It is not an uncommon scenario for one Tennessee businesses to acquire another, only to have a vital employee leave shortly thereafter. That employee often takes with him or her other employees, customers and, worst of all, company morale. For this reason, many companies find that they cannot meet their M&A goals. A successful merger and acquisition often depends on the retention of key employees of the target business. What can new company leaders do both during and after the M&A process to make retention easier and successful?
The first step Lexology recommends is to identify key employees early on in the process. The buyer should make it a point to get to know the target business’s staff and each employee’s relationship to vital customers, vendors and the company as a whole. The buyer should also envision a scenario in which a key employee left on day one and have a plan in place to immediately address such a situation.
To touch more on the last point, Lexology also recommends that buyers have contingency plans in place. Turnover is inevitable after an acquisition, so it would be wise for leaders to define succession actions in the event that an employee unexpectedly leaves. Buyers should also be proactive and establish integration teams that work with existing employees to make the transition more seamless.
Retention agreements and bonuses also go a long way toward retaining existing employees. Prudent buyers will have retention agreements ready for vital staff members to sign as a condition of the purchase agreement. If the drafted agreement fails to sway individuals, or if key team members show signs of hesitation, the buyer should reevaluate the offer and consider adding bonuses to the deal.
Though monetary bonuses are nice, top performers are people, too. As such, they need reassurance that they will still have a job in six months, a year or five years down the road once the new company is well underway. New owners should work to establish trust across all departments through open communications, rewards programs and internal promotions.
Glassdoor also provides a few tips for employee retention after an M&A. Leaders should strategically incorporate team members from both companies into one department to ensure a smooth transition, and to avoid the formation of possibly damaging cliques. The site also suggests that managers go out of their way to create one-on-one time with newly merged employees and to look out for signs of struggle so that they may address issues early on. The CEO of the company should take care to do the same.
Finally, the buyer should solicit feedback from existing employees early and often. It should give any feedback serious thought and implement suggestions that have merit.