One of the major things buyers worry about most when purchasing a business is transferability.
I’ve said this before, but when you’re evaluating listings, you’ll find yourself wondering, “That’s great that this seller has seen this type of performance with the business. But what’s going to happen when I take over?”
Employee retention is a massive part of that transferability. Employees are a major pillar to the success (or failure) of a business and it’s important to maintain the team that you are given once you take over a business.
Today, I want to discuss how you can successfully retain your employees by taking key steps in your first 90 days as the new CEO. Losing key team members during this time can lead to a loss of productivity, decrease in morale, and inevitably affect your business’s performance.
Here are 4 tips on how to retain employees in the first 90 days after closing:
1. Be Transparent
During a transition period, employees may feel uneasy and uncertain about their future with the company, but the first thing you can do to offset that is by working with the seller to best deliver the news to the company.
The narrative is everything when it comes to how you convey the transition to your employees.
Have the seller communicate the sale of the company in a way that is positive, upbeat, and demonstrates collaboration with you as the buyer. The last thing the seller wants to do is show that there’s any type of rift between the buyer and seller, as the employees will feel like that rift is going to jeopardize the stability they have working for the company.
Once the seller has announced the news, it’s time for you to speak. Share your vision for the future of the company, and make sure employees know what’s expected of them. Encourage feedback and suggestions from your team, and be honest about any changes or challenges the company may face.
It’s essential to communicate openly and frequently with your employees during this time.
Employees may feel overwhelmed during a transition period. Make sure to provide the necessary support to help them adjust to any changes. Be available to answer questions and provide guidance whenever needed.
2. Maintain consistency
Fundamentally, we are all emotional creatures. When it comes to dealing with your employees, remember and be empathetic to the fact that emotions can run high when someone is wondering if they will continue to have job security. That said, you can help to temper those emotions by immediately building trust with your team and maintaining consistency.
Avoid making any wide-sweeping changes in the first 90 days. It’s normal to want to make all the changes to undo or improve upon what the seller has done with his or her business, but you want to refrain from making too many changes in the first three months.
There are two main reasons for this.
Firstly, you still don’t have a complete grasp of the operations of the business. If you choose to implement changes now, you may be doing so prematurely without the bigger picture in mind. In 90 days, there’s a good chance you’ll have a different perspective on what changes need to be made.
Secondly, remember that you’re managing the culture of your business just as much as you’re managing its performance. You don’t want to create too many ripples up front with an already tentative group of employees. If you’re able to build rapport with them over the first three months, they will be more receptive to changes you’ll make at that point.
Humility and patience are key for a buyer when they first take over an existing business. During the transition period, learn everything you can from the seller and your employees. Be a sponge and stay receptive to the lessons, so you can be best equipped to make the right decisions for the business in the long run.
3. Offer Growth Opportunities
Offering growth opportunities is a great way to retain employees.
If you think about it, a large part of employee satisfaction is an employee’s ability to do his or her job well. When you buy a business, you’ll start to notice that different employees are at different levels of training, but by investing in training opportunities for your employees, you can start to bring up the skill level of your team as a whole. Training can help your employees perform at a higher level, feel confident from doing a job well, and ultimately take more ownership in their roles.
Consider providing opportunities for professional development, such as training, mentoring, or education reimbursement programs. Showing your employees that you’re invested in their growth and development can increase job satisfaction and loyalty. In turn, they’ll invest in you as an employer with improved productivity and performance.
4. Provide Retention Agreements and Bonuses (If Applicable)
Building rapport with your employees and providing them with growth opportunities are going to go a long way in keeping your employees around. However, I’d be remiss if I didn’t mention the value of money – whether that’s in the form of retention agreements, bonuses, or otherwise.
Is there any room for improvement in your payroll?
Employee retention is important now more than ever, and, undoubtedly, salary is a large part of employee satisfaction. Providing employees with competitive salaries, within the limitations of your budget constraints, of course, can be a great investment in keeping your employees and spending less on recruiting and training new employees.
One way to retain talent in your company is through employee retention agreements. Retention agreements often come up in merger and acquisitions (M&A) scenarios, as the oncoming management team or leader understands that by keeping key employees, there will be fewer issues in the transition process.
It’s important to evaluate your employees when taking over and incentivize them accordingly. Who has succeeded at your company because of their skills and hard work?
That being said, although it’s important to make sure these offers are attractive enough to retain your key employees, take the time to understand the financial ramifications of committing to this decision. Lean on your accountant and possibly a lawyer to help you navigate this process.
Retaining employees during the first 90 days after taking over a business is critical for the success of your company.
By communicating openly, maintaining consistency, offering growth opportunities, and providing additional remuneration, you can create a loyal and dedicated team that will help your business thrive.
Ready to acquire a business in the next 12 months? The Acquisition Lab is your first stop. Reach out to us today and get on the fast track to becoming an acquisition entrepreneur.