Posted in Human Resources Articles, Total Reads: 700
, Published on 24 October 2015
Recent few years have seen tremendous change in the marketing trends and the way companies comprehend, evaluate and approach these trends. One of these trends has waved its way through and spurred the entire global market. It’s a wave of critical change termed Mergers and Acquisitions. When this kind of transition crawls through the strata of organizations, the changes marked prominent are in terms of patents, contracts and other hard aspects. But a key component that gets sidelined during the process is “talent”.
It’s a widely variable subject when talked about what should be and what are the policies for talent retention following an M&A. But it can be broadly understood by analyzing two factors:
• The reason behind M&A and how it’s going to affect the employees, and,
• The perception of key employees about the transition and their consequent mindsets.
When an M&A is done to enhance services and capabilities of the company, the way it impacts on the employees and key talent depends on the product, service or technology responsible for the M&A. Suppose a company merged with or acquired another company to acquire a unique technology or service. In such a case, if the technology or service has scope for research and development, the key lies in preserving the talent who have already done substantial work on it and would be instrumental in its further development. It’s a burning trend in biopharmaceutical companies, which tend to extreme investment in R&D departments.
But when an essential but easy to implement or a single time user friendly technology with no further ado is acquired, the team involved in its development is no longer considered relevant enough to be invested upon by the company.
Evidently, when companies with similar products or services merge or acquire to gain competitive advantage or expanded market share, the workforce may take a hit along with key talents, as personnel with similar set of skills would be fighting for specific positions in the hierarchy chain.
Management and stake holders may surmise M&A as a financial endeavor, while employees may have a varying perspective. Normally, post M&A, apprehensions of uncertainty in terms of change in management, roles and responsibilities, career progression parameters and job security haunt the employees. This traditionally results in high turnover rates. This results in a halt in business continuity and loss of knowledge, intellectual property and client relations. This calls for the organizations to pull up their socks and make these key talents trust in the organizational structure and their significance in it.
When an M&A takes place, there is a mighty chance that policies of both companies won’t have any ink of congruence. Thus post M&A company need to define its policies in such a way to ensure the employees regarding company’s objectivity towards them. There can be four different types of policy changes:
• Company 1 dominant policy
• Company 2 dominant policy
• Mixed company policy
• New feature Company policy
As the name suggests, first two are the policies in which one company’s policies dominate over the other. Third one suggests that both companies have implemented few policies of each in the organizational structure while the fourth one suggests a brand new set of policies by the decision makers for the post M&A company.
Any be the policies but should be implemented with a fair share of transparency on the part of organization. Any decrypted information for key employees at this sensitive juncture of time would result in an upheaval of doubts and distrusting apprehensions towards the company.
Another key necessity during this phase is Credible and Positive Leadership. Changes as such can be detrimental in employees’ faith on the management but the new leaders need to send right kind of message to the employees with objectivity and a definite agenda, to make them believe in their value in the organization. Leadership providing not only financial remuneration but scope for creative thinking and rewarding culture, can be a bridge to instilling loyalty in the minds of key employees. Also, one-size-fit-all retention policies won’t reap any fruits in a diverse group of key talents. The requirements of these employees might vary in terms of conditions, career drive and necessities, which are needed to be assessed with utmost though equivalent importance. And the ultimate expectation of the key employees from their superiors is the “Truth”
As the stats speak for a research made by Towers Watson by the decision-makers retention study 2014, 88% of high-retention organizations end up with successful transactions in comparison to 67% of low retention companies.
74% of most successful by the decision-makers use of “human touch” in their approach to key talents while only 24% of less successful companies do so.
Moreover, 75% of leaders accept that better communication with employees resulted in better retention rates.
It’s said “when loyalty instills, it takes you far”. It’s true by every word in this employee-employer relationship. Thus, the transition during an M&A calls for high alert on the part of organizations to comprehend and then incentivize the needs of their key talents so as to make them trust the organization’s proclivity towards them and instill that sense of loyalty in them.
This article has been authored by Abhisek Sarangi from XIMB
Workforce.com, citeHR.com, recruiter.com, ermedia.com, and
“Rethink Post-merger talent retention” by Adi-Malik
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