“Our biggest assets are our people.” How many times have all of us either heard or uttered that phrase?
No matter how many valuable assets a company has just acquired, one of the riskiest elements of a merger or acquisition is its effect on the very people who have made both companies what they are. One of the most important components of a successful M&A playbook is a comprehensive employee retention plan, but ironically, that’s an element that’s frequently overlooked.
Average Employee Turnover After a Merger or Acquisition
Here are some M&A statistics that are difficult to unsee:
- Over 33% of acquired employees leave after an acquisition
- 47% of key employees leave a company within a year of a merger or acquisition
- 75% leave within the first three years post-M&A
Why Are Employee Turnover Rates So High After M&A Integrations?
Mergers and acquisitions can affect employees in different ways, but even in the best-case scenario, job satisfaction may suffer for any number of reasons. Here are some of the most common:
- Your employees anticipate monumental changes to systems and processes
- They fear losing important aspects of their workplace culture
- They believe that their jobs, or the jobs of their colleagues, are no longer secure
- They miss the close relationships they once had with colleagues who were laid off after the transaction
- They worry they no longer understand or are aligned with the organization’s goals
- They’ve lost trust in leadership
- They feel alarmed that their workload may increase or their jobs will become more stressful
- They may wonder if their role and their contributions will be valued by new leadership
- They may be confused or frustrated due to poor or insufficient communication
- They worry their benefits or salary will decrease
Add it all up, and it’s not hard to understand why so many employees leave. But when you examine that list more closely, most of these issues are worries — not necessarily realities.
FDR’s famous “We have nothing to fear except fear itself” quote remains popular, but it’s not really true. There’s something far worse than fear itself when it comes to the human brain, and it’s the unknown. Not knowing what’s going to happen creates what one psychologist described as “high levels of negative feelings.” To find a more accurate quote, let’s turn to Seneca, who said, “We suffer more in imagination than in reality.”
Supporting Employees During Mergers and Acquisitions
At Pioneer, we recommend taking three actions to support employees following M&A transactions:
- Proactively manage the change and communications
- Consider possible impacts on your culture
- Add formal and informal recognition
Let’s examine each of these in more detail.
1. Proactively Manage the Change and Communications
You’ve probably given considerable attention to how a merger or acquisition will affect your technology and your processes. Be sure to give that same level of attention to how this change will impact employees and plan a thoughtful and thorough communication strategy to address those impacts.
It’s important to remember that effective communication goes both ways. Try to create multiple opportunities for employees’ voices to be heard. You may not have all the answers, and even if you do, you may need to keep some information confidential. That’s okay! Just be transparent about it. Effective communication can minimize the uncertainty that plagues M&A transactions, and go a long way toward building trust.
As a bonus, robust communication can also help your team hit the ground running at the end of the process.
2. Consider Possible Impacts to Your Culture
Workplace culture may be largely invisible, but these statistics illustrate just how powerful it can be:
- 46% of job seekers indicate that company culture is an important factor
- A culture that attracts high-caliber employees is associated with a 33% increase in revenue
If your organization is going through a merger, you may need to blend two cultures and sets of norms that are polar opposites. But here’s a bit of good news: this change could be a great opportunity to remove any norms that have a negative impact on performance and collaborate with other leaders to produce a more positive workplace culture.
Think about what is core to your values that is non negotiable and where there is an opportunity to build new behaviors and ways of working.
3. Add Formal and Informal Recognition
Gratitude goes a long way with most people. Here’s just how far it goes in the workplace:
- When employees believe they’ll be recognized for their efforts, they’re 2.7 times more likely to be highly engaged
- An employee who has been recognized is 63% more likely to remain at their current job within the next 3–6 months
A merger or acquisition is a very busy time, and it’s easy for employees to be undervalued or overlooked. That’s why, as a leader, it’s crucial to communicate to your employees just how valuable they are.
Recognition doesn’t have to come in the form of a bonus, although money always talks. You might, for example, highlight a productive member of your team in your newsletter or on social media, where their friends and coworkers can also see the impact of their contributions.
Key Takeaways for your M&A Integration Playbook
First and foremost, mergers and acquisitions can be stressful, but it doesn’t have to be at the expense of the employee experience. Considering the needs of your people during the process will allow you to realize even greater long-term M&A benefits for management, stakeholders, and the company's bottom line.
Second, while the tips we’ve outlined here will help, these transactions always come with a risk. If a merger or acquisition is on the horizon for your business, you might want to consider speaking with Pioneer Management Consulting — we’ll help you derive the most benefit from the transaction without losing your top talent in the process.
Our elite team has all of the components needed to successfully manage the employee experience through a transition. Our areas of expertise include change management, culture, organizational design, leadership development, and more. Ultimately, we believe our proven methods, impressive results, and 97% client satisfaction score speak for themselves.
If you’d like to minimize your risk and maximize your returns, connect with us to set up a meeting.
