Creating the ideal employee retention strategy remains elusive for companies in Southeast Asia that have recently completed either a merger or acquisition and exercised employee retention agreements, with the result that such deals tend to fall short of expectations, according to Towers Watson’s 2014 Global M&A Retention Study.
More than half of the organisations surveyed in Malaysia, Indonesia and Singapore indicated they retained over 80% of employees who signed a retention agreement over the course of the full retention period. Less than a third, however, said they retained that same percentage one year after the period expired. The primary factor for 75 % of employees who left before the end of the retention period was their concern with the changing organizational culture.
“Far more so than elsewhere in the world, more than half of companies in Southeast Asia cite the need to acquire talent and new capabilities as their key reason for undertaking M&A activity. Yet, given their poor retention rates post-deal, it’s reasonable to deduce that acquirers fail to get the most out of such transactions,” said Massimo Borghello, head of M&A services—Asia Pacific, Towers Watson. “Companies involved in M&As need to understand the organizational and/or cross-border cultural implications of the deal, build employee engagement and work individually with key employees as early in the deal process as possible. Retention agreements are useful in that they offer a way to buy time, but the time must be used productively and wisely.”
“Retaining the right people can make or break a deal. After all, human capital is very often a company’s most important asset. Retention starts with properly identifying the talent, roles and functions most critical to the success of the transaction,” said Borghello. “It’s clearly more efficient to take the steps necessary to keep key talent in place than it is to find, hire and integrate new employees during or just after an acquisition.”
Paul Arkwright
Publisher
