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Notes from Vader: 2 Proactive Ways to Tell Who's Bolting After a Takeover/Acquisition...

There's been a lot written in the past 2 decades about human capital when it comes to acquisitions.  After all, companies buy competitors not only for intellectual property and market share, but also for economies of scale.  "Economies of scale" is code for "via this acquisition, we can slash $100M in duplicated payroll costs".

Ugh... economies of scale = fear, backstabbing and guys ending up in the lifeboat instead of women and Darth-vader-NYSE children, Titanic-style...

With that in mind, there are winners and losers in every acquisition.  Most of what's been written focuses on the resulting purge and layoffs that address duplication and cashing in on the aforementioned economies of scale.

But somewhere in the deep underbelly of the company, there are folks trying to make a call whether life is better or worse under the new company, and if the new company fits their values and world view.  That's especially problematic when the folks trying to make the call hold the keys to your competitive advantage. The issue is currently in play at the former Palm, as some key people who could have stayed with the HP/Palm combo (HP recently bought Palm) decided to get the hell out of HP.  More from TechCrunch:  

"Back in August, while we were in the middle of confirming an exodus of talent from Palm after their acquisition by HP, I specifically asked them about the status of two guys: Ben Galbraith and Dion Almaer. Palm refused to say anything about them. Perhaps now we know why.

As both have confirmed on their personal blogs today, as well as the HP/Palm Dev Center blog, they’re leaving the company as well. So why are they leaving? Almaer compares working for a big company to a wedding, and a small company as a first date. As he writes today, “I am not looking to dance down the aisle just yet, no matter how pretty the bride is ;)“. As such, he and Galbraith are starting their own new company. They aren’t sharing too much just yet beyond the fact that they’re interested in mobile, HTML5, JavaScript, and the idea of “open”.

So let's break this down.  The two cited former Palm employees who chose to jump from HP/Palm are high profile folks, but there are hundreds of duplicates of this morality play at lower levels at HP/Palm and in any acquisition of significant size. 

Those folks are trying to make a call on whether they should stay or not.  Additionally, many more that you want to retain are going nowhere - they're happy and not pre-dispositioned to move.

How do you figure out who's likely to bolt on you once an acquisition goes down and who you need to invest in to have the best shot at making them stay?

If it were me, I'd do the three following things:

1. As part of the due diligence, I'd get multiple data points down and across the organization on who we absolutely can't lose in the company we just acquired.  Multiple data points - not just their manager, because let's face it, that's often tainted.  But too often that's all that organizations do - simply get a list from the manager.

2. I'd then ask my OD and/HR folks to do an analysis of every one of those individuals using their LinkedIn profiles.  The main question in play - does the background and career arc for each person indicate they are a flight risk?  Do they have a history of jumping when things get more corporate? Do they have a history of jumping for other reasons that would indicate they won't put up with the acquiring entity long? Subjective?  Yes, but I could do this in 2 days across 1000 people if you give me the list and most of them have LinkedIn profiles or you give me resumes.

3. I'd then call Josh Letourneau of Knight & Bishop and ask him to use our email servers and other tools to tell me who the most connected and active people are on that list with the outside professional world.  Some custom Social Network Analysis (SNA) in this step, but I'd want to know who's most connected and active, because if I know that, I likely know who could leave tomorrow and have a lateral gig by the end of the week.

Step #1 builds the list of who I need to worry about.  Steps #2 and #3 give me data to tell me who's at risk.  Score a high flight risk in both #2 and #3, and you get the retention attention via more ego stroking, stay bonuses, etc.  Score high in #3 alone, you're next on the chart - you're a stealth one - you're building your network to give you options even though your past doesn't suggest you're going to jump.  Score high in #2 but not in #3, you get some attention, but you're at the end of the line behind the first two profiles because your ability to flee is not as high as the others.

Score low in both #2 and #3 - thanks for being a loyal corporate citizen.  I hope we get to keep you for as long as you want to stay.  When it comes to retention bonuses, however, "no soup for you".

That's right, I'm using your email, maybe even phone and web traffic to determine if I need to be concerned at a high level about retaining you.  In an ironic twist, if I can do the analysis without you knowing, I have no intention of paying the people most likely to be loyal.

It's a crazy world, but if I were the Darth Vader of HR for the acquirer, that's how I would roll, assuming I could deal with the inconsistencies and the word of mouth problem in the organization (those most solid getting nothing - a bit of a PR problem for any young Vader of HR).

Don't hate me because I've got a plan.  How would you do it if you had limited resources and wanted max retention of your best talent?


Dwane Lay

Brilliant, but why limit that to just M&A analysis. This is the kind of forward thinking we should be leveraging in HR to be able to see the future and react before we need to. Tough to do, tough to maintain. Maybe just monitoring #2 and #3 for your key players.

Well done. Thanks for sharing.


First, I agree with Dwane that this is something HR should be doing regardless of an acquisition.

Second, since many aren't, we can apply the "never waste a good crisis" attitude here, and say that an acquisition is a golden opportunity to flex some workforce analytics muscle.

Third, I would add a step (maybe between 2 & 3) that says, "Identify underutilized talent." When you acquire another firm, regardless of size, there's a good chance there's someone there who was just getting by, but could flourish in the new environment. Just like the two palm guys jumped ship b/c they liked the "first date" better than the "wedding", there is likely to be some persons who are better suited for the "wedding" but have been stuck in the "first date".

Dave Dahl

This is why I love reading Kris Dunn, pragmatic and practical. This is the kind of thinking that adds real value (data driven) for the executives running the business. Great ideas! Keep up the critical thinking.

Josh Letourneau

Wow, thanks for the mention, KD! I love how you mesh Human Capital in with Social Capital. I like to see Human Capital data as 2-dimensional (like a "flat file") while Social Capital is more 3-dimensional. There is much to be learned from each.

I've been thinking lately about how an SNA could be the most valuable intel a Competitor could ever get their hands on about you - as a result, you better trust your SNA firm and get an NDA signed!

What I like about your approach is that you're looking at M&A from a "Retention Risk" standpoint. An SNA can immediately inform who you can't afford to lose, and more importantly, what the impact of such losses would be to your network structure (for example, when you lose someone, you also lose all their "ties" or "relationships". The following 'self-organization' of the network can then happen in a way we don't like (i.e. an informal leader then jockeying for position against the replacement hire, which is very common.)

The other thing an SNA can do is to help identify your performance networks - at this point, we're then evaluating how we can best introduce the networks at the Acquirer to the Acquired. Integration won't be easy, but we certainly don't want a culture of mutually exclusive and independent silos. For example, it would be highly beneficial to take the "Hubs" in each network out to dinner to meet and greet with one another. As the "Hubs" are typically the most trusted people in a network, it's important that these Hubs don't resist one another. I'm not saying that SNA is a magic bullet, but we can tip the deck in favor of success when we look at M&A . . . and given the historical and predictable loss of value created by most M&A activities, doesn't it behoove us to limit some of that risk and value-evaporation?


Late in reading this one, but having been involved with several M&A deals over the years, this is a great plan!

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