Talent Retention Post Acquisition

I have played roles on all sides of acquisition transactions – and I have always believed keeping talented people is hard and requires a thoughtful approach and high touch.  But I had not seen much in the way of empirical data.  However, I recently attended an M&A conference hosted by Transaction Advisors, largely to see a session about talent retention and cultural integration post an M&A event featuring research by Towers Watson.

The data and content concluded that, while retention bonuses have become much more the norm, once they run out, cultural issues often drive people away.  Specifically, the TW data indicated that over two-thirds of the firms offering retention packages were able to keep 80% of the targeted employees — for a while.  However, once the retention period expired, less than half of the respondents had figures anywhere near that successful.  The number one reason given for their departure?  The were uncomfortable with the new firm’s culture.

What to do?  Not surprisingly, taking the time to engage, communicate, and to treat your new employees as people who matter can make a big difference.  The TW folks indicated studies have shown a 50 point success gap in employee retention for firms that use a combination of financial and high touch inter-personal tools and programs such as having senior leaders reach out consistently to their new team members, mentoring programs, recognition programs, development programs, etc.  This supports my empirical experience as well.  If you ignore the cultural impact of a new leader, new ownership, etc. – you run a huge risk of losing much of what you thought you were acquiring.