• Chau Woeste, Partner |
  • Neelm Mahmood, Assistant Manager |
4 min read

Chau Woeste and Neelm Mahmood provide their three top tips for retaining key talent following a merger or acquisition.

If you’ve been keeping up with our series of blog posts on the human side of the deal, you’ll already know why we think retaining talent is so important to realising the deal value. For many investors, a key reason for purchasing a company is to access to new technologies/digital solutions which is deeply dependent on the target’s talent pool.

Companies often put a considerable effort into engaging and retaining employees they’ve identified as top talent – those they believe embody the IP of the business they’re acquiring. But losing key talent can impact an acquisition and could prevent you from reaping the full rewards. A global talent retention study conducted by LinkedIn discovered employee turnover didn’t stabilise until four years after the deal causing shareholder value to continue to erode. The sooner it settled down the better for performance.

The talent drain is usually highest in Year 1 – this is when most people make the decision to stay or go. For many, the uncertainty around a deal gets them thinking about their careers and looking for the change they’ve been putting off for some time. Others will be concerned about how their roles and ways of working will be impacted. All of which is exacerbated presently with employees suffering the underlying stress caused by the pandemic and anxious about what their jobs will look like when we return to some sort of normality. Finally, we often see competitors being more active and ready to poach top talent, taking advantage of the deal uncertainty.

So, how can you retain talent during and following a merger and acquisition:

Identify and put your arms around your critical talent

Understanding the talent critical to deal value and ‘putting your arms’ around these people/groups will be key to protecting deal value. For example, you’ve acquired a tech start-up, so the tech team is clearly a priority. We also often see the need to double down on the client facing teams to ensure that they maintain market focus. On a deal, this aspect was neglected and the sales team simply stopped selling as the key competitor dropped their prices, and the target lost three percent in market share within a 14 day period. 

Another key aspect is to understand how high performance and desired behaviours are incentivised. Are there changes you can make that would increase retention? Would changing schemes have a negative impact on talent retention? You should also consider the non-financial as well as financial levers in any retention planning – employees are individuals, and often driven by unique motivations. A one size fits all approach will not suffice.

A simple but effective tool we have seen aide retention efforts is offering learning and development opportunities or offering key talent the opportunity to be a part of the integration programme to shape the future of the company. It also shows how much you value your key talent at a time of unprecedented change and uncertainty.

Talk with, not to, your new employees

Transparent communications are key to earning the trust of your new employees and dissuading them from leaving. Get this right and you’ll find them supporting the change. That means going beyond talking to, or at, your new employees. You need to engage them in an open and two-way dialogue, where they can ask questions, feel their views are listened to and that you are then acting upon them.

Plan for a hybrid world

Engaging employees following a deal was never easy. It has become even harder during the pandemic, with limited avenues to connect on a personal level. It’s likely we won’t see a full return to the office and instead, we’re expecting a hybrid future. That means it’s important to make use of all the channels open to you to connect with employees, including new digital and social channels. On a recent Technology deal, where the retention of the high tech engineers was critical to deal value, we deployed our digital engagement platform, which had 99 percent take up rate by the employees and was able to cut down unwanted attrition by half.

During lockdown, businesses have discovered that digital tools make it possible to collaborate and establish a personal connection even when it isn’t possible to meet up in person. With a changing demographic in the workplace, hybrid and altered working patterns should also become part of your toolkit when considering retention levers. Providing flexibility around start and finish times, and working locations, will prove a strong consideration for employees during retention discussions as they have grown used to working from home.

We’d love to hear from you about your challenges and successes in onboarding new employees following an acquisition. Get in touch if you’d like to discuss any of the points raised or how we can support your integration.