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HR & Employment

As a business, mergers and acquisitions are enticing. They hold the promise of an expanded customer base, synergy, growth and in some cases elimination of the competition. However, M&A is usually anything but smooth for a lot of employees and can wreak havoc on engagement and productivity. One of the major challenges during any merger or acquisition is the retention of key employees. When a merger or acquisition threatens to cause upheaval, the priority should be getting everyone on the same page. The company needs to offer a clear, convenient and reliable path.

What Are The Most Common Reasons Mergers And Acquisitions Fail?

  1. The Human Factor

The main reason for merger and acquisition failure has to do with people and how people cope or do not cope with the change.

  1. Weak leadership

Many mergers and acquisitions fail because employees feel they do not have a strong management team to guide them.

  1. Lack of communication

This can be lack of communication between employees that leads to misunderstanding of the merger or acquisition or lack of communication from management that leads to confusion regarding the future of the new company.

What Are The Best Ways To Retain Employees During A Merger Or Acquisition?

  1. Build your employees’ trust

Communicating early on engages employees and enables them to trust the process. As an acquirer, you need to share with your new employees everything from the ideology and intentions of your company to its guidelines and work strategy.

  1. Have 1:1 communication with all your team members

This may not be appropriate for all companies, but a personal approach can go a long way. Effective communication plays a crucial role in gaining the confidence of employees and retaining their loyalty. Most employees will have at least some doubts when a merger or acquisition occurs. Therefore, it is important to empathise with your employees and communicate with them, on personal level, to listen to any concerns they may have and reassure them from an employment prospective.

  1. Offer an employee retention bonus agreement

Where possible, offering an employee retention bonus agreement is an effective way for employers to retain strong performers and critical employees.

  1. Train your new employees

During an acquisition, there may be employees who require a certain amount of training or development to allow them to transition into the new company. Investing in such employees will not only grow their skills but will also promote that the company invests in personal professional development and growth.

  1. Involve employees in decision-making

Doing so gives employees a point of control amid uncertainty. Regularly gaining feedback will also allow you to gage the overall feeling in the company.

Why Retaining Employee is so important

Employers need to retain their employees because they need to retain their intellectual capital, the client relationships that have been formed and the business focus. Successfully negotiating the choppy waters of mergers and acquisitions is the difference between achieving strong sustained growth and stagnation and as always people management is at the centre of this.

For more information, please contact Tom Evans: tom.evans@dtmlegal.com/ 0151 230 1217
Tom Evans Employment and HR

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