How HR can avoid turnover following an M&A deal

Are you ready for it? (Be honest: You read that in Taylor Swift’s voice, didn’t you?)

While still down overall, corporate M&A deals are expected to rise 12% year over year in 2024, following a 9% dip in 2023, according to the EY-Parthenon Deal Barometer. HR pros at companies contributing to that increase may want to keep an eye on their talent: 47% of workers leave their organization within one year of a merger, Ernst & Young found.

HR can help reduce the risk of turnover following an M&A deal by proactively communicating with employees from the start of the deal-making process, Chris Hagedorn, senior partner in McKinsey’s transformation practice, told HR Brew.

“The CHRO role has always been a pivotal role in M&A activity because the people equation, when you bring two organizations together, is always the most challenging, the most difficult, and the one you actually have to be out in front of the most,” Hagedorn said. “CHROs who are successful in this environment are the ones who play an incredibly active role in the M&A cycle very early on.”

CHROs should advocate for themselves to be involved in the deal-making process from the beginning, suggested Hagedorn. That way, he added, they can get ahead of how it may impact employees.

From the moment a deal is announced, HR should be out front, explaining to employees the reasoning and impact it will have on them, their business, and their jobs, Hagedorn said. The goal is to ensure employees understand the value of the M&A activity the company is undertaking, not just from a financial perspective, but from a personal one, too. Employees need to know why it’s a win for them. To that end, HR should also involve the company’s leaders and have them share why they’re excited about the deal, he added.

It will also behoove organizations to offer employees a detailed explanation of how the transaction can help them find a greater sense of purpose within the company. Employees who feel more connected to a workplace goal are less likely to leave.

“What I advise the CHROs and CEOs who I work with in M&A transactions is to not take for granted any employees in your organization or in the target organization, and figure out how to reach employees through a cascaded set of messaging,” Hagedorn said. “I’m not talking about blanket emails, but more importantly, the one-on-one and small group engagement strategy that’s going to actually make people feel like they are a part of something bigger.”