Effective retention strategies should be aligned with the needs and desires of critical talent, especially when they belong to groups with a high risk of turnover
Retention has always been a hot topic, but in case of an M&A it becomes even more critical to retain top talent for business continuity and long-term success
A recent report by the global human resources consulting firm, Mercer, reveals that the success of multi-billion dollar acquisitions rests on keeping key talent for the long-term. This isn’t a very new insight because it is often said that key employee retention is critical to the long term health and success of a business in general.
As a leader, your managers will readily agree that retaining the best employees ensures a plethora of positives for the business. Some of them being: customer satisfaction, product sales, satisfied coworkers and reporting staff, effective succession planning and deeply imbedded organizational knowledge and learning. The irony here is that all managers understand this, yet it remains a theoretical concept. This is the reason why survey results still show this as the top-most concern. In an M&A scenario, this becomes even more critical.
One of the most important aspects related to retention programmes in an amalgamation is the time of execution of the retention plan. A similar survey was conducted by Towers Watson in 2012. The results of this survey revealed that companies that are more successful at retention begin the process early — identifying people and tactics — and don't rely solely on money.Almost three-fourths of successful acquirers (72%) determine which employees are asked to sign retention agreements either during the due diligence stage or during the transaction negotiations. That is twice the number of less successful acquirers (36%) that ask employees to sign agreements during either of those times.
Another interesting take is the trust factor. Deloitte’s Talent 2020 report reflects on trust in leadership as an important retention factor and a critical component of job satisfaction. 22 percent of respondents cited dissatisfaction with their manager or supervisor as the top reason to look for a new job. The report stated that effective retention strategies should be aligned with the needs and desires of critical talent, especially when they belong to groups with a high risk of turnover. Thus, a disengaged employee-base in times of M&A could result in a messy situation for the management.
If the subjective part of retention plans is looked at, each of these reports confirm that performance-based metrics are prevalent and in use at roughly half the acquiring companies across the globe. Typically, it is noticed that organizational performance is given priority for retention plans. Surprisingly though, nearly twice as many companies (74%) use individual performance goals against using organization-wide performance goals (38%) in the context of a merger.
In the end, one can discern that the success of any transaction depends as much on effectively managing people and the organizational environment as it does on managing the timing and financials. Organizations that keep their overall retention and engagement programs strong will be much better positioned to succeed years beyond the closing of the deal. Through being prepared and proactive, HR, in partnership with their business leaders, has a tremendous opportunity to step up and influence the ultimate success of a transaction.