M&A Employee Retention: When Merging Businesses, How to Keep Your Best People from Leaving

Nothing kills employee engagement quite like a merger.

When a company is acquired, even if there is no significant impact on people’s jobs, the number of actively disengaged employees increases by 23%, according to a recent study by HR consulting firm Aon Hewitt. It takes three years to reach the pre-merger level of highly engaged employees.

Some years ago, I was one of those disengaged employees. As the front-end developer for the online banking project at a major U.S. financial institution, I spent months coding and liaising with bankers, designers, and mainframe experts. But just weeks before launch, our project was abruptly cancelled: we had been acquired.

Cancelled projects are par for the course in the world of mergers and acquisitions, and eliminating redundancies is often a key component of the deal rationale.

But we weren’t laid off: our team was preserved because of our “strategic skill sets.” Without a project to work on, though, and no clear directives or vision to embrace, our team floundered. Our days devolved into trips to Starbucks, random Internet surfing, long lunches, and early departures to get a good spot on the tennis courts. I quit the day I got my “retention bonus.”

With more than 40,000 merger and acquisition deals announced worldwide in 2014 and even more expected this year, all this upheaval begs the question: What can companies do to preserve employee engagement after a merger?

1. Communicate to Reduce Fear

The moment employees learn about a merger, fear, uncertainty, and doubt usually take hold. Your first merger communications priority is to answer the “me” questions. What does this mean for me? Do I still have a job? Who do I report to? If you don’t have answers to those questions, tell employees when you will. Until the “me” issues are addressed, employees will have difficulty focusing on work.

2. Communicate to Win Hearts

Once you’ve addressed the uncertainty, your next communications priority is to start “selling” the deal internally. You need to share the rationale for the deal and a vision that employees can buy into.

Merger communications expert Shel Holtz says, “Good communication is not just a one-way push of information down. Communication depends on people absorbing the information and ending up on the same page.”

A two-way dialog is useful here. You’ll know your “selling” is done when employees have confidence in and allegiance to the newly merged organization.

3. Communicate on Multiple Channels

Face-to-face communication is the best, but there are practical limitations on the number of meetings that can be held. Jessica Tyler, a senior manager with American Airlines that worked on the merger with US Airways, comments on the range of communication channels they used for their merger:

“We do email, webinars, and phone calls, and we have digital and print versions of our employee magazine. We use posters and TV monitors in break rooms. We also do customer letters and media. But the intranet is the hub for most of the communication.”

Intranets or secured merger websites are invaluable for merger communications, as they allow employees to consume information on their terms. They support interactive communications, such as Q&A forums, and they support fresh, consistent content dissemination on a 24/7 basis.

4. Communicate Relentlessly

According to merger integration consultancy Pritchett, “Silence is deadly. It only leads to rumors and speculation, giving a voice to the typical 30% of the people in the target company who oppose the merger.”

So communicate without let-up. When there is no new news, share the dates when information will be available or when decisions will be made. Share the same information repeatedly—your message has to be heard multiple times before it’s truly digested. In a merger situation, there is no such thing as too much communication.

Ultimately, the goal of merger communications is to win the hearts of employees. Long after close, you need to continue to sell the deal internally. As employees buy into the deal rationale and the common vision and values, they become engaged. And engaged employees don’t quit.

—Chris McGrath is cofounder of ThoughtFarmer and has been involved with over 200 enterprise website and intranet projects. He experienced M&A culture clash firsthand during the merger mania in the U.S. financial industry of the late 1990s, and has since been fascinated by the impact of intranet and social technologies on corporate culture.