Mergers and acquisitions (M&As) have been on an upswing in
recent years, and an increasing number of companies are using the deals to
branch out into new markets, services
Such “transformational” M&As have
risen from 29 percent in 2010 to 54 percent in 2016, according to PwC’s 2017
M&A Integration Survey Report released
earlier this year.
While merged companies are generally achieving greater financial and operational success than in years past, they’re
having trouble retaining workers from the
newly acquired organizations, the report
Fewer than half of the survey respondents reported that they were successful at holding on to employees through a
transition, dropping from 56 percent in
2010 to 45 percent in 2016. That could
be attributed to low worker morale and
a lack of clear direction provided for
employees by organizational leaders, the
authors of the report say.
“Fear, indecision and just plain confu-
sion can paralyze companies until people
have some sense of where—and even if—
they fit within the new organization and
what will be expected of them,” report
authors Gregg Nahass and Marc Suidan
wrote. “Often, the difficulty is due to lack
of a cohesive, choreographed plan for
the workforce transition and insufficient
involvement by human resources staff in
deal planning and process.”
PwC partnered with Oxford Econom-
ics, an independent survey company, to
survey 151 senior executives at Fortune
1000 companies with recently completed
Previous studies have shown that exec-
utives preparing to acquire a company
focus more on assessing the other employ-
er’s finances than on how to blend the val-
ues and cultures of the two organizations.
And transformational deals create even
greater workforce challenges since the
organizations involved have bigger differences. That’s all the more reason to have
HR involved as early as possible.
Sue Quackenbush, chief human
resources officer at Vonage Holdings
Corp., a provider of cloud communications services, has been involved from the
earliest stages in each of that company’s
six acquisitions over the past three years.
Take the time to understand the
people. For each of the Vonage acquisitions, Quackenbush met early on with the
target company’s owners to learn about
their organization’s culture, values and talent base. Why do the owners think they’ve
been successful? Why are the employees
proud to work there? Focus on how to
retain those employees when you create an
integration and assimilation strategy.
Look for cultural similarities
and differences. What do the two
workforces have in common? Where do
you need to work to bring them together?
If the differences are too great, the acqui-
sition won’t succeed. “The last thing you
want to do is pay really great money [for a
company] and then have that talent resign
and leave the organization,” she says.
Be open to learning. While the buy-
er’s culture typically prevails in acquisi-
tions, you can learn something from any
organization. “Our latest acquisition
has a tremendous employee recognition
program that we’re going to adopt and
roll out across the organization later this
year,” Quackenbush says. “You have to
look at the best of the cultures.”
Ensure consistent communica-
tion. Help minimize employees’ uncer-
tainty and stress as their company is
being acquired by providing frequent and
consistent communication, she says. Be
visible and listen to people’s concerns.
Explain why changes are being made.
Merge HR teams. By integrating the
other company’s HR team, you can use
their knowledge of their employees and
anticipate problems before they arise.
Train the people managers. Supervisors are responsible for setting workers’ expectations and ensuring that newly
combined teams are clear about their
roles. They also can motivate their staff
members by giving them opportunities to
help with the transition and show off their
skills at the same time.
After acquiring six companies, the
Vonage HR team conducted focus
groups with new and old employees to
create a new employer brand. The goal is
to build a new culture that is the best of
Dori Meinert is senior writer/editor for HR
United We Stand
How to retain talent during mergers and acquisitions.
By Dori Meinert