I came across this relevant article by Joyce M. Rosenberg of the Associated Press:
NEW YORK – Offers of training and stock in
their new employer weren’t enough to keep four out of his five staffers when Dennis
Chow sold his information technology firm in 2016.
Chow and the buyers learned one of the hard
lessons of a business sale – despite their best efforts, some employees will
leave. People departed from both companies when SCIS Security acquired Chow’s
Houston-based Xtec Systems, most of them workers who didn’t like their new
assignments.
"We lost maybe 25 percent of the overall
workforce," Chow says.
As the number of small-business sales keeps
rising, staff retention is a priority – especially since low unemployment makes
it easy for many workers to find new jobs. Transactions tallied by online
marketplace BizBuySell.com show more than 2,700 small businesses changed hands
during the second quarter, the most since the count began in 2007. The trend is
being driven in large part by retiring baby boomer owners.
One big problem can be a culture clash –
staffers whose company is sold may be uncomfortable with their new bosses and
how the business is now being run. A new owner may be more rigid about schedules
or more of a micromanager. Staffers who worked with
just a handful of people before might find themselves with dozens of
co-workers, and miss the old camaraderie.
Bosses should focus on the quality of
employees’ work life, says Mike Astringer, owner of Human Capital Consultants,
a human resources provider. Money, whether it’s in the form or a raise or a
bonus, may not work in the long run.
"The new acquirer and the seller need to
really collaborate in the transition to make sure the culture not going to
change, that the reason people work there is going to continue," he says.
Critical to keeping staffers is not springing the ownership change on them at
the last minute. That will only anger them and add to their anxiety and
temptation to flee, Astringer says.
A new boss should acknowledge and validate
staffers’ feelings, and not try pep talks to ease anxiety, says John Proctor,
CEO of Ottawa, Ontario-based Martello Technologies. The information and communications
technology company has made two acquisitions in recent years, giving Proctor
experience with persuading reluctant staffers to stay.
"People aren’t praying at the altar of
Martello. It doesn’t work like that," he says.
Proctor’s approach is to meet with staffers
individually or in small groups, spell out his ideas for the company’s
direction and ask employees about the roles they see themselves playing. He
recommends listening rather than dictating.
"You’re giving them a sense of ownership
instead of, ‘You’re going to be doing this, and you’re going to be doing that,’
" he says.
Still, Proctor warns owners to
expect some friction. "You also need to be realistic that there will be
issues and disputes and you must deal with those with an open and frank
dialogue with all involved," he says.
It can be more difficult to retain staffers in
some industries than others. David Crais, chief executive of CMG Carelytics, a
health technology development company that has done several acquisitions, has
found software engineers reluctant to be part of a company that’s growing by
buying others.
"Many times, they’re driven by wanting to
be part of a building process," says Crais, The more an owner can align a
staffer’s needs with the company’s culture, the greater the chances of
retaining employees, Crais says. He considers an acquisition a success if 70
percent to 75 percent of the staff is still there 18 months later.
John Ahlberg, whose technology support and
management company has made several acquisitions in recent years, has been able
to retain about a third of the staffers who joined his firm, Chicago-based
Waident Technology Solutions. Those who left tended to be uncomfortable with
the culture at their new company; for example, they were used to working on their
own and had a hard time adapting to team work.
"With each person, we sit down and talk
to them, and ask, ‘What are you doing now, and what skills do you have?’ "
Ahlberg says. "But most of the conversation revolves around, ‘What are your
hopes and dreams. What do you want to be doing?’ "Those conversations must
be ongoing, Ahlberg says: "We sit with everyone regularly to make sure
they are heard; we discuss the company expectations and define what is expected
of them. We try to leave nothing vague."
Sometimes there isn’t much an owner can do.
Steve Sargent hoped for an easy transition when he bought an automotive repair
shop in Car y, North Carolina, in March and turned it into a Mr.
Transmission/Milex franchise. He told the three staffers they could keep their
jobs, but changes he made, including new technology to handle transactions and
accounting, were troubling for the shop manager. Sargent provided training and
tried to talk to the man, but couldn’t get him to open up about his frustration.
"He always said he wasn’t going to
leave," Sargent says. But nearly three months after Sargent arrived,
"he called me and said, I can’t do this anymore," Sargent recalls. Sargent advises other owners to keep
communicating, but be ready for people to quit.
"Not everyone will make it through
the transition, so be proactive about looking for replacements before a person
leaves," he says.
