The main concern of companies involved in mergers and acquisitions is to retain their key talent, keeping them on the job and directly influencing the conduct of transactions.
According to a recent survey published by Mercer, during mergers and acquisitions, 70% of members of management are the subject of a retention program, compared to 53% of other employees. The former would have an influence on the success of transactions over the long term; the latter in the short term. The study reveals that the two means most used by companies to keep their employees on the job are loyalty bonuses and transaction bonuses.
Loyalty bonuses
Mainly used for management positions and senior profiles, loyalty bonuses are better suited for acquisitions than divestitures. In fact 57% of organizations have systematically used them during an acquisition, compared to 44% for a divestiture. This method of retention is especially used in North America.
Transaction bonuses
Transaction bonuses are generally related to CEOs (33%), members of management (42%) and those involved in the negotiation (33%). Other employees are only rarely covered by transaction bonuses, which consist of an increase in the base salary. This method is preferred in Europe and Asia Pacific.
According to the consulting and human resources firm, companies need to first consider the real risks of employee departure based on the type of financial transaction, before deciding to put a talent retention program in place and choosing the method to be employed.