Step 8: Develop M&A Staffing & Retention Plans

Talent retention in M&A--the decisions regarding who goes, who stays, and who is in charge--help determine the future direction of the business and the workforce’s views on what the new organization values.

Unfortunately, selecting someone to stay does not mean they will. It is not surprising that people often choose to leave an organization or “de-commit” during a merger or acquisition.

Acquirers should re-recruit the crucial people in the target company before competitors capture their attention. Merging becomes even more risky and problematic without the help of a target company's best performers.

If the acquired workforce is to be integrated—truly merged—then the staging for this consolidation should begin well before the deal is formally closed. Problems develop rapidly when the parent firm fails to orchestrate a prompt and systematic assimilation process.

Organizations routinely suffer a loss of identity upon being acquired and with that loss comes an erosion of employee commitment. Motivation deteriorates as people’s sense of “my company” fades and blurs, making it harder for them to maintain an emotional attachment to the organization. Also, personal ties to upper-level managers or the owner may be severed as those people leave the scene, eliminating important personal loyalties that previously generated strong motivational forces.

The widespread turmoil created by change turns people’s thoughts inward, away from their job and toward personal concerns. Self-protective thoughts swirl through their minds, leaving people to wonder about the wisdom in waiting to see what will happen to their careers.

Effective staffing plans and onboarding processes quickly reduce uncertainty and re-focus people back on the business.

In this section, our articles explain how to evaluate the acquired company's management, design a new organization structure, retain key talent, manage redundancies, and onboard new employees.

We also provide slides from our Merger Integration Certification Workshop that reveal guidelines on how to identify and retain key players without overpaying or overpromising.

Check out our answers to FAQs about Post-Merger Employee Retention & Staffing.

 

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The Case for Leadership Due Diligence in M&A
The Case for Leadership Due Diligence in M&A

Traditionally the merger due diligence process has focused on legal and financial issues—e.g., contractual matters, litigation points, economic and fiscal considerations, etc. Obviously that’s an important exercise.

But when mergers fail, as they too frequently do, the odds are it reflects a sloppy job of soft due diligence.

There is powerful logic in favor of systematically assessing the competencies of key players in the new organization. You should not automatically assume that people who have been successful in a pre-merger environment will perform with the same effectiveness under a new regime and in a different corporate setup. People’s strengths often become weaknesses during a merger transition period.

IT IS NOT UNUSUAL FOR AN INDIVIDUAL TO BE AN ALL-STAR IN A SLOW, DELIBERATE SETUP STYLE OFFENSE, YET BE A LOSER IN A FAST-BREAK GAME

Ordinarily, the most staunch defenders of the old culture—i.e., the loyalists—have the most difficult struggle adjusting to the inevitable changes brought on by a merger/acquisition. This highlights the need for an objective, professional appraisal of people’s competencies and potential. An important part of the soft due diligence work involves identifying those individuals who can tolerate the ambiguity and uncertainty, facilitate the change process, take appropriate risks, communicate effectively, and generally enjoy the challenge of the merger with the opportunities it will provide.

The absence of such an assessment process practically guarantees the miscasting of people. It means that some poor souls are going to be set up for failure. A merger invariably creates a number of new jobs and profoundly alters the requirements of many others. Often employees “inherit” positions, and end up in roles where they can’t really measure up to the new demands. And when they can only run at half speed, or prove unable to “go the distance” in a merger, you can expect dangerous slippage in corporate effectiveness.