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3 Key Strategies to Retaining Employees During a Merger/Acquisition

3 Key Strategies to Retaining Employees During a Merger/Acquisition

Merger and Acquisition is quite a difficult time for a company, especially when it comes to retaining the key merger and acquisitionemployees, which puts difficulty to a whole another level. No one wants to say goodbye to their gems, especially when the likelihood of a company’s future success isindeterminate.

While a merger can be beneficial to an organization (or two) in many ways, it can present a horde of problems for the top management as well. Employees, as well as the upper management, are forced to consider various aspects of business potential including the change in culture, the resultant size, redundancies, numerous risks that have to be taken, and worst of them all – the “merger syndrome”.

As defined by Mitchell Lee Marks, “Merger syndrome is a primary cause of the disappointing outcomes of seemingly otherwise well-conceived merger and acquisitions. The syndrome encompasses executives’ stressful reactions and the development of a crisis management atmosphere.”

Human Resource Management and practitioners need to pacify these concerns by employing effective employee retention techniques. This would ensure that at least the most important assets of the organization – the key people—remain.

1) Find and Locate the Key Contributors: Organizations often make the mistake of either sticking to the senior executives or the “top performers” when deciding on who to retain. Much thought should also be given to lower level employees and the various ways they contribute to the business. Some employees may not be “top performers”, but will have a useful network of contacts or another skill that is critical to the business’ssuccess. Also, having a first-in-first-out policy may sound fair, but it won’t necessarily be beneficial to the business. A recent hire may have a lot to offer to the company, and maybe even more than a senior employee who has been around for too long.

2) Use Retention Agreements: Using retention agreements during a merger is common and quite useful, as long as it doesn’t violate any law. Once you have your key contributors and final list of employees in place, an agreement that includes a cash bonus or other monetary benefits will prove effective. Many companies choose to go beyond the typical financial benefits allure and offer other non-monetary rewards such as promotions, management programs (such as leadership development programs), or an opportunity to lead a project.

Discussing the terms of agreement with each employee individually might be a better approach. Although, this will be slightly more time-consuming, taking a note of which particular financial or non-financial incentives each key employee prefers would guarantee retentions since you will be offering them just the “perfect package”.

Offering incentives before the deal is closed is appropriate for certain key employees and roles. Alternatively, a company can choose to offer incentives after the merger has already taken place, taking post-merger “performance” into account. This could save the company a lot of money as well.

3) Communicate the Change: Keeping your employees in the dark for too long will do you no good. Companies that communicate their merger intentions as early as possible tend to have better retention results. Giving them as “shock” at the last minute is unlikely to yield positive results.

This strategy will most definitely results in what Mitchell Lee Marks calls the “merger syndrome”. HR practitioners should clearly communicate the direction of the company, the effects of the merger, the changes that will take place and everything else that would occur before, during, and after the merger.

Employees that are vulnerable to one of the effects would have less “shock” should this be communicated earlier. Also, this will give them ample time to search for other opportunities in due time.

The retain-ees, on the other hand, would know exactly where the company is headed, allowing them to be confident about their decision to stay.

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Specializing in educational writing and consulting, Sabrina Walker loves to offer academic consultancy to students who want help with their college research papers. She also works for an esteemed firm,, to extend her valuable assistance to more clients around the globe.

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