Talent Talk: Retaining Great Talent in a Time of Mergers
Here is another exclusive employment column by Glen Esnard, the executive vice president and principal of 20-20 Foresight Executive Search. He contributes to Connect Media regularly.
They’re at it again. The commercial real estate services sector is on an M&A tear as the industry continues to consolidate. Consolidators, or buyers, are using cheap money, the opportunity to cut redundant costs and the promise of retaining critical revenue to grow faster than they ever could organically. I have clients with three different business cards in eighteen months who’ve never changed their office location!
Cutting redundant costs is simple mechanics. Retaining revenue and critical talent is an art, particularly durable retention which will survive over time.
The American Management Association reports typically 25% of top performing employees leave within 90 days of a major change event such as an acquisition.
There is a school of thought that cash and aggressive retention agreements are the best mechanisms to retain talent.
The AMA research suggests otherwise. Identified reasons for top performers leaving include poor communication between the combining firms, a sense of inferiority and a loss of status on the part of acquired employees and uncertainty regarding their future role in the organization.
Nothing about cash.
Research and experience suggest four key retention levers:
Communicate effectively, clearly and frequently. Every individual in a merger is afraid. Ineffective or inadequate communication stokes that fear. In the absence of clarity, the worst is always assumed.
Be open to creative approaches that earn trust. Do not treat retention as a formula. Treat every retention target as a new recruit. Understand them, their life, their needs. Build trust and create solutions that don’t violate corporate values but address those needs.
Bridge cultural fit. If you have a strong corporate culture, effectively articulate that culture and its value. Develop bridges to draw new talent on the fringe into the culture.
Make the hard decisions. If you reach too hard for the newly acquired talent, it can create a sense of disrespect in your existing staff and build uncertainty in your own people.
A 2009 McKinsey survey identified six factors that drive retention- only one was financial. As leaders, keep in mind the analysts and bankers that create M&A deals are financially brilliant, thus are likely to see financial incentives as THE retention tool. Your job is to add the communication, understanding, flexibility, cultural awareness and difficult decisions that result in a more powerful and durable organization.