According to a news release, Hewitt compared the survey responses of companies that exceeded deal objectives (Overachievers) versus those organizations that did not achieve their deal objectives (Underachievers), and found a clear link between deal success and investment in leadership and key talent issues. Overachievers and Underachievers both say leadership and talent strategies are important to the success of a deal (69% versus 62%, respectively), but less than a third (32%) of Underachievers report their leadership and key talent strategy in transactions as being effective, compared with 70% of Overachievers.
In addition, the news release said, Overachievers are twice as likely to effectively identify and retain leaders (81% versus 42%) and assess critical talent (73% versus 35%).
A separate Hewitt analysis shows that the loss of critical employees can have a devastating impact on corporate transactions. Based on a sample of 96 companies representing more than $568 billion in total deal value over a two-year period, the analysis found that more than $54 billion – or 10% – of a deal’s value depends on the rate at which critical employees separate during or immediately after corporate transactions.
Hewitt’s quarterly M&A pulse survey of 278 organizations around the world shows that 72% expect to increase their deal activity over the next two years.
Nearly half (47%) said their past transactions did not achieve their intended financial and strategic objectives. While almost two-thirds (65%) of companies indicate that leadership and key talent retention are critical to the success of a deal, 49% of these organizations report they have lost critical employees at the same rate or at an even higher rate than non-critical employees.
“Human capital is one of the top three intangible assets of any organization, yet many companies fail to execute a rigorous and sustained leadership and key talent approach, permitting key leaders and talent to walk out the door,” said Elizabeth Fealy, global leader of Hewitt’s Corporate Transaction and Transformation practice, in the news release. “As companies prepare for 2010 and beyond, there is a real opportunity to shift the dial. Having a formal strategy and game plan for leadership and key talent and effectively executing on it is critical for achieving better deal success.”