent of mergers & acquisitions fail to enhance corporate shareholder value.

To its clients, Insigniam recommends disposing of the conventional wisdom on M&As to get that people part right. “Most of the time, companies think about M&As as a way to merge two different corporate cultures together,” Bina says.

“But rather than doing that, we suggest bringing the key stakeholders together in both firms and invent an entirely new company. It will have some things that will look like the old companies, but the context will be a very different.”

Said briefly, here’s how that process can unfold.

1. Assess people and teams.

Who are the key team members in both of the companies involved? What are their strengths?

2. Retire the legacy organization.

Move away from the old corporate structures.

3. Create a cross-functional, cross-organization team to bring the merged companies together and redefine the new company.

This team should make a new mission statement, draft a new statement of values, develop new operating principles, and sketch out the new, breakthroughs that the new organization wants to accomplish.

4. Set up integration teams.

Although these teams exist in most M&A situations, they often aren’t operating in the context of reconstituting a new firm.

Back to those truth-telling numbers: How does this kind of people-first approach to combining organizations work out in M&As? The data, from several studies, is clear: Make cultural, communication, and integration issues a priority and M&A success rates shoot up by a third.