M&As in Africa: How to boost employee retention with an EOR

47% of key employees leave within a year of a merger or an acquisition – a chilling statistic for companies looking for carve-out or buy-out deals. Even more unsettling is the fact that each employee lost and each subsequent new hire costs money. More money, in fact than retaining an employee would. In 2022, the average cost per hire was $4,700.

So how do you counter this downward spiral when expanding to Africa?

Already valuable during the M&A process, EORs are particularly good at promoting employee retention thanks to their understanding of local legislation, their adaptability and ability to reliably take over critical internal functions.

In this article, we go in detail about the specific ways that Employers of Record can improve the employee experience and consequently boost employee retention:

Why is employee retention that important, anyway?

Beyond the financial aspect – which can add up, at $4,700 per employee – there are important human and operational aspects that should motivate companies to retain their employees:

· Lack of handing-over

Upon quitting after a merger or an acquisition, senior employees or workers who have been with the company for a long time take all their company-specific knowledge with them. As a result – especially if the employees in question have a short notice period – there may be no handing-over of duties and training done. This leaves new employees at a loss and in need of guidance, which means that operations will lag for a while.

· Atmosphere of insecurity

Massive loss of talent within an organisation can create a sense of panic among remaining employees. The latter may feel like they are not fully safe and comfortable about their future with the company. And when employees are uneasy, productivity suffers.

How EORs boost employee retention:

1. Seamless transition

Since mergers and acquisitions are already fraught with anxiety for the staff, the transition to a new administration must be handled perfectly. EORs can facilitate this thanks to their understanding of administration and by handling the important internal aspects of a merger or an acquisition. This includes onboarding employees on the new payroll system and migrating all necessary employee data. After all, there is an added layer of complexity when dealing with M&As: the employees are not new ones. As such, one must still consider their leave taken to date, and what other rights/benefits they are entitled to according to their level of seniority.

2. Understanding of local legislation and culture

Cultural sensitivity is key when acquiring or merging with an entity in Africa.

Organisations cannot treat such a move as the would in their home country. In fact, this would be a surefire way to make employees leave.

Adapting your expansion strategy to the local context is key – and EORs can help you do that. An EOR knows that local/regional legislation, which includes the labour law – something which directly impacts workers. Thanks to that knowledge, there will be no gauche mistakes that spread mistrust among your new employees. It is worth reminding after all, that 49% of employees say they will look for a new job after 2 incorrect pay cycles. In the relatively destabilised context of a merger or an acquisition, simple payroll mistakes like these can tip the scale and convince employees to go in search of greener pastures.

3. Taking over Payroll

Speaking of payroll, EORs also take over the payroll function for you. This means one less issue off your plate as you negotiate and implement the new terms of a merger or acquisition in Africa. Besides, payroll is not just another function. It is one of the most sensitive internal operations, dealing with employee statutory rights, employee expectations, and large sums of money, among other things. By ensuring the smooth running of critical payroll operations, Employers of Record in Africa help respect worker rights and increase the chances of employee retention post M&A.

4. Employee benefits

When you enter a collaboration with a company through a merger or an acquisition, one great way to boost retention is by offering employee benefits. Or, as it may be, with you taking over or merging with a company, there may be a need to replace old payroll and insurance providers. EORs perform both these functions. Because they work with several clients, an employer of record will be able to offer you some of the most profitable life and insurance schemes for your employees. Africa HR Solutions, for instance, has gone a step further than all other African EORs.

We offer FREE life insurance to all our EOR clients’ eligible employees.

No underwriting. $20,000 value. In collaboration with international insurer Unisure.

Aside from value-for-money deals, EORs also help you standardise your employee benefits scheme (including insurance) across different locations and even different countries.

In this way, you can extend the same benefits to your African workers and have a truly global benefits programme.

5. Flexibility & scalability

During a merger or an acquisition, you may need to upscale your operations or welcome new recruits to take on the new workload. During a merger specifically, there may be a need to unify your two teams – a process which requires flexibility. An EOR like Africa HR Solutions can help with that flexibility, allowing for large employee intakes in a short amount of time – keeping company growth and employee satisfaction at a peak.

Expand to Africa without any of the administrative pains

Africa HR Solutions is the largest EOR in Africa, and we put all the means at your disposal for a successful merger, acquisition or expansion to 46+ African countries.
Curious to see how our team can be of help? Send us a message to chat with one of our experts.