The purpose of this report is to guide decision makers at this company, by offering the most recent theories and practices regarding talent retention programs. Recently mergers and acquisitions have become a major part of global business. During the M&A, it is important to manage the organizational and human resource issues. Our team focused on gathering real business cases. Then we highlight some suggestions from the best practices to create successful M&A. It is our intent that the research findings in this report will help to enlighten and inform the company’s leaders to guide the effective human management program centered on key talent, ultimately leading to organizational success

Lee, Eunjung

Park, Hye Joon

English

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Spring 2013 
What are Best Practices for Retaining Employees During Mergers 
and Acquisitions? 
Eunjung Lee 
Cornell University 
Hye Joon Park 
Cornell University 
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What are Best Practices for Retaining Employees During Mergers and 
Acquisitions? 
Abstract 
The purpose of this report is to guide decision makers at this company, by offering the most recent 
theories and practices regarding talent retention programs. Recently mergers and acquisitions have 
become a major part of global business. During the M&A, it is important to manage the organizational 
and human resource issues. Our team focused on gathering real business cases. Then we highlight some 
suggestions from the best practices to create successful M&A. It is our intent that the research findings in 
this report will help to enlighten and inform the company’s leaders to guide the effective human 
management program centered on key talent, ultimately leading to organizational success. 
Keywords 
human resources, employee retention, mergers and acquisitions, mergers, acquisitions, retaining 
employees during mergers and acquisitions 
Comments 
Suggested Citation 
Lee, E. & Park, H. J. (2013). What are best practices for retaining employees during mergers and 
acquisitions? Retrieved [insert date] from Cornell University, ILR School site: 
http://digitalcommons.ilr.cornell.edu/student/25/ 
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Executive Summary 
Eunjung Lee & Hye joon Park 
Cornell University ILRHR 6640 : March 8, 2013 
 
Question 
 
Talent Management: Best practices and benchmarks around retention of employees during 
mergers and acquisition (M&A) 
o HR management during M&A    
o The key talent retention programs  
o The types of incentives to offer  
o Key lessons from the best practices 
 
Introduction  
 
The purpose of this report is to guide decision makers at this company, by offering the most 
recent theories and practices regarding talent retention programs. Recently mergers and 
acquisitions have become a major part of global business. During the M&A, it is important to 
manage the organizational and human resource issues. Our team focused on gathering real 
business cases. Then we highlight some suggestions from the best practices to create successful 
M&A. It is our intent that the research findings in this report will help to enlighten and inform 
the company’s leaders to guide the effective human management program centered on key talent, 
ultimately leading to organizational success. 
 
HR management during M&A 
 
We identified employers that exhibit successful traits in this area, notably their retention 
agreements, which are rated as highly or mostly effective for retaining employees during an 
acquisition, and their ability to keep all or nearly all of their employees through the retention 
period in past acquisitions. Three practices stood out when examining these companies.  
• identify retention talents as early in the process as possible  
• recognize that money is necessary, but insufficient, to create the emotional connections to the 
new organization. In particular clarify their roles and report line. 
• remain flexible within the confines of a well defined and consistent retention strategy and 
process.   
 
Talent Assessment 
 
Most of all, the HR department of the buying company has to know exactly which skill and 
competencies are needed. In that case it can be possible to find proper people. In fact, 
identification of talents early is difficult because access to relevant information about employees 
is limited. To gather the information, it can be helpful to focus on informal fact -finding across 
multiple channels. For example, you had better talk to people below top management in critical 
functions or units to understand the breadth and depth of available talent. Recently because of the 
scandals on Wall, Street many HR experts comment talent management programs of the future 
will have to consider behaviorally-based individual assessments of adherence to ethical standards 
in actual ethical dilemmas encountered by leaders in these organizations. Ethics should be 
objectively measured first before any potential measurement is done.  
 
Talent Retention Programs 
 
 Through the book “Best practices in talent management,” we can see 14 companies’ practices 
and find the most prevalent retention programs including ‘above market salaries’, ‘ training and 
development opportunities’, ‘top commitment’, ‘flexible work schedules and ‘group 
incentives’(Appendix 3). Companies with these programs have lower talents’ turnover than those 
without a program. In particular, after M&A they are worry about their future career. In this case, 
giving the supportive work relationships or the meaningful work is more effective because it 
makes people feel they are important for new company.  
 
Types of incentives  
 
With the goal of retaining key talent, the reward programs offer a variety of ways to 
acknowledge employees. Progressive HR departments strategically use incentives and rewards as 
a part of the total compensation package.(e.g. incentive compensation, year-end bonus, retention 
bonus, sign-on bonus, profit sharing, spot bonus). Some organizations offer nonmonetary 
awards, such as additional time off for extraordinary accomplishments and 72% of organizations 
publicly recognize employees for good work. In addition, it is as important for HR to make an 
attractive package as it is to strategically promote consistent and wise use of incentive and 
reward programs. Otherwise, talent would not give the acquired new company trust and would 
think to move other options.  
 
 
Conclusion 
 
Through a number of researches, there are a myriad of programs for HR to strategically attract 
and retain valuable employees. However, a “one-size-fits-all” process does not pertain to talent 
management, and therefore, HR must design programs that are appropriate for its specific 
organization and industry. However, many successful companies give us a tip that at a certain 
point retention is driven more by the new organizational culture and environment than by a 
specific monetary agreement. And retention is a never-ending story. Therefore, HR has to review 
all policies and programs at least annually to ensure they are competitive in the marketplace and 
appropriately address talents’ concerns for job satisfaction. 
APPENDICES  
Appendix 1. 
 
