FREE online courses on Mergers & Acquisitions - Chapter 6 - Retaining Key Personnel

 

Mergers often result in the loss of key (essential) personnel. Since synergies are highly dependent upon quality personnel, it will be important to take steps for retaining the high performers of the Target Company.

 

The first step is to identify key personnel. Ask yourself, if these people were to leave, what impact would it have on the company? For example, suppose a Marketing Manager decided to resign, resulting in the loss of critical customers. Other people may be critical to strategic thinking and innovation.

 

Once you have a list of key personnel, the next step is to determine what motivates essential personnel. Some people are motivated by their work while others are interested in climbing the corporate ladder. Retention programs are designed around these motivating factors.

 

The third step is to implement your retention programs. Personally communicate with key personnel; let them know what their position will be in the new company. If compensation is a motivating factor, offer key personnel a "stay" bonus. If people are motivated by career advancement, invite them to important management meetings and have them participate in decision making. Don't forget to reinforce retention by recognizing the contributions made by key personnel. It is also a good idea to recruit key personnel just as if you would recruit any other key management position. This solidifies the retention process.

 

Finally, you will need to evaluate and modify retention programs. For example, if key people continue to resign, then conduct an exit interview and find out why they are leaving. Use this information to change your retention programs; otherwise, more people will be defecting.