Content area
Full Text
The most critical aspect leading to success or failure of mergers and acquisitions (M&As) is people-related - this is both conventional wisdom created by countless studies and common sense. Unfortunately, this has not been converted into actions and behaviors when it comes to actually doing M&As and how to handle aspects of "people issues" remains one of the most difficult tasks to accomplish successfully.
There are a number of reasons why the challenge of motivation and retention of key people is so difficult to master. First of all, damage to trust and motivation is often already done before the deal is closed. During the start of a sales process or negotiations rumours start spreading and are counterproductive with regard to motivation and retention. Secondly, time is a very important factor that is scarce in making deals and dealing with integration. Speed has often been identified as a key factor in M&As, but it is hard to cope with. Additionally, identifying key people and other employees that should be kept is hard, if it has to be done quickly and efficiently. Next, it is important to get the design of the packages and programs right that should be offered to really motivate and retain employees. Finally, communication with employees to be kept and those not to be kept has many pitfalls that have to be avoided.
An overview of these five challenges in M&As will show in detail how to tackle them. The challenges and how to deal with them are based on a variety of projects, especially in the financial services industry.
Damage to motivation and retention is already done
Often harm is already done at the target company before the deal is closed. Once rumours start during the sales or acquisition process, employees will either lose trust in management or some of their motivation to perform, or both. They will start worrying about their own future and might think of careers at other companies. Solutions are few, but the following approaches may prove helpful:
- Companies have to be aware of this fact. Awareness will help manage the process and handle it at a later stage.
- Companies have to take this into account during the HR due diligence and to explore key questions,...