Mergers and acquisitions are an opportunity for two companies to combine their most important assets: their teams.
Unfortunately, things don't always go as planned. Employee attrition typically reaches 55% to 71% after a company is acquired. Often, the most talented staff leave first, as they have the most opportunities. When they leave, they take a huge amount of institutional knowledge with them.
High levels of staff turnover can undermine an M&A, which is why it's so important to think about staff retention right from the beginning. Let's take a look at how to keep your team together (spoiler alert: communication is the key.)
How to retain staff during an M&A
HR plays a vital role in Mergers and Acquisitions. It’s important that the HR team starts working on a retention plan from day one, with a focus on retaining the best talent. Here’s how.
1. Start with a cultural assessment
Organizational culture plays a key part in any retention strategy, as a positive culture will encourage people to stay around for longer. M&As often involve a cultural realignment, which can lead to team members becoming unsettled. To head off this problem, HR needs to consider the culture of both organizations and make plans for a smooth merger between the two.
To assess cultural alignment, focus on key areas such as:
- Work styles and decision-making processes
- Communication norms and expectations
- Employee engagement approaches
- Leadership philosophies
- Core values and mission alignment
Look for differences between the organizations and try to identify changes that might impact the team. By getting ahead of a cultural change, you’ll be in a position to help your team adapt to any changes.
2. Communicate as much as possible
One of the most common reasons employees leave during an M&A is a lack of clarity. As highlighted in the attached documents, employees often say, “I didn’t know if I was going to have a job,” or “I didn’t know what was going to happen to my benefits.” To combat this, organizations must proactively address these “unknowns.”
Start by developing a clear communication plan that outlines:
- Early decisions: Share as many decisions about organizational structure, employment, compensation, and benefits as possible. The more clarity you provide, the less room there is for speculation.
- Timelines for unresolved decisions: Be transparent about what decisions are still pending and provide a timeline for when they will be made.
- Multiple communication channels: Use a mix of face-to-face meetings, emails, town halls, and one-on-one conversations to ensure messages are received and understood.
3. Leverage your Total Rewards strategy
One of the big concerns in an M&A is what it means for Total Rewards. This includes salary, benefits and bonuses, as well as professional development opportunities and flexible working patterns.
Again, communication is key here. Ideally, you’d like to be in a position where you can tell the team about new opportunities to grow their careers and increase their earnings. In some instances, you might need to announce some not-so-popular changes, such as the end of specific benefits. Both scenarios are easier to manage with clear, consistent communication. Some things to address include:
- Variations in compensation: For example, will the M&A impact the company’s overtime policies? Is their current pay rate secure?
- Benefit changes: Employees will be keen to know if their benefits will change, for example by switching to a new health insurance provider.
- Career pathing: Many team members will be following a professional development plan based on an agreed career path. Will these commitments still be honored after the M&A?
4. Build a Retention Risk Matrix
Not all employees are equally likely to leave, nor are all roles equally critical to retain. By understanding these dynamics, you can prioritize your retention efforts where they will have the most impact. Use a retention risk matrix to segment your team and identify:
- High-risk employees: Who is most likely to leave based on their role, tenure, or personal circumstances?
- Mission-critical roles: Which positions are essential to the success of the new organization?
- Institutional knowledge: Which people possess vital information, such as process knowledge or customer relationships?
- High-potential future leaders: One of your retention focuses should be on emerging talent, especially those on a leadership development track.
- Business continuity: Some individuals are essential for day-to-day operations, such as your Disaster Recovery experts.
5. Maintain operational stability
M&As can be dramatic, especially if your organization is being acquired. However, these things take time and your team might not feel the impact for months—or even years. In the meantime, it’s essential to stay focused on business as usual. Doing so will help the team feel more settled and engaged.
Some of the areas to focus on here include:
- Hold regular meetings as normal
- Continue to celebrate wins and achievements
- Support ongoing projects and initiatives
- Schedule one-to-ones and performance reviews
- Keep career paths up-to-date
- Keep things as normal as possible and try to avoid disruption
6. Focus on the future state
From an employee perspective, the worst thing about M&As is the uncertainty. Will they still have a job after the merger? Will they still want a job in the new organization? Do they feel committed to the goals and vision of the new organization?
HR can help by painting a picture of the company’s future state. Focus on things such as:
- The vision: What is the long-term strategy of the new organization? What will teams be working toward?
- The values: What values will be at the heart of the new culture? How will teams live those values through their work?
- The opportunities: How might the M&A benefit individuals? Will there be chances to take on new responsibilities or to learn new skills?
Naturally, some of these details will be hazy until the M&A is complete. Communicate openly and honestly about what you know. If you don’t know, or if you only have partial information, let the team know that you’ll try to answer as soon as possible. Trust is crucial at this stage, so it's important that the team has faith in the current leadership and the new, incoming leadership structure.
Making a success of M&A
Remember that some turnover during M&A is natural and even healthy. The goal isn't to eliminate all attrition but to retain key talent and maintain business continuity through the transition.
Successful M&A integration requires a balanced focus on both the business and human aspects of the deal. By prioritizing clear communication, cultural alignment, and employee engagement, organizations can maintain the stability and talent base needed to realize the full value of their M&A investment.
Most importantly, remember that your people are the key to making the merger successful. Every effort invested in keeping teams intact during this transition will pay dividends in maintaining productivity, preserving institutional knowledge, and achieving the strategic objectives that drove the deal in the first place.
