Recruiting and retaining workers during M&A: Keep them engaged and invested

Companies aiming to retain the best existing and acquired talent must invest time and resources into communications and development plans.

“The existence of a strong people-centric culture promotes stability and trust within the existing employees,” says  Jagdish Chugani. (Photo: Adobe Stock)

Your employees may be looking for any excuse these days to take the plunge on a new career move. They want to know their employer is invested not only in their current needs (such as flexibility and a competitive salary), but their future success, as well. The latter is particularly important to emphasize during an acquisition or merger.

While an acquisition might look good on paper, the actual execution will only succeed if you’ve taken the time to develop a people strategy to ensure that all employees–both at your current company and those that will soon join your team–feel valued and included in your business’s future. After all, people are a company’s greatest asset.

Related: An empathy-first approach: People leaders should ‘taste the soup’

Jagdish Chugani, Chief People Officer, Appfire,

Jagdish Chugani chief people officer with Appfire, recently shared some thoughts on what companies should consider during an acquisition to ensure a smooth transition for all employees.

Why is a people development strategy as important as a tech development/integration strategy in the acquisition process? Does this change if it’s a acquihire or not?

A good people development strategy is critical for organizations, and particularly for technology organizations where product development and value creation depend heavily on the people that are part of such development. A software platform or product can only be made successfully through the contributions of talented individuals. People are the greatest asset of an organization and enable that organization to have a major competitive advantage. We know that people drive tech development, so investing in people development accelerates the value creation from an acquisition.

An acquisition can have an increase or lack of motivation or the retention or loss of top talent. Investing in the right people development strategy translates the intent and communication relating to an acquisition into action. For instance, employees may be concerned if their job is becoming redundant and if they may be facing a layoff. Or perhaps they might wonder if they will have a change in compensation, or whether they will receive the same benefits with the new company.

Employees going through this transition are keen to see whether the new company is invested in their individual long-term success and hence their professional development and advancement. Executing a well-thought-out people development plan helps employees feel engaged and invested in their jobs and the company’s mission.

How do you prioritize the needs of both new and existing talent during an acquisition? How does this change at different stages of the integration?

The needs — and anxiety levels — of both new and existing talent during an acquisition are different and can present significant challenges. Both audiences are complementary and are critical to the continued success of the organization. Companies aiming to retain the best existing and acquired talent and ensure a seamless transition must invest time and resources into communications and development plans that help prepare employees for possible culture shifts and ensure individual motivation throughout the transition.

The primary needs of existing talent are centered around the “why” of the acquisition: its role in advancing the organization’s long-term strategic direction, and its increased value to its customers, partners, themselves, and their shareholders. The existence of a strong people-centric culture promotes stability and trust within the existing employees, allowing the teams that manage the merger to focus on the new employees during the transition.

New employees deal with an increased FUD (Fear Uncertainty and Doubt) factor and are highly sensitive to WIIFM (What’s In It For Me) relative to the changes being made. Questions usually include:

HR professionals play a pivotal role in managing these people priorities. They reduce periods of uncertainty and leverage new managers to enable increased communication and transparency on changes, their reasoning, and how they add long-term benefits for new employees. With good feedback mechanisms such as surveys, they help cross integration markers, allowing for these priorities to be evened out between the new and existing employees.

When talking about change management, what is top-of-mind when onboarding new employees into the organization? What is your definition of “people-first thinking?”

To remain competitive, focus on your people and their growth. This attracts talent and helps develop future leaders within the company. If you treat each employee as a vital and essential stakeholder, then you will foster a team that is aligned on core values and is exceptionally engaged. In a world filled with amazing technology, let humanity be the key that sets you apart. Let it be a cornerstone in your strategies going forward.

What are some strategies that you find work well against reducing the “Us vs. Them” mentality that often comes with integrating new employees from the acquired company, especially as a remote-first workforce?

This is quite natural and not an easy road to close. The trick is to aggressively promote a “winning team mindset” by evolving to a “Us vs Competition” mindset. The last thing you want is for the acquired company to have any sort of “underdog” mindset, stemming from the notion that the acquired company and its functions are less valuable because they were able to be acquired. It is essential that everyone who is part of the acquisition feels empowered to contribute to the newly formed organization’s success. A slow but continuously forward-moving approach to integration is important so both the acquired company and the parent organization can learn from each other. Major changes do not have to happen on Day of Close.

This demands empathy and goodwill and therefore honesty in all communications, ensuring psychological safety for employees. One good approach is to foster an open climate by creating “brain trusts.” These are groups from both organizations with guidelines that enable and foster honest feedback while carefully steering it away from negativity to ensure it is received constructively. Members of these groups who offer their opinions do so with the best of intentions, lead with praise, communicate with empathy, and are mindful of always speaking up in the interest of progress — wearing the combined organizational hat rather than emphasizing “this was how it was done in the past.”

Do you have any final thoughts for HR/talent professionals working their way through an M&A deal and welcoming new employees into their company?

There are a few elements that can materially help HR/talent professionals make a big impact on the success of an M&A deal. It’s very important to understand the business context of the deal — how the deal fits into the business model, its vision, and its strategic impact on meeting the company’s goals. Success is better if the focus is on the people integration strategy more than the HR integration strategy. A people strategy may seem synonymous with an HR strategy, but there is a distinction. While an HR strategy is more of a plan for managing employee logistics, a people strategy is a plan about boosting trust and engagement with employees — value that has a bigger and more long-term impact.

HR strategies include processes for how to recruit, onboard, evaluate, compensate, etc. People strategies outline ways to create a stronger culture, improve how managers assess and nurture employees’ capabilities, as well as manage a transparent and long-term relationship between the employees and the organization. This puts skilled people in the right position to deliver what it takes to achieve the business goals.

It is important to outline how to attain, manage, and invest in the employees who will garner the desired outcomes. This means finding answers to the questions that strengthen the health of the talent that is being welcomed:

This does not mean not sweating the small stuff — it counts in a big way and is best addressed on day one or shortly thereafter. In addition to gaining an understanding of each other’s businesses and cultures, new employees need answers quickly to all the foundational stuff, which the team should be prepared to answer (or provide a timeline for a response):

The success of a deal is long determined in advance based on how well its integration is thought through.

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