Peter Wallum, head of Mergers and Acquisitions at Mercer Human Resource Consulting explains how to hang onto key staff in times of change.

There is plenty of evidence to suggest that announcing a merger or acquisition (M&A) has an instant and negative effect on the performance of both organisations.

Avoiding this outcome depends on a range of management approaches. When getting ready for an M&A, identifying and retaining key talent in the new organisation should be at the top of the HR agenda.

Research and experience suggest a merger announcement is deeply unsettling for employees. People are generally wary of change and even the most confident individuals will have concerns about an uncertain or unpredictable future.

In addition, a merger announcement is an opportunity for search firms, who are never slow to spot the chance for a bit of poaching to get working. Managers and high-level technical specialists will receive increased attention from researchers asking: “Do you know anyone who might be interested in ….?”

This attention is not only aimed at talent in the acquired organisation. Workers in the acquirer may be unsettled by the arrival of newcomers, especially when the expressed rationale of the deal is to consolidate or downsize the combined organisation.

These individuals may also be tempted to look for positions elsewhere. The people an organisation most wants to retain are usually most attractive to competitors. The solution relies on forethought and planning, supported by a range of targeted and effective actions.

Key steps

The first priority is to identify top performers, that is the talent, and to decide who it is essential to retain. These may be specific individuals or teams of specialist professionals who are integral to the future of the business.

The second priority is to identify and implement what will be the most effective retention ‘hooks.’ Where possible, this process should complete before the deal closes or, in some cases, before the deal is even announced. This is not an easy task.

Often, the new executive team is determined more through negotiation or diktat than with any specific reference to skills and experience. Below the executive level, there are considerable benefits to using a more structured and objective process to assess people’s suitability for roles in the new organisation. However, the risk of using this fair approach to staffing is that it may preclude targeted retention activities.

This suggests the need for a three-tier approach:

• If necessary, identify the executive team and other critical roles through negotiation. Keep the numbers involved to an absolute minimum.




• As part of the due diligence process, identify teams or individuals in both companies that must be targeted for retention.




• Immediately after the deal has closed, set up an objective assessment process to decide who will take on all other roles in the new combined organisation.

Targeted retention is not simply a problem that can or should be solved by throwing money at it. In persuading an individual to stay, rather than leave, a range of hooks should be considered and used.

• Of primary importance is individual communication – ensure the person knows they are important to future business; explaining how they fit into the big picture and motivate them to stay and contribute to the new organisation.




• Secondly, as quickly as possible, clarify the future role and performance expectations.




• Ensure that changes in remuneration policies and processes, bonus arrangements, benefits and share schemes do not impact adversely.




• Implement (if deemed absolutely necessary) an interim retention package. Note this can increase the chance that people will leave at the end of it.

As usual, it is the ‘soft’ issues that have more impact on personal motivation. If an individual feels wanted, has a clear role, a satisfactory remuneration package and their personal needs have been addressed, the outcome is likely to be far more successful both in the short and longer-term than paying a large retention bonus.

People create value in organisations. It is critical, in times of high organisational and personal stress, that the best people are retained to ensure that the merger is successful. The risks of failure are high.