Strategies for Retaining Talent During a Merger or Acquisition

Mergers and acquisitions are effective solutions for growing a company, getting a competitive edge, accessing new resources, lowering risk, tapping into new markets, and acquiring key talent. Obviously, these are all very appealing to investors and upper management. But employees do not always see it this way. 

In actuality, employees often view such a major change as a threat. These negative feelings can lead to employee retention problems, especially in today’s world where labor shortages are already a significant problem. Staff members may feel uncertain about the future of the company, how secure their job may be, how the culture will change, and how a change in leadership will impact them. They can also have their concerns worsened or blown out of proportion if there is not a clear line of communication about what is happening with the company during a transition. Sometimes employees will feel a sense of betrayal. Furthermore, some team members may feel guilty if they keep their jobs while coworkers are victims of downsizing or restructuring. Combine all these factors and quickly end up with people looking for work elsewhere. But that is not good for any deal. Why?

Because business continuity is critical to the ultimate success of an M&A transaction. Moreover, there can be serious financial implications if you lose key talent and their knowledge and skills, pay to hire and train new people, and even lose customer relationships because you lost the staff that maintained them. 

For these reasons, you want to take the proper steps to reduce turnover during your merger or acquisition, and do all you can to retain your valued team members. So, where do you start?

Clear Communication

Company leadership should create up-front strategies for communication that outline when employees will be informed of what is happening in the process. Clear communication will prevent employees from speculating about things that may not be true, which can lead to rumors and problems with morale that could be completely avoided. Take the time to meet with staff members regularly face-to-face, answer their questions, explain why the merger or acquisition is good for them, and show that you care about their wellbeing. Be sure to repeat your message through multiple channels and ensure that your messages are received, whether via email, an employee intranet, or other means. Check out how best to announce an acquisition here. 

Credible Leadership 

Amid major changes to a company, employees want to hear the truth from their leadership. The more they trust their leaders’ credibility, the less likely there will be uncertainty surrounding the merger or acquisition. Credibility can be imparted by continued messaging that reinforces ongoing organization support and by high visibility by management. The last thing you want is for your leadership to appear to be hiding or avoiding discussing the coming changes.

Strong Management Support 

Managers are so important to keeping talent within a company. Good managers will clearly articulate the company’s vision and goals, encourage employee development, and help with key information, resources, and technology. Managers should be held accountable for their ability to retain staff and their people management skills. Learn more about creating a winning management team in this helpful article. 

Workload Monitoring

Sometimes, when a merger or acquisition occurs, some employees are forced to take on additional workloads. Management needs to be fully aware of to what extent this is occurring and should be prepared to talk to staff regarding their new or different roles in the company. They should be fully equipped to offer them support, training, tools, and knowledge to be successful and not overwhelmed. This can also show them that they are valued by the organization. 

Performance Management 

Performance management processes are important to determining whether the business is hiring the right talent, offering appropriate professional development, and properly recognizing accomplishments. This management should include formal feedback to individual employees on a scheduled basis. 

Continued Learning & Development 

In some cases, training and development are discontinued leading up to a merger or acquisition to save money and boost financials. But this can send the wrong message to team members. Not to mention, the cost of hiring and training new talent can cost more than continuing to support existing talent. Also, keeping the training in place can reinforce the message that the company values its staff and wants to support them through and after the transition. 

Retention Incentives

Retention incentives can be an effective way to keep employees during a merger or acquisition. Sometimes M&A models will include a financial remuneration plan, and the amount of money added for staff retention is built into the cost of the deal. While this can be a useful strategy, leadership needs to understand that this may not be enough reason for employees to stay. Retention incentives are merely one step in fostering employee trust. And the employee could still choose to leave once the retention incentive is paid. All of the previous steps outlined above should be part of one overarching strategy to create long-term stability and retain as much talent as possible. 

Retention is Key to Valuation

Talent retention is important to any merger or acquisition because it can directly impact company valuations. Retaining employees means retaining intellectual capital, client relationships, and operational focus. To lower the risk of attrition following an M&A transaction, company leadership must take concrete steps to focus on employee commitment and retention.