Retaining key talent and preserving company culture were found in recent research to be the two primary concerns during M&A transactions from a human resources perspective. This discussion focused on strategies to retain talent including financial incentives and considered methods for aligning critical cultural and performance objectives.

Stephen Lee, Senior Partner in the M&A practice at Mercer, began the conversation asking the participants what methods and tools they have used to retain key talent. Valerie Rupp, Vice President of HR Transformation and M&A Strategy at Hewlett Packard Enterprise, answered that retaining the best talent requires “flexibility in the way that you’re approaching” the financial and other incentives offered to the target’s employees.

For executive-level talent, Rupp suggested deal teams, specifically those in the human resources function, should thoughtfully review the mix of stock, cash, and other incentives offered to key executives. The incentive package should be competitive with peer groups and, to an extent, with the acquiring company’s incentive structure.

“We try to win their hearts and minds,” said James Harris, Principal of Corporate Development Integration at Google. Incentive packages should be flexible and address specific needs. “It’s not really all about the money at this point,” said Roberta Chen, Senior Principal of M&A Integration, Corporate Strategy and Development at Intuit, agreeing with Harris. Additionally, deal teams should spend time “selling a vision of what you want that person to do” so that they have a continuing stake, according to Chen.

Salespeople at the target company are an especially challenging group of talented employees who require particular attention from the acquirer. Chen advised audience members to “really try to be thoughtful about what their current compensation structure looks like” and to phase-in new compensation structures slowly after the closing date. Harris concurred, noting flexibility in new compensation structures is a must when integrating a sales team from the target’s operations.

The panel next turned to a discussion about integrating the separate cultures of each company. Lee asked the panel what strategies they have used to address culture issues in transactions. Rupp mentioned recent acquisitions where her deal teams have left strong-culture target companies “fairly standalone” and provided great flexibility for the transitioning employees. Harris encouraged the audience members to treat the relationship “more like a marriage rather than us coming in and saying ‘this is how it’s going to be from now on.’”

Surveys and cultural assessment tools are some strategies to understand and address cultural differences from the very first day after closing. While some panelists advised waiting until several months post-close, Harris suggested multiple surveys set at intervals after the closing to demonstrate progress and track integration plans.

The panel concluded the session discussing whether they had personally observed a scuttled deal due to cultural differences. “The whole deal process is a crucible where there is an intense amount of change and an intense amount of pressure,” said Harris, reacting to Rupp’s recollection of a “mismatch” with the CEO and the founder of the target company. Chen added that companies wishing to avoid scuttled deals should spend more time in the early diligence phase speaking directly to executives and management members to ensure a positive match.