Acquisitions don’t actually fail because of bad financial models or incompatible systems. The reason is much simpler and far more predictable. Talented employees just leave. Data shows that 33% of acquired workers quit within their first year at the new company – nearly triple the departure rate of regular hires who have similar skills and experience.
The numbers are even more alarming in the short term. A recent study found that 25% of top performers quit within just 90 days of a big change event.
Here’s where most buyers miss the mark. They only give retention packages to less than 2% of the staff, even though the disruption of an acquisition touches literally everyone in the organization. 80% of employees are also experiencing serious workplace anxiety because nobody’s telling them what’s actually happening during the transition. Everyone wants to know if they should be updating their LinkedIn profiles or not!
Let’s talk about how we can hold onto your talented team through this big transition!
Speed Beats Perfection in the First 90 Days
The first ninety days after an acquisition make or break employee retention, and the numbers back this up in a big way. Organizations that move fast and take action during this period hold onto about 25% more of their workforce than those that just wait around and hope for the best. Most employees are already on edge at this point. A lot of them are quietly refreshing their resumes and reaching out to their networks, and it makes perfect sense why they’d do that. Acquisitions have a reputation for bringing layoffs and a big reorganization, so employees want to protect themselves.
That’s why speed matters this much. A retention team needs to be assembled on day one, with HR and senior managers working together to find the employees who are too important to lose. Once that list exists, managers need to have honest conversations with those people right away. The best strategy is to sit down with top performers and ask direct questions about what would convince them to stay and what specifically concerns them about the acquisition. The most important part is to actually follow through on the feedback they share. Employees pay attention when leadership asks for input and then does nothing with it.
The choice to stay or leave is happening in employees’ minds right now, not three months from now when the official integration plan gets announced. Every leadership move is being watched and analyzed by the workforce. A CEO who doesn’t make an appearance within the first two weeks sends a message, even if it’s unintentional.
Waiting for the perfect retention strategy is a mistake that I see businesses make all the time. A decent plan that gets implemented now will always outperform a perfect plan that launches three months later. By that point, lots of the top performers will already have accepted jobs elsewhere.
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Speed beats perfection every time when employees don’t know what the future holds.
Weekly Updates That Keep Teams Together
Employees who just found out about an acquisition aren’t going to care about your company’s strategy or market position at that time. The very first thing they want to know is what’s going to happen with their job. This natural reaction is why the “What’s In It For Me” principle should guide every announcement and update you put out there.
Every bit of acquisition news gets filtered through each person’s own situation. They’re concerned about their next paycheck, and they want to know if they’ll report to somebody new. They wonder if their projects will survive the transition and whether they’ll have to learn new systems and processes. These questions are normal and expected. You need to talk about them directly.
A communication cascade that flows from leadership all the way down through each management layer is effective here. Executives can share the big picture with their directors first. Then those directors translate everything for the managers who are under them. Finally, the managers sit down with their teams and have honest conversations about what the changes actually mean for everyone’s day-to-day work.
Here’s something that makes a massive difference – the businesses that communicate at least once a week during the first six months after an acquisition hold onto around 35% more of their best employees. That number is big, and it makes sense. Frequent communication is the only way to stop the rumor mill from taking over your workplace.
An information vacuum creates dangerous conditions because employees will fill that vacuum with their own stories. Those stories are usually far worse than reality. Worried employees who are left in the dark will start looking for other jobs just as a safety net.
The practical and emotional sides of this change need your attention. Employees want straight answers on reporting structures and job security. At the same time, they also care very much about their career growth opportunities and changes in company values. Dedicated channels for acquisition updates give employees a reliable place to find accurate information whenever they need it.
When Two Company Cultures Meet
When two businesses merge, employees who have different work styles have to suddenly collaborate as one unified team. Culture audits can help quite a bit here because they show us what matters to each organization. With an audit, management can see what each company values and how employees like to get their work done on a day-to-day basis.
Salesforce handled its acquisition of Slack in a pretty effective way that most businesses could learn from. Instead of marching in and forcing everyone to take on their existing corporate culture and processes, Salesforce took the time to understand what made Slack’s culture special in the first place. A lot of executives see it as soft or maybe even indecisive. But it stops your most talented employees from updating their LinkedIn profiles and jumping ship to competitors.
One of the best strategies I’ve seen is creating integration teams that include employees from both organizations. These teams can work through cultural differences together, and it works way better than having corporate headquarters just dictate all the new policies and procedures. Employees need to feel like they’re part of creating something fresh together. Nobody wants to wake up one morning and feel like their company has been conquered by an invading force.
Cultural aspects that look minor to executives matter enormously to employees on the ground. How fast decisions get made can be different at every business. And employees pick up on it immediately when this changes. Some organizations run meetings as formal presentations with strict agendas, and others like casual roundtable discussions where everyone chimes in freely. Can employees pack up and head home at 5 PM, or does that earn them judgmental looks from management? All these day-to-day experiences add up, and they can make the difference between employees who want to stay with the merged company or quietly start looking for new opportunities.
