All the M&A gurus and research will tell you that retention of key talent is critical to M&A success. In today's environment, where 'business as usual' is no longer the ‘usual,’ a company's retention strategy needs to be viewed through a different lens and adjusted to reflect the new reality. You need to set aside the numbers and take a more in-depth look at the human side.
What we know to be true is that the new reality for today's employees is anything but typical right now, which makes adding merger and acquisition transactions to an already unsettled workforce even more precarious. In addition, the days of using financial incentives as a sole retention strategy are long gone. Today, employees are looking for a more holistic approach to retention. They want to have trust in their company's leadership and work in a culture where they are encouraged to share ideas and individual opinions. They are also, looking for leadership reassurance, which allows for a sense of security. In other words, a stable, inclusive leadership culture that shows respect for what employees can bring to the organization.
In fact, companies who use a blend of financial incentives and a high-touch strategy of leadership outreach to retain key talent are more successful. Industry data shows a 50-point gap between successful and not so successful retention programs. It is not all about the money.
So, what does this mean in today's environment?
Regardless of where you are in the lifecycle of a merger or acquisition, leaders need to ensure employees feel included, connected to the company, and well informed to preserve their engagement and productivity and keep them from leaving. As a result, now more than ever, 'high-touch' activities and non-financial retention practices should be deployed.
One high-touch activity is a virtual tour where senior leaders can share the vision and create excitement about the future. It provides an essential avenue for employees to ask questions and for leaders to solicit crucial talent feedback to get a pulse on the current environment. Individuals with opportunity to provide input have a greater deal understanding, and therefore have a more substantial commitment to its success.
Another high-touch, high-value activity is to have leaders and managers take the time to reach out to employees individually outside of business meetings. These 'virtual' coffee break conversations help promote engagement by providing employees with an avenue to talk about their concerns and to feel heard. It provides leaders with an opportunity to help alleviate fears and reconfirm the individual's value to the company.
In addition to financial and 'high touch' retention strategies, there are 5 other key non-financial practices companies must get right to retain talent in today's environment.
1. Safe working environment – employees want to feel their health and safety needs are being met, and their concerns are heard and addressed. Increased access to employee assistance programs, and other supportive health and well-being (physical and mental) benefits have increased in importance with employees.
2. Trust – working remotely in this environment brings a new set of challenges, i.e., closed childcare centers, home-schooling children, caring for parents, or ill love ones. Employees are seeking greater understanding, support, and trust from their leaders in allowing them the flexibility they may need to work effectively in the new reality.
3. Social connections –maintaining good social relationships while working remotely is paramount to employee well-being. We all need social connections to feel connected to the company and our colleagues. Organizations need to be proactive in finding unique and fun ways to keep these social connections in place during these times. Virtual lunches and coffee breaks, celebrating special events, team-building activities such as daily workout challenges, trivia contests, etc. are examples of what leaders can utilize to help bring employees together. Research shows a sense of belonging is an essential intrinsic motivator and positively influences an employee's work performance and loyalty to the company.
4. Personal Development – a great way to re-recruit top talent. Employees involved in personal development and/or learning feel more engaged and connected to the company. This is an excellent time to consider offering your employees greater access to online training events, executive education and/or advanced degree programs, personal coaching sessions, etc. Companies may want to provide key talent with stretch assignments and/or the opportunity to lead strategic projects.
5. Communicate, Communicate, Communicate - business, as usual, is no longer business as usual. It is more important than ever to communicate transparently and often, listen to employee feedback and to address employee concerns to reduce any anxiety faced by them. Given today's environment, employees going through mergers and acquisitions will be anxious to know 'WIIFM' and the impact the initiative may have on them. How an organization handles this sensitive element will speak volumes in the hearts and minds of employees and set the stage for the relationship (or no relationship).
It is the time to take an empathetic approach with your key talent to ensure those employees critical to the business's ongoing operation are engaged and motivated to continue to achieve a high level of performance.
We all know that your retention strategy should be aligned with the financial and strategic objectives of the deal, that goes without saying. However, today it is also critical that your retention strategy be adapted to the unique evolving demands of the pandemic.
Editor’s note: For more ideas about improving culture in your M&A deals, check out “Eight Essential Principles for Culture Success in M&A” by Mark Herndon, Chairman of the M&A Leadership Council. Ms. Parkes and Mr. Herndon will both be key experts presenting at the upcoming online training event “The Art of M&A® for HR Leaders – Online with M&A Direct℠”.