Retaining Best Talent after a Merger or Acquisition

Published by MBA Skool Team, Published on August 27, 2015

There was once a time when Mergers and Acquisitions existed only in the movies and raked in money with the plots of richer organisations taking over the helpless ones for money, later acquiring them.

"Yeah, you fellows need to scratch around in the dirt and find it like the rest of us instead of buying up someone else's hard work." -Daniel Plainview in There will be blood.
Mergers and acquisitions are no longer plot of movie but have become a way to have rapid financial growth. Although the purpose of an M&A is purely financial, but for an M&A to be successful it is important that the most valuable resource of the organisation is being taken care of through the process. It has been well established that human resource is vital for growth of any organisation, retaining the best talent becomes especially important for the stability of the company after merger or acquisition. Your best employees will help you restore balance when in the newly merged/acquired organisation entropy is on a toss.


M&A may have become a common phenomenon but the stigmas associated with them remain as depicted in the movies especially if the M&A was hostile in nature. It is difficult for the workforce to deal with these sudden upheavals and this leads to voluntary turnover. Voluntary turnover needless to say is expensive for the organisation and can be taxing during the unstable times post M&A.

“The people aspects of merger integration cannot be handled in a silo, away from the rest of the effort. Human capital issues are critical to every work stream and must be managed with the same focus and discipline as issues of finance, operations, or information technology.” - PWC (Talking about the people side of M&A)

It is the responsibility of the human resource department therefore to start early to help fall things in place. The first step towards this should be building a team (an integration team) with good representation from HR. HR should be involved in the process and discussions of integration so that the people aspect is not ignored whilst discussing the other fronts. One of the common demons an HR has to address post-merger is the uncertainty of who should report to whom. With the HR’s involved in the discussions, the new organisation structure can be better understood and explained.

Every organisation entails a different culture which gets us to the second demon HR have to deal with, aligning employees to the new culture of the organisation. An organisation is like a family who have a certain way of living and leading life. After the acquisition employees have to live and learn a new culture and change their lifestyle which is difficult. This ends with employees being disgruntled and dissatisfied. A good way to deal with this is to have an uninterrupted information flow among employees. The employees should know and feel involved throughout the M&A process, so that they become a part of the new organisation and feel belongingness towards the new entity. Only when the employees feel at home with the new entity will they be ready to evolve with it.

Next and most important step towards talent retention would be to be prepared with the quiver full of retention plans. Retention bonuses and transaction bonuses have been proven measures of retaining employees, as they incentivize the employees to be with the organisation in the troubled times. However, these can also backfire as the employees may leave the organisation after taking the bonus.

Awards and recognitions can also help in keeping the employees connected and engaged with the new organisation. Growth plans in the new organisation and learning and development initiatives can help in getting the employees ready for tranisition.

Another measure which might seem trivial but can work wonders with talent retention is increased interaction with the new leadership. Employees grow up to ranks and establish their identity in the organisation through years of hard work. New leadership in the organisation washes this off and employees feel orphaned and face an identity crisis. Increased interaction with leadership will ensure that the employees are made to feel at home, their work is valued and respected and they see a future in the new entity.

A Merger/acquisition changes not just the organisation but lives of the humans working for it as well. It is in times like these where HR should step in to help the employees’ transit and evolve with the organisation smoothly. Employees should not just feel at home but should also look for exciting world of opportunities they are ushering into.

The article has been authored by Neha Sharma, Goa Institute of Management


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