The Hindu Business Line : `Retention of talent a big challenge during M&As'

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Bangalore Feb. 8 Global human capital consulting firm Watson Wyatt says that talent retention is the biggest concern for Indian firms that are riding high on the M&A crest.

Dr Chuly Lee, Vice-President, Managing Director, Asia-Pacific, Watson Wyatt, says, "In a hyper-compensation employee market like India, retention of talent risk is highest during any M&A activity."

The key concerns of companies during such transitional phases would be whether people would cross over to the new entity and they whether they would stick around for a couple of years at least. "We've found that about one-third of top and mid-management talent quits before three years of completion of any M&A activity," says Dr Lee. To battle this trend, Indian companies are adopting the `golden handcuff' practice where top and mid-managers are wooed with retention bonus, deferred payments and ESOPs.

From the employee point of view, big concerns post-merger or acquisition are security, role definition and continuance of contract employment and monetary benefits. "But larger than any of these issues are cultural fit into the new entity which most companies ignore," she says.

Very few companies do a due diligence on culture during pre-merger days, which leads to senior management exits.

Watson Wyatt currently has 120 people in India and works in three core areas: human capital services, employee benefits, insurance and financial services for companies across sectors such as cement, engineering, IT, consumer durables and financial services.

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