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Retaining employees is one of the most crucial things you need to do when acquiring a company. However, this is easier said than done. According to Wharton's studies, acquired employees are twice as likely to leave compared to employees that are hired off the market. Clearly, organizations are doing something wrong. Helping us understand employee retention is Dr. Klint Kendrick, director of strategic workforce initiatives at SC Johnson.
"If you don't have a happy workforce, you don't have a productive workforce, and therefore you don't have a profitable workforce. And that can really affect your deal outcomes." - Klint Kendrick
Understanding Employees
It's no secret that people don't like change, and employees are no different. Many of the employees will be stressed because of the uncertainties that lie ahead of them. Will they have a job post-close? What will that look like for them? Will their compensation change? These are the questions that are running through their heads.
Another thing that people like to do is have control over their work. In an acquisition, that control goes away. They will end up in a job they didn't apply for, for a company they don't even know or like. So this results in even more stress and, in some ways, a loss of their identity.
These are the things that you need to take into consideration when you are dealing with employees during an acquisition.
"Employees need to hear key messages from a couple of different places, and in a couple of different ways before you can get them to take action" - Klint Kendrick
Three Major Questions
Going into the Announcement Day, you need to be able to answer three major questions to have at least a shot at retaining the employees:
1.Do I Still Have a Job?
This is the first question in your employees' minds and the most important question you need to answer on your announcement day. If there are going to be layoffs, you need to be honest about it. The worst thing you can do is lie about it and lose every employee's trust in the company.
2.Are they going to be fair?
Like every other acquisition, there are going to be process and policy changes. Be sure to talk about it and let them know that your policies make sense, are fair to the employees, and apply to everyone.
3.Will my job be as good?
With all the fear of uncertainty, employees need to know that their job will be as good as the ones they had before. Think of it as re-recruiting your employees and sell your company to why they should stick around and experience their new job.
Best Practices for Announcement Day
1.Announce Early
Even before the deal closes, rumors will start to spread. Rumors cannot be avoided, but it takes several repeated exposure to the information before people begin to accept it as accurate. You need to get ahead of the rumor mill and announce before the employees validate the deal from someone else.
2. Be empathetic
Your message needs to be empathetic. Not everyone got a big fat paycheck for selling the company. Some employees might be hearing about the deal for the first time. Their world has just been rocked, and you need to understand their perspective. Show them that you care; otherwise, people will start leaving.
3.Use a trustworthy messenger
It's no surprise that the employees do not trust the acquiring company, so you need a trustworthy messenger to get the message across. Frequently, the founder of the target company is a good messenger because all the employees trust him.
Practical Things During Announcement
1. Use prepared talking points
Do not wing your announcement day messaging. Giving out inaccurate information can be detrimental to employee relationships. Stick with your notes.
2. Prepare your middle managers
Middle managers are the most trusted source of information for employees. You have to take care of your managers very early in the process. Way before the announcement, prepare the middle managers through their change process by answering the 3 major questions. Once you get these middle managers to trust the acquisition, they are going to be the ones to settle the freaked-out employees on announcement day.
"Middle managers are really the secret to successful integration." - Klint Kendrick
3. Spend time in the office
At some point on the announcement day, the business leader of the acquiring company needs to hold office hours. Even just for an hour, stay in the office and make yourself available to answer any questions from the acquired employee.
4. Give out Swag
Give out swag on announcement day to help the employees with their identity crisis. Buy some t-shirts, mousepads, coffee mugs, or anything that will help them align with their new identity as a member of the acquiring company. The faster that they acquire that new identity, the faster they'll become productive for you and help you drive that deal value.
Conclusion
You need to earn their trust before you can retain the people in the acquired company. Make sure you answer the three major questions that are concerning them to put them at ease. Also, remember to announce before all the rumors sink in, be empathetic about your messaging, and get a trustworthy messenger to deliver your message.