Talent loss during a M&A
There can be few business events that have the potential to create chaos, lose key people and adversely affect morale than a merger and acquisition. Last week I became aware of a number of businesses as well as a couple of charities that are merging in order to reduce costs and create a better platform for survival.
Process of an M&A
The process can be viewed as a pre acquisition and post acquisition. Pre acquisition establishes a good business fit. Post acquistion comprises of making it work. The businesses seem to be on the right track whilst the charities, having argued for over twelve months, are likely to find the process depressingly difficult and expensive.
Key People will leave during the second phase
During the pre acquistion phase both organisations will have established where savings can be made and implementation starts post acquisition. Whilst some leavers will have been identified by the new company and be made redundant there will be a significant portion of the top talent that will decide to leave because they don’t like the new culture or management style.
My research shows that acquired companies lose almost 50% of their key people within twelve months. One insurance company that I know of lost 80% of the staff over a two year period. Those staff that leave first tend to be those described as “Key people”
Who’s in charge?
Many M&A’s start by trying to adopt the best practice from both companies in terms of culture and management style. This invariably results in a three humped camel with people being confused as to the “norms” expected of them. It’s better to adopt one set of rules and thus establish clear anticipated results.
To maintain productivity keep people informed
One of the charities I’m observing is telling its people that there will be no change to their work, benefits and prospects. In reality it’s aware that the senior partner in the merger is planning to reduce staffing levels and set different results criteria and because the staff don’t believe what they are being told productivity has all but ground to a halt.
It’s estimated that at least 360,000 hours of productivity can be lost during an acquisition of a company with just 1000 people*. They stop becasue they are establishing the new political agenda and determining influence groups and listening to the rumour factory working overtime.
During 2011 there is likely to be an increase in M&A’s and it’s worth considering that effort and planning has to be made to retain the key people that are needed to make the post M&A a success.
* The complete guide to M&A’s by Timothy Galpin and Mark Hendon
