Employee attrition is one of the few solid metrics we can utilize in Human Resources. We can track it, define it, analyze it, and even pair it with a dollar amount to quantify the financial impact. There is some debate as to the percentage of “desired” or “acceptable” turnover (unless your name is Jack Welch), but a representative ratio can be determined by dividing the number of employee departures by the 12 or 24 month average headcount. Accounting for fluctuation between certain positions (Sales vs. Finance, e.g.), a company with 15% or less attrition signals a rather healthy mix of retention and replacement.
And then you have an acquisition.
In the first year after a merger, almost 50% of senior managers from the acquired entity will leave the new merged company. Tracking the same group over the course of the first three years, the percentage increases to 75% (Human Resource Executive, 2011.)
“Wait a minute Einstein, you’re supposed to see turnover from the acquired company – that’s what happens when you get acquired.”
Granted, that stat could be colored by the redundancy process during integration (and thank you for referring to me as Einstein); so extend the time frame out a decade and you’ll still see one in every five has departed the company, a rate that is double that of “non-merged” organizations (Journal of Business Strategy.)
“I still don’t see the big problem here, it’s a process of trimming fat & becoming a more efficient entity.”
Maybe. But who is it that leaves? Unless you’re acquiring the Dallas Cowboys front office, there must be some inherent talent in the target company. When a merger is announced, there is a real simple sequence of events that occurs:
A. Uncertainty Hits.
B. “Take Care of Me” process initiates.
C. Certainty is sought after.
As a savvy professional, you are certainly aware of the fact that the dinner bell is ringing for your competitors, and they aren’t targeting the table scraps; they want your prime cuts.
Phone lines are buzzing, plans are being made, alternatives are being sought. It’s up to you to determine if the source of these communications are externally or internally generated.
Moral of the story: When the company around you is shaking, grab your valuables first. The rest is replaceable.
John “Whit” Whitaker is Founder and OH (Original Hardballer); HR Hardball™ is a blunt, self-aware, and sometimes snarky perspective of Human Resources.