Three most critical issues to be addressed in the first six months post transaction 
Issue 
percent of respondents (n=62) 
head of HR's view 
Head of HR's 
perspective 
 of CEO, Board's view 
Strategies to retain key employees 20% 25% 
maintaining employee morale 15% 15% 
a well-executed employee communication 
program 
15% 11% 
focus on cultural alignment  11% 7% 
realistic synergies and cost benefits / 11% 21% 
savings in relation to employee costs 
HR Planning and project management 
(for example duplication of job functions) 
6% 6% 
integrating pay and  performance management 
program 
6% 5% 
other 12% 9% 
 
 
Appendix 2.  
 
Perceived/Proven Importance of Employment Value Proposition Elements  
Ranked by Likert (n=51), Scale: 1 = No Importance, 5 = Critical Importance   
 
Scale Employee value proposition elements 
5 Ethics  
Executive quality 
 
4 
Compensation  
Health benefits  
Retirement benefits  
Vacation benefits  
Development opportunity  
Career advancement opportunity  
Organizational stability  
Organizational growth  
Market position  
Product brand awareness  
Social responsibility  
Innovation methodology/history  
Best employer recognition  
Work‐life balance programs  
Co‐worker quality  
Manager quality  
Flexible work schedules/locations  
Transparency in executive decision making and communication  
3 
Meritocracy  
Workforce diversity  
Environmental responsibility  
Organization size  
Best employee recognition  
Work‐life balance programs  
Work location  
Work environment  
Education/tuition benefits 
 
 
 
Appendix3. 
 
 The program design of 14 best practice corporations  
 
Avon Products 
• CEO Andrea Jung and the Talent Management Group (TM) built their talent practices on 
two guiding principles: execute on the “what” and differentiate on the “how.”  
• Moved from a regional to a matrix structure; cut management layers; made a significant 
investment in management talent. 
 
Bank of America 
• CEO Ken Lewis personally spearheaded BOA’s executive development strategy. 
• Created a New Executive Orientation Program with coaching and support. 
Corning 
• Created a boot camp immersion experience for potential program managers.  
• The Corning Management Committee chartered a task team to design a pipeline for 
program leaders. 
Ecolab 
• Human Resources formulated key areas and ways through which Ecolab would establish 
and maintain its competitive advantage—the five key business drivers. These included 
Talent Development, Leadership, Relationships, Innovation, and Delivering Results.  
• HR established the Ecolab Talent Council, composed of the ten most senior Ecolab 
executives including the CEO, and representing all key business lines, geographies, and 
critical functions. 
 
 
GE Money Americas 
• With the assistance of a human resources consultant, created a centralized staffing 
process and a dedicated team.  
• Applied the Lean approach to the staffing process to create efficiencies and cut costs. 
 
Insurance CES Division 
• Hired consultants to review CES’s structure and finances and another set of consultants 
to perform an assessment survey.  
• Got the ball rolling with a no-holds-barred leadership conference. 
 
Internal Revenue Service 
• Developed a competency model with twenty-one leadership competencies.  
• In collaboration with a consultant, developed the Leadership Succession Review (LSR). 
Kaiser Permanente Colorado 
• Restructured in collaboration with the Kaiser Permanente National Organization.  
• Designed a series of programs including the Peer Network, Leadership Edge, Experience 
Management, and Executive Coaching. 
 
McDonald’s 
• Top management asked Human Resources to redesign the performance development 
system in order to place a stronger focus on accountability for results, increase 
performance differentiation, and enhance openness to change and innovation. 
 
Microsoft SMSG 
• Formed a new program, ExPo Leaders Building Leaders (ExPo stands for 
Exceptional Potential), drawing on the Corporate Leadership Council’s 2005 study 
“ Realizing the Full Potential of Rising Talent. ” 
Murray & Roberts 
• A project team was assembled consisting of line managers, HR practitioners, and a 
consultant. The project team reported to the executive in the Office of the Group CE. 
Porter Novelli 
• Hired a chief talent officer to work with the executive management group.  
• Implemented a Leadership Pipeline program with results-based role definitions.  
• In a series of staff interviews, Porter Novelli grappled with the question of defining 
leadership and management. These concepts were regarded as critically important, but 
participants stated that neither was well-articulated or easily measured. A client-centered 
strategy was a key success factor, as was creative thinking. 
Southern Company 
• The CEO initiated an in-depth review of the company’s leadership development and 
succession processes. 
• Chartered a group of executives as the Leadership Action Council, serving as a steering 
committee for leadership development. 
 
Whirlpool 
• Chairman David Whitman and the executive committee spearheaded development of the 
Whirlpool Leadership Model. 
 
 
 
 
 
 
 
 
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What are Best Practices for Retaining Employees During Mergers and Acquisitions?

The purpose of this report is to guide decision makers at this company, by offering the most recent theories and practices regarding talent retention programs. Recently mergers and acquisitions have become a major part of global business. During the M&A, it is important to manage the organizational and human resource issues. Our team focused on gathering real business cases. Then we highlight some suggestions from the best practices to create successful M&A. It is our intent that the research findings in this report will help to enlighten and inform the company’s leaders to guide the effective human management program centered on key talent, ultimately leading to organizational success.What_are_best_practices_for_retaining_employees_during_mergers_and_acquisitions.pdf: 16346 downloads, before Oct. 1, 2020

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