Frequently Asked Questions
What are several post-merger integration employee retention methods?
- Make the target person feel special, not taken for granted.
- Keep the communication lines open and active.
- Take the person into your confidence, asking for his or her ideas and opinions.
- Try to give the individual a key role, a special assignment that makes it clear that he or she is a highly valued individual.
- Consider giving a raise, a higher-ranking title, or a “stay” bonus.
What are stay bonuses and do they work?
A stay bonus is an incentive paid to an employee who remains employed with a company for a certain period of time after the close of an acquisition. These bonuses are usually reserved for employees who have critical skills or possess key information needed during the integration.
Stay bonuses absolutely work. They motivate people to stay. However, it is a mistake to assume they motivate people to do good work. Near term rewards tend to focus people only on what’s immediately before them rather that what’s off in the distance. This myopic attention to short-term gains—the bonus—may lead people to make decisions not in the company’s best long-term interest.
From Do Stay Bonuses Really Work?
What is leadership soft due diligence?
Soft due diligence is the systematic assessment of the competencies of key in the new merged 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. Soft due diligence work involves identifying those individuals who can tolerate 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.
From The Case for Leadership Due Diligence in M&A.
Why do so many employee retention efforts fail during integrations?
Acquirers do not invest the necessary time to develop and execute a compelling retention strategy. There are many other competing demands for management's time so far too often, there is virtually nothing done by way of deliberate retention, except for scattered attempts to hang on to a handful of upper-level executives. Usually, the measures taken to retain key talent are superficial, poorly coordinated, and carried out with a serious lack of urgency. This helps explain why so many merger/acquisition situations are marked by a mass exodus of valuable talent, and why so many mergers end up in the failure statistics.
What are the steps in the employee retention process after an acquisition?
- Assess Impact of Loss – Identify how critical each individual is to the business.
- Define the Role of the Individual – Are they critical to the transition, in the long-term, or both?
- Identify Key Motivators – Determine the top two or three motivators for each person to stay (both physically and mentally) with the organization and perform to expected standards.
- Take Action – Remember, actions don’t have to be monetary. A conversation, a title change, a promotion, even a call from a company founder or CEO can serve to “re-recruit” people to the new organization.
How should acquirers approach staffing decisions in a merger?
- Always operate with the assumption that there will be turnover which directly results from the merger.
- Plan on taking advantage of the opportunity the merger presents to get rid of marginal employees.
- Look for opportunities to consolidate and streamline for a more efficient organization.
- Move rapidly to retain good employees.
It’s much easier to succeed with a team comprised of quality players that you select deliberately rather than try to win a game with those who randomly show up to play. Take charge of the situation . . . make sure the new organization is staffed for success.
Why should employee issues be addressed quickly after close of a merger?
Because the first two letters in merger is “me”. Until important personal career issues have been resolved satisfactorily, employees are too preoccupied with their own situations to focus effectively on their work. Company interests take a back seat to personal interests. Employees worry, gossip, and trade rumors rather than concentrate on their jobs. The longer people have to go without closure on their “me” issues, the more likely a work group will lose momentum. Get these questions answered in a hurry, so people can get on with business.
How many people in the acquired company can you expect to support the merger?
We are talking in generalities here, but about 20 percent of the employees in the acquired company will be “merger-friendly.” They will be clear advocates who embrace the deal. They will help drive the program. Another 50 percent will be fence sitters. They will initially assume an impartial stance trying to determine which way to lean. They will not be openly opposed to the merger, but they will not be helping like they should. The remaining 30 percent will be resisters. They’re opposed toward combination and will try to make it flop. Guess which group makes the most noise? And who do you think soaks up the most management time and energy during the integration? The resisters.
How can acquirers protect the work force’s productivity during the integration?
- Operate with very short-range goals or objectives.
- Initiate new, merger-specific incentive programs for the transition period.
- Monitor performance more closely.
- Provide employees quick, accurate feedback regarding shortfalls in their performance effectiveness.
- Pass out more “psychological paychecks” (i.e. sincere appreciation, praise) to people who are excelling.
- Move quickly to clarify roles and responsibilities for each employee.
- Even though you may secretly be expecting less from your people, ask for more. Actually, raise the performance standards.
Our experience indicates that employee productivity in a newly acquired or merged company gets cut in half during the first several months of an integration.
From M&A Failure Feeds on Itself.