An HR Leader’s Guide to Employee Retention After an Acqui-Hire

Sometimes, when you need to hire hard-to-find talent, the fastest and most cost-effective route is to acquire a company where that talent currently works. Known as acquisition hiring (or “acqui-hiring” for short), this practice also allows companies to add new products and services to their repertoire if they choose—but the driving factor behind the transaction is always human capital.

Acqui-hiring is especially common in the tech industry where a large number of firms are competing for a relatively small talent pool. When Google wanted to hire entrepreneur Kevin Rose, for example, the tech giant simply bought his company Milk, scooping up Rose and his product and design team in the process.

But while acqui-hiring can be a valuable strategy, it can also backfire. If the process isn’t handled with care, the very people you wanted to bring in might get cold feet and leave. In fact, a 2018 report from EY found that 47% of key employees leave a company within the first year following a transaction—rising to 75% by the third year. 

Since acqui-hiring is all about people, HR plays a critical role in ensuring a smooth and successful transition. Here are five steps that HR leaders can take to give new and existing employees confidence, build loyalty, and improve retention. 

1. Work with the acquired company’s HR team to understand the culture

EY’s report found that 85% of failed acquisitions are attributable to mismanagement of cultural issues. When HR leaders don’t understand the culture employees are coming from and fail to recognize potential culture clashes, they often underestimate the level of resistance that they’re going to face. 

Work with the acquired company’s HR team to learn about their culture and how it compares to your own. Are there any similarities (such as a shared core value) that could provide a gateway for people to get comfortable within your culture? Are there aspects of their culture that would be worthwhile integrating into your own?

2. Conduct interviews to get to know employees better, and vice versa

Typically, acqui-hires happen because a company wants to adopt a specific group of employees, such as the engineering team. But where possible, consider interviewing every employee at the acquired company during the acquisition process.

This approach offers two core benefits. Firstly, it allows you to better understand what makes those must-have employees tick, including their career goals. That way, you can paint a more compelling picture of their career trajectory at your company and what you can offer them in terms of professional growth.

Secondly, having conversations with the rest of the acquired company’s workforce can help you make more informed decisions about who to keep and where they might thrive within your organization. For example, you might learn that someone whose role is now redundant would actually be an ideal fit for another team.

3. Approach any lay-offs with extreme empathy and compassion

Unfortunately, some employees from the acquired company may not have a place at your own. When this happens, it’s essential to act with empathy and compassion—because the way you treat these people will leave a lasting impression on those you want to retain. 

Ensure employees you’re letting go know that it was a difficult decision, and be transparent about the reasoning. You should also aim to tell them the news in person or over the phone, rather than via email, since this can feel impersonal and transactional. 

4. Re-examine your policies to ensure they still align with your workforce’s needs

Acquisitions provide an opportunity to do some spring cleaning. Since you’ll likely have to dust off your old policies anyway while bringing the new people on board, you might as well re-examine them to confirm they remain relevant.

Given what you know about the talent you’re acquiring and the culture they’re coming from, ask yourself whether your policies are setting them up for long-term success at your organization. If their firm offered flexible work options, for instance, and your company doesn’t, is that something that needs to be addressed? By making strategic policy updates, you may not only improve retention among your newly acquired talent, but among your existing employees, too. 

5. Communicate consistently and transparently throughout the process

Communication is at the heart of any successful acquisition. Employees on both sides will have a lot of questions—like how their pay and benefits will be affected and whether the leadership team is changing—and failing to answer them in a clear and timely fashion may result in confusion and doubt.

Having a digital knowledgebase provides a one-stop-shop for employees to find answers to their questions, whether they’re working remotely or on-site. Make sure all employees—but especially those coming into the company—know how to access the knowledgebase, and how to reach out if they can’t find the information they need.

Are you preparing for a merger or acquisition—or in the middle of one? Learn more about how to ensure a smooth integration by reading our eBook, HR’s Role in Mergers and Acquisitions.