Utilizing Rewards to Keep Talent During M&A
Robin Benoit
July 10, 2024
As noted in my previous blog post “From Restriction to Retention: Adapting to the FTC’s Non-Compete Ban in M&A,” the recent FTC ruling banning non-compete clauses will present additional challenges around retaining top talent during a merger or acquisition. Without that additional guardrail in place, key employees are much more likely to depart during such a time of uncertainty. And while there are several strategic interventions that can help retain employees – career development opportunities, inclusive culture building, and communication – let’s turn our focus to recognition & appreciation.
Recognition vs. Appreciation
First, it's helpful to distinguish between recognition and appreciation. Mike Robbins does an excellent job of describing the difference in his HBR article “Why Employees Need Both Recognition and Appreciation”: Recognition is about acknowledging what people do—their achievements and successes. Appreciation, on the other hand, is about valuing who people are—their character and presence within the team. While recognition focuses on positive outcomes, appreciation connects on a personal level, showing team members that they are valued as individuals.
Public Acknowledgement and Celebrations
Acknowledgment amongst colleagues is a powerful tool for recognition. According to one Gallup report, recognition that comes from the top—such as a manager or CEO—has the most significant impact, but positive feedback from peers and customers also matters. Recognition in all capacities can invoke feelings of pride and personal satisfaction which inevitably helps employees feel that same sort of satisfaction with their employer.
Timing is also crucial; recognizing efforts within days – not weeks or months – ensures the acknowledgment is relevant and impactful. And, perhaps most obvious of all, positive feedback is free to carry out, meaning that companies of all sizes and budgets can implement this very simple strategy.
Celebrations may have a little more cost involved, but still quite minimal and foster feelings of community and shared achievements. This is a great benefit to both individuals and teams. A team lunch that highlights the week’s wins can go a long way.
Personalized Thank You
A handwritten thank you can have a big impact. Image via Unsplash
There’s a reason your parents have made you write handwritten thank you cards to your grandparents and birthday party guests: they’re just plain nice to get. Authentic, individualized acknowledgments of appreciation demonstrate thoughtfulness and gratitude. (Workhuman has some great suggestions for opportunities to acknowledge employees.) Telling your employees how much their specific contributions are noticed and valued helps create goodwill and a sense of belonging within the organization.
Recognition Platforms
Digital recognition platforms provide a means for both manager-to-employee and peer-to-peer acknowledgment, fostering a culture of mutual respect and appreciation. These platforms can help create an environment where employees feel consistently valued and appreciated by their colleagues at all levels. If you don’t already have a recognition platform, check out this People Managing People article highlighting some of the different options.
Retention Bonuses and Financial Incentives
Retention bonuses are another way to show employees they are valued and to retain them for a specific period post-merger. However, as not everyone can receive these bonuses due to budget constraints, careful planning is essential— McKinsey notes that typically less than 2% of staff receive retention packages, highlighting the need for strategic allocation for your most critical staff.
There is evidence that these bonuses can increase engagement, but they should be thoughtfully tied to performance metrics to maximize their effectiveness. Furthermore, consider the timing of the disbursement and whether you want to issue a one-time payment at the end of a prescribed period or spread it out over 6-24 months. There are many ways to tackle this topic, but just remember that a retention bonus isn’t always the most effective tool for keeping employees engaged – some may just be waiting out the time for their payment. Other cultural components will matter if you truly want them to stay for the long term.
Spot Bonuses and Performance Rewards
Spot bonuses are spontaneous gestures of appreciation that can motivate and engage employees. They are awarded for outstanding customer service, innovative problem-solving, exceeding performance goals, achieving training milestones, or any similar situation that falls within the company’s guidelines.
These bonuses, which are typically lower than retention bonuses, provide tangible examples to staff of what sort of behavior is rewarded. Per Talent Cards, budgeting for spot bonuses can generally fall around 1% of a company's payroll for up to 25% of eligible employees. Additionally, they can include non-cash rewards, such as trips, conferences, PTO, gift cards, or gifts, as long as they align with the employee’s preferences—but again, be sure that your company has a policy outlining what is eligible and that you have a system in place for tracking awards, even if it’s as basic as a spreadsheet.
Ultimately, recognition and appreciation are vital during the M&A process. By valuing both the achievements and the intrinsic worth of employees, companies can maintain morale, foster loyalty, and ensure a smoother transition. Whether through public acknowledgment, personalized thank-you notes, digital recognition platforms, or financial incentives, recognizing and appreciating your team is an investment in the success of your merger or acquisition.
Robin Benoit is the Co-Founder and CEO of Benoit Global, a human resource consulting firm specializing in mergers & acquisitions.