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8 Ways to Retain Employees After a Merger or Acquisition

By Caitlin Mazur - Nov. 7, 2022
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Mergers and acquisitions can be exciting for companies, but they’re often less exciting for the employees involved and can result in significant turnover.

If your company has a merger or acquisition on the horizon, keep reading: We’ll explain some of the most common reasons why employees leave during and after these events and give you tips on how to boost your retention rates after mergers and acquisitions.

Key Takeaways

  • Three of the top reasons why employees leave after a merger or acquisition are mistrust of leadership, job insecurity, and disliking the new company culture.

  • Building employees’ trust, offering incentives and training, and communicating on an individual level are key to retaining employees after a merger or acquisition.

  • Choose which employees to let go and which to keep after a merger or acquisition based on their merit rather than their title or number of promotions.

Why Do Employees Leave After a Merger or Acquisition

There are a number of reasons why employees may choose to leave after a merger or acquisition. Here are a few of the reasons why they may do this:

  • They don’t trust the new leadership. Whether it’s the new CEO or their new manager, many employees leave after mergers or acquisitions because they can’t get behind their new leaders.

  • They don’t feel their jobs are secure. People know that mergers and acquisitions usually come with downsizing and restructuring, so if they have any doubt about the future of their job, they’ll often jump ship in the name of self-preservation.

  • They’re afraid their jobs are going to become more stressful. If employees start to see their to-do lists and stress levels increase while their resources and support from leadership decrease after a merger or acquisition, they aren’t likely to stick around for long.

  • They don’t like the new company culture. When companies experience mergers and acquisitions, their cultures shift. Even if there isn’t anything inherently wrong with the new culture, some employees won’t care for it and will start looking for jobs elsewhere.

  • They feel a breakdown in company communication. Employees who feel confused and lost during and after mergers and acquisitions often leave their jobs to look for calmer waters.

  • They feel layoffs were unfair. Mergers and acquisitions usually involve layoffs of some kind, and if employees — even the ones who kept their jobs — feel that politics, favoritism, or general incompetence played a role in deciding who went and who stayed, they likely won’t stay with the company long.

This isn’t a comprehensive list of the reasons why employees may leave a company after a merger or acquisition, but it’s a good starting point for understanding some of the most common ones and being able to combat them.

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How To Retain Employees After a Merger or Acquisition

  1. Select Employees On Merit

    While retaining employees after acquiring a company, it is important that you make your selection based on merit and not on their rank.

    When you take over an organization, you will quickly learn that there are employees who were promoted for their loyalty to a manager or team leader – not based at all on their performance.

    Therefore, you should not mistake a star employee just by their number of promotions or awards. Instead, you should take a methodical approach and choose people who stand out from others on the grounds of skills, experience, and talent.

  2. Build Your Employees’ Trust (The Old And New)

    Keeping things simple and communicating clearly helps employees trust you more. As an acquirer, you need to share with your new employees everything from the philosophy and goals of your company to its policies and work strategies.

    All these things are essential for putting across the vision of your organization and how you intend to go about running the “new” business moving forward.

  3. Communicate Individually With All Your Team Members

    Effective communication plays a crucial role in gaining the confidence of everyone in the business (both the existing team members and the new employees) and keeping their loyalty to your organization.

    Understand that every employee will feel some level of insecurity when a merger or acquisition occurs. Therefore, it is important to empathize with your employees and communicate with them on a personal level to listen to any concerns they may have about their future employment prospects.

  4. Offer An Employee Retention Agreement

    Where possible, offering an employee retention agreement is an effective way for employers to retain their newly acquired key talent and to benefit from the integration of their skills, competencies, and experiences.

    To make your offer even more lucrative, you can include valuable incentives, such as cash bonuses or other forms of financial assistance.

  5. Train Your New Employees

    When you take over an organization, you may find yourself with new employees who require a certain amount of training or development to get them up to speed inside the new entity. 

    Investing in such employees will not only grow their skills but will also send them a message that your organization cares for the professional growth of all its employees — not just the old team.

    Besides, a proper training and development program is a beneficial financial investment that results in better performance of employees and increased productivity.

  6. Identify Everybody’s Strengths And Weaknesses

    Performance analysis of all your employees is critical to their progress and successful retention.

    Remember that your employees are your biggest asset, and knowing their strengths and weaknesses could help you channel their experiences and skills for the benefit of your organization as well as allow you to retain them longer.

  7. Create An Incentive Program

    Setting up a good incentive or rewards program is essential to boosting the morale of your new employees and helping them feel part of your organization.

    Offering performance-based bonuses and promotions are some of the ways you can make your best employees feel acknowledged for their service for your organization and motivate them to do better at their job as well.

  8. Understand That Every Employee Is Different

    When setting a retention policy for your employees, it is important to remember that they’re individuals, not just a team.

    What works for one set of employees might not suit the others, so it is essential to understand the individual needs of your retained and new employees before settling for an overarching strategy.

    For example if, as a result of the merger or acquisition, you plan to relocate the office, then it is likely to offend a number of your existing employees. Similarly, a revision in the compensation plan of any of your employees may not be received too well either.

    You’re can’t avoid upsetting anyone, but do everything you can to listen to and work with individuals to make sure their needs are met as you make decisions.

Author

Caitlin Mazur

Caitlin Mazur is a freelance writer at Zippia where she has written 140+ articles that have reached over 1 mil viewers as of June 2023. Caitlin is passionate about helping Zippia’s readers land the jobs of their dreams by offering content that discusses job-seeking advice based on experience and extensive research.

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