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How to Retain Your Key Employees During the Mergers and Acquisitions Process

Wednesday, October 12, 2022

During a merger or acquisition, employees may understandably feel wary about the security of their jobs, changes in management style and cultural differences between the two merged companies. If business owners do not keep these factors in mind while preparing for the transaction and continue to neglect them during the entire process, employee productivity and morale could decrease drastically.

Mismanaging talent can adversely affect a mergers and acquisition (M&A) transaction, which is why you should implement a strong talent strategy before the transaction has closed. Here are some effective ways to retain your best employees during the mergers and acquisitions process.

Evaluate Your Benefits and Offer the Best Options

Many traditional retention strategies involve pay incentives such as stay or performance-based bonuses. However, firms are also looking for additional levers that can help bolster their retention strategy. For example, executive medical reimbursement offers programs that allow companies to reimburse their key employees tax-free for out-of-pocket medical expenses for themselves and family which would not otherwise be covered by their base health insurance plan.

Additional options include but are not limited to:

  • 401k/retirement plan – Financial wellness advisory through certified financial planners can help employees feel confident and secure about their financial future.
  • Business Travel Accident coverage – This is an inexpensive way to provide accidental death and dismemberment coverage for employees who are traveling domestically and abroad.
  • Life Insurance – Enhanced life insurance options for key employees is an effective method of retention. This can be coordinated with a strategic key person life insurance approach, which provides financial protection for a company if one of their key employees dies.

It may be a good opportunity to reevaluate your company’s benefits package. Creative benefits are an opportunity to show candidates how you can help them inside and outside the workplace. Do you offer flexible work schedules? Are there options for childcare? Are you able to offer remote working options? All of these are topics to consider.

Remain Transparent with Employees During the Mergers and Acquisitions Process

It is important to keep employees’ needs in mind during the transaction to update them frequently on the status of the merger or acquisition. If a certain change being implemented is going to be altered, let them know. If a timeline is going to run longer than projected, inform everyone. Keeping your employees in the loop will make them feel involved and trusted as a valuable part of the company. This also means you must be very transparent about positions that will be opening up or others that will be eliminated. It would be helpful if this information were decided and relayed before the actual merger begins, but sometimes decisions are unforeseen or must made along the way. These should be handled with tact and honesty.

Additionally, if employees are taking on extra work during the merger or have moved to a position that drastically alters their current roles and duties, make sure they are compensated fairly for the change. If employees must take on extra tasks and their increased efforts aren’t recognized, it could cause resentment.

It is also important to set aside time to reward and recognize employees for successfully handling changes, adapting quickly to new methods or processes and managing new roles or duties well. Employee recognition is a great way to keep everyone encouraged and moving forward.

Stay positive and keep employees motivated when working through the merger or acquisition. There may be changes in the plan that are not ideal for your company or employees but are necessary to facilitate the merger. You should encourage employees along the way and keep reminding them of the end goal.

Don’t Forget to Check in with Employees After the Merger

After the merger is complete, your most important focus will be training employees on changes to policies, processes and new systems or programs. Coordinate small group training where employees can work hands-on and receive guidance regarding any changes in workflows and processes. Employees may feel more comfortable asking questions in a smaller group setting. Any employees who need assistance above and beyond the scope of normal training can be helped on the spot. It’s also a good idea to set benchmarks to measure where you want employees to be with the training and by when. Setting goals will help employees who are struggling with or resisting the changes to stay on track.

Make sure new management is open and honest with employees after the merger – in return, employees will feel more comfortable being open and honest with management. Fostering these relationships and keeping them positive is imperative. Consider setting time aside for old and new employees to get to know each other outside of the office or during the day away from work responsibilities for a period of time—this could accelerate the time it takes for everyone to feel more comfortable around each other.

A successful merger or acquisition requires planning beyond contracts and finances—business owners must remember to address the needs of their most important resource: employees. Refer to the following checklists for a quick guide to help you review pre- and post-merger items.

Next Steps: Update Your Talent Strategy TO RETAIN YOUR KEY EMPLOYEES

If business owners remain sensitive and committed to employees’ wants and needs during the M&A process, they can ensure the transition is a positive one. Do you need help reevaluating your talent strategy? The Horton Group can help. Call a member of our mergers and acquisitions team at (800) 383-8283 to start your path and discuss ways to retain your key employees.

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.