A Talent Retention Agreements Becoming More Effective

A Talent Retention Agreements Becoming More Effective

While financial retention agreements designed to ensure that acquired talent remains with the new company during a merger or acquisition appear to have become more effective in recent years, the acquiring companies are often unsuccessful in holding on to senior leaders after the initial retention period is over, according to the results of a global study on M&A retention conducted by human resources consultancy Willis Towers Watson.

The study’s findings are based on survey data collected between March and May 2017 from 244 respondents across 24 countries in Asia, the Americas, and Europe. Within the past two years, 91% of the respondents had acquired another organization, 10% had merged, and 6% had been acquired.

The survey results showed that 79% of acquirers had been successful in retaining at least 80% of their employees with agreements through the end of the retention period, up from 68% of acquirers who participated in a similar survey on global M&A retention conducted in 2014. However, citing previous research, the study’s authors observed that after the one-year period, only around one-half of the above mentioned companies retained at least 80% of employees who had signed agreements.

In addition, the survey found that cash bonuses, most commonly expressed as a percentage of base salary, continue to be the primary financial award in retention agreements for senior leaders (77%) and other key employees (80%).

The findings also suggested that there are compelling reasons why acquirers should begin the retention process early by focusing on senior leaders. For example, the survey showed that nearly one-quarter (24%) of acquirers asked the senior leaders at the target company to sign retention agreements before the initial merger agreement was signed; and that early communication with senior leaders is a clear differentiator between acquirers with high (28%) and low (11%) retention rates.

Moreover, the survey found that of the employees with retention agreements who left the company before the end of the retention period, 44% blamed the new or changing culture. Among the other reasons cited for leaving were being aggressively pursued by competitors (36%) and not liking their new role (25%).

The results also showed that the size of the median retention budget has been declining: according to the survey, more than half of the acquirers (55%) polled in 2017 reported having a retention budget representing less than 1% of the total transaction cost—or nearly 50% less than 2014, when the median budget value was 1.9%.

From Benefit Trends Newsletter, Volume 60, Issue 12

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Employers Should Do More to Retain Restless Employees

Employers Should Do More to Retain Restless Employees

As large shares of employees indicate that they are planning to look for another job in the near future, employers should seek to improve the job candidate experience during the hiring process, increase engagement and retention among current employees, and develop a more transparent culture and a leadership structure that align with the needs of today’s workforce, a report by recruitment firm ExecuSearch Group recommended.

Released on January 12, the report’s findings were based on the results of a survey of more than 1,000 job seekers, working professionals, and hiring decision makers across a number of industries. The survey found that 50% of the working professionals intend to stay at their current company for only two years or less, and that 61% of these respondents reported they had been interviewing for two or more roles during the interview process for their current position.

The findings also suggested that employers are struggling to retain and hire top talent. When asked why employees leave their company, the top reasons cited by the recruitment professionals surveyed were a lack of advancement opportunities, a lack of salary growth, a negative work-life balance, and a poor corporate culture.

The survey results further indicated that employers are not providing the hiring experience expected by job candidates: 75% of the recruitment professionals polled stated that their hiring process, from initial interview to offer, takes more than three weeks—even though the vast majority said they believe the process should take two weeks at most.

When asked about their experiences of the hiring process for their current job, 34% of the working professionals said their interviewer could not convey the overall impact that their role has on the company’s goals, and 45% said they did not feel that their interviewer made the effort to give them an introduction to the culture.

The survey findings also appear to suggest that employers should take a more active approach to culture, retention, and leadership development: of the working professionals surveyed, 42% said they feel that the executive leadership at their organization does not contribute to a positive company culture, and 48% said they do not believe that their company encourages younger employees to pursue leadership positions. However, more than half (59%) of the working professionals polled reported that having access to projects to help keep their skills up-to-date would keep them satisfied at their current company.

In addition, the survey uncovered a disconnect between the goals of younger employees and employers: while 76% of the millennial working professionals cited having professional development opportunities as one of the most important elements of company culture, 74% of the recruitment professionals said that millennials are not prepared for leadership positions.

When asked to rank the importance of various kinds of opportunities for professional development, the top responses from working professionals were an emphasis on work-life balance, collaboration with team members, and access to leadership/management. Moreover, when asked which benefits other than health benefits would make them happier at their current company, the most common responses of the working professionals were flexible scheduling, greater vacation allowance, recognition by supervisors, and interesting projects or work.

From Benefit Trends Newsletter, Volume 60, Issue 3

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Workplace Giving Programs Can Help Attract and Retain Talent

Workplace Giving Programs Can Help Attract and Retain Talent

Research shows that effective corporate giving programs are beneficial for a range of stakeholders, including the company, employee donors, and the benefitting charities, according to a recently published analysis by corporate philanthropy software provider JK Group.

In an article entitled, “The Future of Employee Benefits: Employee Giving Programs,” JK Group director of client strategy Nita Kirby cited research showing that the presence of corporate philanthropy programs has the potential to increase revenue by up to 20%, reduce staff turnover by up to 50%, and can even have an effect on the overall mood and health of employees.

Kirby also reported that the results of a survey conducted by JK Group showed that employers recognize the benefits of strong employee giving programs, with over 80% of the participating companies and organizations agreeing or strongly agreeing that their company is committed to a giving program. The survey findings further suggested that employee giving affects a company’s ability to attract and retain talent.

In addition, Kirby cited a 2015 report that showed that 61% of millennials would rather work for a company that offers volunteering opportunities or a giving program, such as volunteer time off, skill-based and pro bono volunteerism, and matching gifts.

Kirby also outlined several steps companies interested in incorporating giving and volunteering into their employee benefit programs can take. For example, employers can find out what type of programs solicit the strongest interest from their employees using free survey tools available online, and can then use the results of the survey to identify an employee advocate to support the program, and to help introduce the program to the rest of the workforce.

In addition, she advised companies to team up with partners associated with providing software and services that offer a user-friendly environment that allows employers to speak to their employees in their own unique way. To improve the chances that the programs will be supported and recognized by the entire company, she suggested that employers consider getting marketing, communications, compliance, and IT involved in supporting and promoting the philanthropy programs.

Finally, Kirby recommended that when it comes time to finally implement corporate giving programs, employers should look at a number of issues, such as whether they are adequately informed about all of the charities that might be in line with the philanthropic interests of their employees, and how legitimate the charities that are being considered for the company’s corporate giving programs are. To ensure that employees have peace of mind that their donations are ending up in the right hands and that their financial security has not been breached, Kirby advised employers to investigate the safest way to facilitate employee giving.

From Benefit Trends Newsletter, Volume 59, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.