Justin Pethick, Senior Vice President of Strategy & Business Development, POWERS
In M&A, the spotlight often falls on financials, synergies, and processes, but one factor can make or break the deal’s long-term success: employee engagement.
For manufacturing firms, where frontline performance drives output, engagement post-merger or acquisition isn’t just an HR buzzword—it’s the linchpin for sustaining operational excellence and growing deal value.
At POWERS, we’ve seen how aligning frontline workers and leadership through clear communication and standardized processes can transform a shaky acquisition into a powerhouse. Here’s how to make engagement your M&A superpower.
The Hidden Cost of Disengagement in M&A
M&As disrupt everything, roles, routines, and trust. In manufacturing, where precision and uptime are king, disengagement can be a deal-killer. A 2019 study found acquired employees leave at three times the rate of regular hires, costing firms talent and institutional knowledge. On the shop floor, unclear expectations or cultural clashes lead to mistakes, delays, or downtime, think a 14% drop in engagement tanking OEE by double digits. For PE firms, this signals risk; for manufacturers, it’s lost production. Yet, traditional due diligence rarely prioritizes engagement, leaving buyers and sellers blindsided by workforce woes.
Why Engagement Drives Deal Value
Engaged employees stay, perform, and align with the merged entity’s goals. In manufacturing, this means higher throughput, fewer errors, and faster integration. For example, a global food and beverage manufacturer reduced voluntary turnover by 18% post-acquisition by implementing regular engagement surveys and transparent communication, saving an estimated $5 million in rehiring and training costs.
Conversely, disengagement erodes value: a semiconductor plant saw 15% lower output post-M&A due to ignored morale issues. Engagement isn’t soft, it’s a hard driver of ROI.
A Blueprint for Post-M&A Engagement
To sustain and grow deal value, M&A leaders must prioritize engagement from day one. Here’s a practical, manufacturing-focused plan:
1Communicate Early and Often
Uncertainty fuels disengagement. Start with transparent updates, weekly town halls or shift briefings, detailing merger goals and role clarity. A client in automotive M&A used daily huddles to align shop floor teams, cutting confusion and boosting output by 10%. Be honest about unknowns; even “we’re working on it” builds trust.
2Audit Engagement Like You Audit Processes
Use pulse surveys or tools like our DPS platform to track critical KPIs like downtime, capacity, and OEE in real time, serving as an early warning of engagement issues. One manufacturer identified a 25% engagement drop in a newly acquired plant through real-time data, enabling targeted interventions. Treat engagement as a critical process metric, not an afterthought.
3Align Cultures Through Shared SOPs
Cultural clashes sink integrations. Build unified Standard Operating Procedures (SOPs) that blend best practices from both firms. Involve frontline supervisors in co-creating SOPs to foster buy-in. An acquisition we supported reduced errors by 30% by standardizing quality checks across merged teams.
4Invest in Leadership and Wellness
Frontline leaders bridge the gap between strategy and execution. Train supervisors to coach, not command, during transitions. Pair this with wellness programs, mental health resources or team-building events, to ease stress. A metalworking firm offered post-M&A mentoring, lifting engagement scores by 18%.
5Tie Engagement to Career Paths
Show workers their future in the new entity, map career development plans, like cross-training or leadership tracks, to retain talent. A client in heavy machinery used this to keep 90% of key operators post-deal, avoiding costly rehiring.
Making Engagement Stick Post-M&A
Sustaining engagement requires real-time visibility. Tools like POWERS’ DPS platform track critical KPIs like downtime, capacity, and OEE in real time, serving as an early warning of engagement issues, ensuring gains don’t fade. Post-deal, revisit SOPs quarterly to keep teams aligned. One client sustained a 15% productivity boost two years post-acquisition by embedding engagement checks into daily operations.
The Value Catalyst
Employee engagement isn’t an HR checkbox, it’s the engine of M&A success. In manufacturing, where every minute of uptime and every worker’s effort counts, engagement sustains performance and grows deal value.
About POWERS
At POWERS, we build the tools for private equity firms and manufacturers to unlock value fast and sustain it over the long haul. Our team dives deep into operations, processes, workforce, supply chains, to drive efficiency, productivity, and accountability. Our DPS platform codifies optimized processes and tracks production KPIs in real-time, ensuring your M&A gains endure. Ready to maximize your next deal? Let’s connect.
- Speak to an Expert: Call +1 678-971-4711 to discuss your specific challenges and goals.
- Email Us: Get tailored insights by emailing info@thepowerscompany.com
- Request an Assessment: Use our online contact form, and one of our expert manufacturing consultants will reach out to schedule an in-depth analysis of your operations.
