Asian companies are more likely to lose senior management staff after mergers and acquisitions (M&A) than their western counterparts, a study has found – news which experts say emphasises the need for more sophisticated talent retention strategies in the region.

The Willis Towers Watson 2017 Global M&A Retention Study found that, globally, the effectiveness of retention agreements to ensure acquired talent remains with a new company has improved over the past three years.

In the survey, 79 per cent of acquirers were successful in retaining at least 80 per cent of their employees with agreements through to the end of previously accepted retention periods, up 11 per cent on the previous survey in 2014. But for Asian acquirers, this statistic remained flat at 70 per cent.

"It could be a function of the more robust Asian economies where talent could leave for other jobs, and if it is a cross-border acquisition into the Western market, it could be culture clash," said Na Boon Chong, managing director and partner at Aon Hewitt Singapore, in an interview with People Management.

Boon, who has more than 25 years’ experience in talent management, added: “It could also be a function of the magnitude of the retention bonus. My experience with Asian domestic mergers versus Western global mergers is that the latter would be more generous on the retention bonus, providing stronger commitment to the end of the retention period.”

He added that just like any talent strategy, a retention bonus only ties an individual to a company for a period of time, so it is the bigger picture of management experience, benefits, promotion opportunities and other issues that sustains retention. According to Boon, when change is looming, it is important to be clear about the M&A objectives and plan a talent strategy accordingly, an area where Western acquirers perform better than some Asian acquirers who are relatively new to the M&A game.

“Experience counts in high-intensity transactions where there is no room for learning,” Boon said. “We have been conducting in-house M&A training for HR teams in global corporations for decades, tailoring to their own M&A process, principles and tools. But it is still rare to see Asian companies investing in that kind of training for their HR teams.”

The research conducted by global business advisory company Willis Towers Watson surveyed 244 respondents across 24 different countries in Asia, the Americas and Europe, and also showed that framing an approach to executive retention early in a deal cycle is a key tactic for Asian acquirers wanting to retain talent, and that some Asian countries perform better than others.

For example, Japanese acquirers, where 68 per cent reported asking senior leaders at target companies to sign retention agreements before or at the signing of an initial merger agreement, showed much better retention success rates than Chinese acquirers, where that proportion fell to 37 per cent.

“Senior leadership typically steers the transaction pre-close and is mostly responsible for getting the deal done,” said Trey Davis, executive compensation practice leader for Asia Pacific at Willis Towers Watson.

“To make sure they aren’t distracted by concerns over their own futures, early communication is critical to get them on board and aligned with the goals and strategies of the acquisition,” he added.

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