Money alone won’t solve cultural integration problems. Even if salaries stay the same or they actually increase after the merger, cultural friction can create an uncomfortable work environment that pushes talented employees toward the door regardless of compensation. When employees feel like strangers in what used to be their own workplace, a decent paycheck won’t be enough to make them stay around. Eventually, they’ll find a company where the culture feels more comfortable and familiar to them.
Keep Your Best People with More Than Money
Money does play a part in retention, but it’s not the whole picture. Stay bonuses are pretty standard now, and you’ll see that most businesses put them somewhere around 25% to 50% of someone’s annual salary.
Your top performers are the ones who care most about their career trajectory and future opportunities. These employees need to see a path that actually gets them excited about what’s ahead. One strategy is to hand them bigger responsibilities right from the start or maybe put them in charge of new projects that were previously out of reach. Some businesses will fast-track the promotions for acquired talent as a way to show their value from day one. Other organizations create these hybrid roles that let employees use their expertise from the old company and the new one.
Google does something very clever when it acquires smaller businesses that most corporations never even think about. Acquired employees actually get to spend part of their workday on their own innovation projects and side ventures. That entrepreneurial energy stays alive even after these founders and developers become part of a massive corporation. Google is essentially promising them that whatever made their original startup successful isn’t going to disappear just because the acquisition papers got signed.
The challenge is to figure out what matters most to each person on your team. Some of your employees may be primarily concerned about job security in the near term. At the same time, others are more focused on their career trajectory over the next 5 years. You have to address each one of these concerns simultaneously if retention is your goal. The timing of retention packages matters a lot, and you shouldn’t blow through everything in the first week. You’ll have better results if you stagger these incentives throughout the first year of the acquisition. You might announce the expanded role opportunities around the 3-month mark and then announce the promotion possibilities at 6 months, creating multiple milestones that give employees reasons to stay past the first transition period.
Many employees who chose to work at a smaller company did so for very particular reasons. They valued the flexibility and autonomy, and they loved the ability to have a meaningful impact on the business. Your job is to find out how to preserve those qualities as much as possible as you integrate these employees into your bigger organizational structure. You’ll also find that honoring what made their original workplace special goes a long way toward keeping them engaged.
Clear Roles Keep Your Best Employees
Mergers are messy enough without employees who wonder all the time who their actual boss is. And if businesses want to hold onto their best talent during a merger, they need to sort out the organizational structure fast, very fast, actually. Businesses that lock down their org structure within 60 days manage to hold onto most of their employees and make sure that they stay happy and productive. The ones that take forever to make these decisions wind up losing about 20% more employees in that first year, and it’s usually the talented ones who leave first.
Nobody expects a perfect organizational chart from day one. Employees can be patient about these matters. What they do need is straight answers about a few big questions. Who do they report to now? What decisions can they make without asking permission? Which teams will they be collaborating with going forward? And most importantly, how much is their role actually going to change?
Leadership positions are where matters get especially tough. Each company has talented managers who’ve earned their stripes and want a shot at the top roles. Every employee is watching closely to see if the buying company is going to put all their own executives in charge or if they’ll also be fair about it and choose the best candidate for each position.
Transparency is what makes the difference between success and disaster here. Explain the exact criteria for picking leaders and then actually follow through on it. Speed matters too. Quick decisions beat perfect decisions every time here.
Duplicate roles are very toxic for company culture. When two employees have the same job title and responsibilities for months on end, it creates an awful competitive environment that spreads anxiety throughout the entire organization. Employees start worrying that they’ll be next on the chopping block. It’s much better to make the tough decisions early and communicate the exact timelines for any organizational changes that need more time to sort them out properly.
Level Up Your Incentives and Rewards
You need constant attention and regular maintenance, and you have to actually care about the little details. Those first 90 days really matter because they set up everything else that will come after. The work goes on for months and sometimes even years. The teams that come out stronger on the other side don’t survive the chaos and uncertainty – they find themselves in a better place than they were before the whole process started.
There’s an uncomfortable truth that most acquisition guides won’t tell you. Some of your employees are going to leave no matter what you do, and this can be a healthy development. A little bit of turnover brings in some fresh blood and new ideas that the combined company probably needs anyway. The employees who stay through all the mess and confusion usually become your strongest team members later. They know each side of the business inside and out, and they can help everyone else understand how the different pieces work together.
This effort actually does pay off if you look at the bigger picture. Every hour that you spend in one-on-one meetings with worried employees and every dollar that you put into retention bonuses and every awkward conversation about cultural differences will come back to benefit you 10 times over. You get to hold onto the institutional knowledge that took decades to build up. Your customer relationships stay strong because the same faces are still there to answer the phone. Mergers and acquisitions might look like financial transactions on paper. But they’re also about the human side at the end of the day. The whole deal only works if you manage to get two groups of humans together and make them want to work toward the same goals.
Level 6 knows exactly how to motivate teams through big changes and transitions. We build custom incentive programs that actually work for businesses like yours. Maybe you need to fire up your sales team, or maybe you want to lift the morale across the entire company – we have programs for either situation. Our branded debit cards, employee recognition systems and sales incentive structures are all built specifically for each client’s needs. Nothing that we do is one-size-fits-all because every business has its own challenges and opportunities. We’d love to show you how our programs drive tangible results for high-performing businesses.
Contact us for a free demo, and let’s talk about what we can do for your team!
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
