Retaining Talent During Mergers
M&A is not just about financials; it’s about integrating people. M&A transactions can be disruptive, with employees facing uncertainty about job security, role changes, and new cultures.
Towers Watson research indicates up to 40% of key employees may leave within two years post-merger. Deloitte data shows 47% of executives leave in the first year, and 75% by the third year, while Sirius reports 34% of acquired workers leave within a year compared to 12% of regular hires.
Challenges include uncertainty causing anxiety, redundancies leading to stress, and leadership changes alienating talent. For example, Financier Worldwide notes that a lack of clarity can motivate employees to seek alternative employment. The tight labor market, evident in finance and TMT sectors, exacerbates this, with WTW’s 2024 study finding 59% of respondents confident over 80% of senior leaders will stay with retention agreements.
Retaining talent requires clear communication and incentives like bonuses or stock options, with WTW noting 55% of agreements are time-based for senior leadership. Cultural integration fosters belonging, employee involvement enhances engagement, and leadership support ensures visibility. McKinsey suggests a fair, transparent selection process for mergers of equals to avoid biases, optimizing retention.
Retaining talent during M&A requires a proactive, empathetic approach. By prioritizing communication, incentives, and cultural integration, companies can mitigate turnover risks and ensure a smoother transition.
