Mergers and Acquisitions: Beware of Talent Poaching

During a merger or acquisition, there are a thousand balls in the air for managers to juggle while trying to integrate new teams, work out the actual business deal, and so much more.

You can read all about mergers and acquisitions here.

However, one of the most important aspects of an M&A is how the move can impact staffing and talent retention. It’s reported that 30 percent of employees are rendered redundant during a M&A, leading to a major headache for HR and management teams.

On the flip side, key talent needs retained because mergers and acquisitions are a prime time for talented staffers to jump ship and find a new job in a more stable environment.

While some of these individuals will leave just because they do not want to deal with the massive amount of changes coming their way, there’s also another thing that HR leaders and management teams need to be aware of: the fact that mergers and acquisitions are basically chum in the water for talent poachers.

Yes, rival companies, new startups, and other organizations will smell the blood and attempt to lure some of your most talented individuals out of your newly formed entity and into their own firms.

So, when a M&A is on the horizon, you need to work hard to retain key workers and make sure that they know they are valued at your organization.

Let’s dig in a bit and explore how talent poaching works and how you, the HR leader or manager, can help ward them off.

“Employee poaching means the act of hiring the best talents of competitive firms. It can also be described as targeting the competitors’ pool of talent,” reports Ankita Agarwal from Project Guru.

“Poaching is done to get the trained, experienced and most talented employees of competitive firms. It is sometimes considered to be the easiest way of securing people who possess just the right kind of skills for the operations of the company.”

In other words, talent poaching is when recruiters from outside firms look at the talent working for their competitors and try to offer them a bigger role or paycheck to steal them away.

It’s used primarily because finding talent in other companies is a lot easier than looking for talent that is out of work. Who better to fulfill a highly technical and complex role than someone who is currently doing that role elsewhere? Why spend time and money interviewing candidates when you know the perfect one works for some other company?

By poaching talent, Agarwal goes on to say, companies are able to recruit better talent, forego much of the training process, and fulfill their talent needs quicker than going the traditional route with a job posting or through networking. In the end, this saves the poaching firm a ton of money on their talent acquisition strategy even if the move is generally frowned upon (but not enough to make companies not do it).

While it may seem like a shady, underhanded thing to do, it’s super common in today’s world, especially within the tech sector.

“Recently, reports surfaced that Apple has made efforts to poach battery engineers from Samsung to help develop an electric car project,” reports Mergetech.

That’s just one example. A quick search for stories like this will uncover that countless organizations are poaching talent from others. It’s the way of the world, it would seem, right now.

And talent poaching can really impact a business, because what is a smaller firm supposed to do if their top talent keeps jumping ship?

“Losing employees to competitors is a critical issue in corporate parlance today and is a major cause behind high attrition rates,” reports Project Guru.

“The companies are taking steps to retain their best employees by giving them a salary hike, better career opportunities, flexible work settings to help them maintain a family-job balance, conducive work environment, better leisure facilities etc.”

This means that smaller companies, which are at more risk of poaching, have to spend way more money and attention to keep their top talent around for longer periods of time. It’s hard to compete when Apple, Google, or other huge companies come knocking.

There’s another tactic at work in today’s modern age, too: acquisition. This, again, impacts mainly the tech sector (or at least in the news) but there are a ton of acquisitions and mergers happening in the business world all of the time.

Why?

Because, in some cases, it’s a lot easier for a large, growing company to simply buy out the competition and their staff, allowing them to both acquire great workers and knock the competition out the water.

Though this is common, we’re mainly focusing on poaching in this article. If you want to learn more about how acquisitions take place, check out our article all about them here.

Getting back on topic here, poaching can be avoided. However, you must realize that mergers and acquisitions make retaining staff members hard to begin with.

This is largely because cultures tend to clash when two companies – for whatever reason – become one entity. During this time, your employees – even the happy ones – may look for other jobs because they know there will be layoffs, they are concerned about fitting into the new team, and they want the stability of a company not going through such a change.

While you should try to retain as many staff members as you can, your top performers are who you really need to watch out for because, not only will they also start to look for new jobs if they are stressed out, other companies will learn about the event and start opening a dialogue with them.

So how do you handle this as an HR professional? Is there anything to be done about talent poaching during a merger and acquisition.

Absolutely.

The first step is to identify who will potentially leave your company. Mergers and acquisitions require a lot of pre-planning before they are put into action. You need to understand how your talent works, who will be redundant after the event, who you need to retain, etc.

If you’ve done all of your homework, this should be the easy part. You never want to go into a M&A event without knowing your staff forwards and backwards.

After that, it’s time to enact some initiatives that will foster a more intimate connection to with your staffers, especially those who are top performers.

According to Recruit Loop, there are quite a few ways to do this. The first is to open up communication.

Here’s a fun fact: most mergers and acquisitions fail to meet their agreed upon business goals. Why? Because company cultures clash, sending staffers packing. And the reason cultures clash is usually because HR fails to communicate properly and integrate teams in a manner that works for both cultures that are coming together as one.

The focus here is communication. Have an open talk with your staff members. Have one-on-one meetings. Have an open door policy. Make sure that you are being as transparent as possible because this will allow you to earn your employees’ trust.

After you make sure you have a strong communication policy in place, you can start to use other tools to make sure you protect yourself from talent poachers.

One way to do this is to offer staff members a retention agreement, which is basically an incentive to stay with the company over the course of the merger or acquisition.

“Where possible, offering an employee retention agreement is an effective way for employers to retain the newly acquired key talent and to benefit from the integration of their skills, competencies and experiences,” reports Esperanza Denise from Recruit Loop.

“To make your offer even more lucrative, you can include valuable incentives, such as cash bonuses or other forms of financial assistance.”

You can also enact some performance-based incentive programs that will motivate your top performers to stay with your organization. These incentives can be in the form of bonuses or other rewards. This type of incentive program largely depends on your corporate culture and what will work best for you.

When it comes down to it, mergers and acquisitions are trying times for all organizations that go through them.

Most mergers and acquisitions fail for various reason with poor cultural fit being at the top.

While these events are happening, on average, 30 percent of staff members are rendered redundant during a M&A event.

At the same time, your top talent may start looking for work elsewhere, compounding with the fact that other companies will swoop in to offer these top performers positions with them.

These talent poachers are a big concern during a merger or acquisition because you cannot afford to lose your best workers during these stressful times.

To retain them, make sure you communicate properly, have an open-door policy, and put in place either a retention agreement or unique incentive programs so that your top talent will understand that you value them and want them to work for you.

In the end, if you play it right, you will be able to come out of a merger or acquisition stronger than before, which is, after all, the goal.

Josh Hrala

Josh is an HR journalist and ghostwriter who's been covering outplacement and offboarding for over six years. Before pivoting to the HR world, he was a science journalist whose work can be found in Popular Science, ScienceAlert, The Huffington Post, Cracked, Modern Notion, and more.