Why lose critical talent during a merger or acquisition?
Published in SatMagazine February 2014
Mergers and acquisition of small, medium and large companies has been ongoing for many years.
The reasons for an M&A might include:
- The well planned desire for growth
- Advantages of combined synergies
- Purchasing a complimentary technology
- A defensive play to remove the threat of a competitor
Industries have been built to support M&A activity. Rarely does a merger or an acquisition simply happen overnight. Significant planning and preparation is involved. Sometimes years go by.
In almost every case, employees are involved. It is hard to run a company of any kind without talent.
In the circumstances where the M&A was driven for the purpose of acquiring critical technology, a talented employee or team of them was at the core of originally developing the now valuable technology. The same talent base is predictability capable of developing additional technology.
In the circumstances where the M&A was driven for the purpose of acquiring a team of highly talented individuals, assumptions are made by the acquiring party that the prized employees will naturally “come along for the ride” with the new employer.
Under most M&A agreements, a period of a year or two is established that allows for a smooth, uninterrupted period in order to transition processes, procedures and employees to the new parent organization.
This is the moment in time where the parent employer has the best opportunity to generate great value from the newly added critical talent OR the best chance to lose the investment and related value in the recent acquisition.
Intuitively, following the acquisition of a desirable asset, wouldn’t it be logical to focus on maintaining the employment of the newly acquired talent? Wouldn’t it be logical to provide re-assurance? Wouldn’t it be logical to communicate? After investing significant time and money, wouldn’t it be predictable for the parent employer to invest in a program to integrate the newly acquired talent into the “mother-ship”?
I am surprised by the answers of employees following their company being acquired. I ask them about the parent company’s direction, focus and general communication. Most of the time, the employees tell me that there has been little to no information provided by the parent employer. The “deafening-silence” comes from both the parent organization as well as from individual managers.
Inside the mind of the acquired employee is uncertainty and a need to fit into the culture of the new parent organization.
If an employee reflects on their position, they would agree that rarely does anyone really work for a company. Employees work for the individual they report to. Remember, a company does not have chemistry or culture, people do. Managers and leaders define the culture of an organization. Employees are connected through chemistry or a cultural fit to their leaders or managers.
So, when there is a change of a manager or leader as predictably occurs during an acquisition, the employee is really asking “Do I fit the culture of the parent company?” The normal course of business has been interrupted. Instead of the employee reporting to a manager where chemistry has been developed, the employee’s day now contains uncertainty. The employee may also be asking “With change going on around me, perhaps I should take a look at my career and consider alternative employment options”. Thoughts less dramatic might include “If the parent company were that interested in their acquisition, why are they making such little effort in including the newly acquired talent in the process?”
A simple, executable solution sits directly in front of the parent organization. The solution requires a minimal financial investment. Time and commitment are the two biggest expenses.
For a successful path to integrating newly acquired talent, why not treat them like new employees. Why not over-deliver on a on-boarding program?
With the manager/leader taking a front seat:
– Open a dialog between manager and employee
– Assign mentors to insure the newly acquired employees get on a fast track toward understanding and embracing the parent company’s culture
– Involve the parent company’s marketing/communications group for a weekly update and clear path of information
– Schedule both formal and informal events for the newly acquired employees to interact with the legacy employees
– Develop a repetitive meeting schedule (example every two weeks) for the manager/leader to speak with the newly acquired employee
– Develop a process for the newly acquired employee to receive feedback
– Develop a process for the new acquired employee to provide feedback and feel like a valuable contribution is being made
While the suggestions made above require a significant effort and investment in time, how expensive is the alternative?
With a well-planned integration program, the probability for success is very high. Without an integration program, the parent company faces the likelihood of issues with employee fall-out.
What is the cost to the parent company of lost talent? A failed hire is expensive. The expense is magnified by the related costs associated with the acquisition event.
Take care of your investment with the important follow-through of a Best Practice Integration Program and assure that you maximize the potential of your acquisition.
Good hunting.