A recent article in the Wall Street Journal (subscription required) says that executives who don't conduct thorough "human due diligence" before completing an acquisition can suffer "steep long-term attrition."
One featured researcher says that in a recent study, he found targeted companies lose close to 21% of their managers each year, more than double the turnover experienced in non-merged firms, for at least 10 years after an acquisition. The article goes on to say that though no two companies manage employees and operations in exactly the same way, the more their decision-making styles and value overlap, the more they will benefit from the merger.
Cleveland-based industrial-products manufacturer Parker Hannifin is featured in the article. The manufacturer has made about 100 acquisitions in the past 10 years, including rivals, according to CEO Donald Washkewicz. Washkewicz told the WSJ that he strives to keep talent at acquired companies by communicating frequently with employees and sticking to an orderly integration process.
The process: He assigns an integration manager to each acquired company to get to know the managers and employees. This manager will also help them understand Parker Hannifin's goals. Next he sends supply-chain and sales managers to share with the acquired company how they get the best prices for supplies they use in manufacturing. Then an "innovation team" works with acquired companies to launch new products.
Washkewicz says: "We don't try to ram our ways down everyone's throat because that won't fly, but instead try to get employees' approval by showing how they can be even more successful [with us] than before they were acquired."
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