Acquisitions afford a rare opportunity to capture unique talent that may not otherwise walk through your door.
The start-ups of today attract the potential leaders of tomorrow. What if you acquired a future Steve Jobs or Mark Zuckerberg? Would you have been able to keep them? Would they have stayed, and how would this impact your company?
Acquisitions give us, if only for a brief time, an unparalleled opportunity to capture remarkable and visionary talent. And, though these entrepreneurial spirits may not be destined to remain for any lengthy period in the big corporate world, their short-term impact can be extremely beneficial.
Money: an obvious retention strategy
Companies that can harness and leverage this talent will be successful. It is up to the HR mergers & acquisitions team to help craft a strategy to lock them in.
Let’s start with the most obvious retention strategy: Money.
Financial incentives, whether in stock or cash, do work. It’s hard to walk away from a substantial amount of money in exchange for working a short amount of time at a company. To determine the appropriate financial package, you will need to weigh an executive’s immediate liquidity event versus the financial benefit of staying. Think of it as a scale — you need to identify the amount that tips the scale in your favor.
You can use time-based cash or stock rewards, or incentives tied to performance (ideally related to the acquisition’s integration milestones). To take a step further, you can combine the positive financial aspect with the negative or punitive component.
I have to admit, to the disgust of many, a combination of the two is very effective. Asking an executive to “re-vest” stock that he has already vested is a psychologically powerful retention tool. No one likes to leave behind something they feel they’ve already earned. Re-vesting is hard to negotiate, and you’ll likely give up some cash on the back-end to get them to agree, but I guarantee, they won’t leave until that stock is vested.
However, we know many of the truly talented employees are not driven by money. Don’t get me wrong; money should be somewhere in the equation, but it won’t be the deciding factor. You will need to appeal to their personal desires. Find out what they are interested in.
Focusing on interests and passions
For instance, if they’ve just had a financial win from the acquisition, then address their other needs. Take them out for a beer prior to the deal and get to know them. Listen to what is important to them. In the past, I often got so caught up in calculating financial retention that I forgot to sit and listen to them.
Ask them about what they want to do — not in terms of the deal, but rather, the nature of their interests and passions. I’ve had leaders express an interest in an up-and-coming technology. This is an ideal time for your company to let a seasoned leader explore developing a new product or market for the company. Give them some breathing room and flexibility to dally in a new space and you will get their creative juices flowing.
I’ve also come across executives that are generally burned out from the long start up hours, and want nothing more than to be around their families in a role that provides work-life balance. And surprisingly, I’ve had other executives express a desire to take a larger leadership role in the company.
Challenge them to get out of their comfort zone — they often appreciate it! Providing them with growth opportunities and new responsibilities may peak their interest. Big companies do have a lot to offer everyone if you can get to the heart of the target employee’s desires.
Harnessing leadership from an acquisition
Finally, the thought of a long-term career may frighten an entrepreneurial executive. Take baby steps. Appeal to their interests in successfully transitioning the company. It’s easier to get an executive to commit to 1-2 years with clear transition goals.
However, you can also use this time to get them involved in the next generation of the product or excited about another area of the company. Too many times, we actually get them onboard for this short period of time and then we forget about them. It’s easy for them to fall off the radar or to be considered a “loss” from day one because most people believe key executives from startups have no interest in or don’t fit in big companies. This mindset loses people before they even start.
Companies have been transformed by harnessing leadership brought onboard from an acquisition. As an HR leader, you have the power to change the trajectory of a company by crafting ways to retain and leverage rockstar talent.
Seize the day — you may not have another opportunity.