After completing the purchase of a business, many new owners see the transaction as a chance to wipe the slate clean and begin afresh with all new employees.
While injecting fresh blood into a workforce can serve to breathe life into a business, making wholesale changes can be a risky approach which could backfire.
There are several reasons why you may wish to consider retaining existing employees when buying a business, including performative, financial and legislative ones. When rethinking employment strategy, it’s imperative you take into account the following factors, which could have significant ramifications for the future success of your company.
No matter how experienced you are in your field, it’s important to recognise that existing staff members will have been working in this particular business for far longer than you. With that in mind, there may be certain employees who possess key skills, connections and qualifications upon which the success of the business hinges. It’s vital you identify these star performers and keep them onside for any changes you may be planning to the operational side of things.
Strengthening the competition
Remember that every staff member you let go will be looking for another job, most likely in the same industry. With the years of experience they’ve accrued working at your company prior to your arrival, they’ll surely have some great insider knowledge of how things work – regardless of any changes you intend to introduce. In this sense, laying off all or part of the workforce could effectively be simply strengthening the competition.
Never underestimate the importance of morale to the productivity and profit margins of a business. People are generally wary of change and if you arrive with all guns blazing and sack one or more members of the team straight off the bat, you run the risk of alienating the rest of the staff. This could severely compromise their ability to work effectively and only increases the chances of losing more staff members in the future.
Recruitment and training costs
There are a number of reasons why most businesses do their utmost to avoid high staff turnover – and one of them is the extensive time, effort and money it takes to locate new talent and train them up. If you inherit a fully functioning workforce at your new business, it only makes sense to employ those skills that they’ve already learned and leverage their experience, rather than making more work for yourself by seeking out a whole new team.
You should be aware that all existing employees of a company are covered under Transfer of Undertakings (Protection of Employment) regulations, known as TUPE for short. This means that after the sale of a business as a going concern, existing employees are entitled to the same terms as those they previously agreed to (same salary, benefits, pension, etc). There are possible exceptions to TUPE regulations so it’s important you read the wording of employee contracts carefully before releasing any staff to avoid employment tribunals or court cases further down the line.