Breaking Through the Black Box: Reframing Talent Retention in Mergers and Acquisitions
Your organization is heavily engaged in the pre-merger or pre-divestiture stage of a transaction. As a leader in the organization you and your colleagues have a critical interest in identifying and retaining key talent in critical roles. You’ve tasked yourselves with finding an appropriate method for selecting valued staff members, providing an incentive program which will keep them in place at least through the early stages of transition, and with luck for a much longer period of time. Your hope is that your efforts will make the employees feel confident that they are needed and wanted, and that they will produce well for you during this period of major shift and instability.
If you’ve lived through this process, you will know that this often happens as a black box exercise. A few knowledgeable subject matter experts, along with a select group of leaders gather in a remote conference room to decide upon a short-list of keepers, as well as the coveted retention packages to be offered to these high-value assets.
I know. I’ve done it many times. All with the best and most positive intentions. The goal is to field the best team at crunch time, and to be true to our word, “we believe in our employees and value our talent, they are our greatest asset.”
I am however, a convert. Conventional approaches to talent retention during major organizational transitions often leave much to be desired, and lack a whole-systems understanding of which roles are most critical to the unique function of a team, department, business unit or company. These talent assessment and retention strategies rarely consider the less obvious aspects of individual employee values, personality and motivation which inspire great collaboration and culture building, and are ultimately the keys to successful transformation.
Traditional talent identification and retention processes neglect to involve the very people whose lives are impacted by the restructuring efforts. The people, your ‘most valued assets’, get lost in the shuffle. They feel insignificant and dehumanized – has anyone even asked them if they’d like to stay with you and if so, for how long and in what capacity?
The following true story offers an alternative approach, with a much improved outcome: We worked with an organization acquiring a facility of 300 employees, being divested from a large parent company. During the period between deal signing and close, we spent one week on-site to meet with all of the managers and supervisors, conducting focus groups of 3-10 employees at a time.
Participants in each focus group were asked to describe the strongest aspects of their work as an organization; where they had achieved their greatest successes; what elements of their environment contributed most significantly to their long history of accomplishment; and who their most valuable team members were. Not one interview participant identified themselves, individually, as critical to the success of the organization. They did, however, identify a team of mechanics and maintenance technicians as the most important employees to ensuring business continuity and operations – incidentally, such employees are very infrequently selected for retention bonuses.
We heard compelling stories of collaboration, survival and flourishing against all odds. A 30 year history of coming together to prove their worth as troubleshooters and creative problem solvers for an entire global operating network; a story of unity and esprit de corps.
In the end our recommendation to the acquiring organization was to adopt a unique retention mechanism. In alignment with a strong business strategy and a very aggressive set of operational objectives, a site-wide performance bonus program was instituted. This bonus structure supported the collaborative and cohesive culture of this team, and provided clear line-of-sight to the short-, medium- and long-range outcomes expected from the newly acquired site employees.
At three months post closing, the site had reduced its historic backorder levels from 40% to 0%, had retained all but one employee (this one employee was a planned retirement), and had increased its production yield to 120% of target. At seven (7) months post-closing the site was holding steady at 99% employee retention, had maintained its new zero (0) backorder levels and was ending the year 7% positive to their year-end financial targets. At one (1) year post close, the site was $2 million positive over their first 12 month financial goals and was outperforming their production capacity estimates by an average of 12% per month.
An equally impressive outcome was the level of confidence this newly acquired team expressed in the ability of their new leaders to guide them to a positive future. These employees frequently expressed their appreciation for having their voices heard in the early stages of the acquisition process, and were grateful to the acquirer for the respect and dignity demonstrated in the integration and retention process.
If you’re interested in creating a unique retention strategy and activating your own success, give us a call. We’d like to learn more about you and your needs. www.ColloquiaPartners.com