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Retaining Employees During a Merger or Acquisition


Every year, tens of thousands of mergers and acquisitions happen in the U.S. Companies that go through mergers aspire to make their operations more efficient than if they operated as independent companies. Mergers can also open the doors for separate resources to be integrated vertically, giving the combined companies more reliable access throughout the supply chain.

During this transition time, employees will be subject to different changes that can make their jobs more difficult or less fulfilling. It can also be a time where employees are nervous about their prospects with a new company. This is why retaining employees during mergers can be a challenge for enterprises. But there are ways to rise to the challenge.

HR Best Practices during a Merger

Many small and midsized businesses don’t have an HR department, but that doesn’t mean they can’t do a great job of retaining employees during a merger.  Management can use best HR practices. Particularly during significant change, retaining talent is the single best cost-effective solution overseen by management or HR professionals. The best HR practices, recognize key talents, where they should be assigned after the merger, and how to keep them there.  Good managers know that a successful merger depends on keeping high-value employees pursuing careers in key positions where they belong. “If it’s not handled right, you run the risk of losing the talented employees that you just acquired. That’s the last thing anyone wants to happen,” details executive vice president and chief people officer of Sedgwick Claims Management Services, Terri Brown.

With Mergers & Acquisitions, communication is key. You want to understand employees’ strengths and weaknesses and put them in a position to thrive. This is why strong managers and teams are crucial to the success of the merger and what comes after. Across the industry spectrum – especially during times of change – it is important to have people who understand good HR practices and get the most out of your people. If you are large enough to have an effective HR manager, they can bridge the gaps between your company’s highest levels and the essential day-to-day staff. During mergers and beyond, having a strong HR manager and team will make the whole process much smoother.

Retention bonuses can be helpful

For top talent, retention bonuses can be the right way to go during mergers. But while this can provide a short-term boost, it might do little in convincing them to stay longer – unless you follow through with other benefits and opportunities. For instance, you can use your merger to develop a new and improved company culture. Work with your HR team and/or management to identify potential partnerships and mentoring relationships between employees from the two companies. This can improve the way merging employees and departments understand how the ‘other side’ does things in certain ways. This can also open new opportunities and careers in different departments for talent from both sides of the fence.

Sometimes cuts need to be made with a Merger

In many cases, there are little or no cuts in staff during or after a merger. And talent retention is always important. However, in some cases, mergers and acquisitions can be the best time to figure out whether redundancies in staff functions need to be addressed.  And you don’t want to have the company losing money through redundant positions. While this can be an emotional process, eliminating redundancies can significantly reduce the burden and stress on the talent that does stay on. Having to fire an employee or close a branch is always a difficult choice. Soften the blow by ensuring reasonable severance deals for anyone that has to be cut out. Rest easy in the fact that getting rid of redundant positions not only saves money but also allows you to focus more on what your key talent needs.

Mergers can be difficult for everyone involved. But if you follow the aforementioned tips, you can do what’s best for your company as well as the talent you choose to keep. If you are interested in potential merger and acquisition opportunities, please view our current Businesses for sale and fill out an NDA on any business of potential interest.  If you are interested in being acquired by another company, please complete our Seller Info Form for a confidential consultation.

Written for by writer Kara Payne and Blake Taylor


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