Challenges of retaining employees after a merger

14 Nov

Mergers sometimes mean companies will lose employees.

Keeping employees engaged during a period when two companies are merging can be difficult, Human Resources Executive reported. The problem lies with the changes in culture that happens when companies come together. A recent study by Towers Watson shows that of 248 respondents, 68 percent of companies were able to keep their most of their employees by using a retention agreement. Such an agreement means that companies will provide incentives or else penalize those who choose to leave the business before a certain period of time.

These agreements work, but using a carrot or a stick to enable certain behaviors is not the same as providing an internal motivation, such as improvements in expediency at the job or other perks that come when two companies join forces. Having said that, Towers Watson does recommend having key employees, which it defines as those who make a major difference in how a business runs, sign a retention agreement.

"An [acquiring company] does not want revenues, client relationships, proprietary technology and know-how, or unique processes to walk out the door," said Jay Meschke, president of CBIZ Human Capital Services.

Keeping employees without using a retention agreement
Aaron Sanandres, principal in PwC's human resources services practice in New York, told HRE Online that the key to a retention agreement is that it is essentially promising that although times will be difficult in the short term, they will improve in the long term. As such companies wishing to keep top talent from leaving a year after a merger should consider offering other incentives for retention.

Some ways of having people stay involve providing an environment that people enjoy working in. For an extreme example, The Fiscal Times recently said that Twitter bought log cabins that employees can use as a cafeteria at lunch – or they can work there during their hours when they don't need to be in meetings.

Another company has a machine that dispenses beer whenever someone fills out his or her timesheet completely, indicating that all the day's work is done.

These are somewhat gimmicky tricks, since a company in an urban area can just let its workers eat wherever they prefer, and companies can always keep beer stocked in the fridge for workers who are off duty and want to have a drink before they go home for the day. At its core, though, the two ideas focus on a culture of caring for the worker through employee self service, and when people sense that they are being placed foremost in the company, they will stay longer.

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