Mergers and acquisitions are extremely challenging and even chaotic events. Therefore, it is critical that everyone involved has a clear understanding of their role in the process. Mergers and acquisitions have become the norm in the business world and are often necessary for survival. Almost every major company in the US today has or will experience a major acquisition. There is a subtle yet distinct difference between a merger and an acquisition. A merger is when two separate companies merge into one new entity. An acquisition is when one company buys the assets of another company. A merger or acquisition can be desired due to many different strategic reasons including positioning in the market, acquiring another company’s areas of strength or expertise, acquiring capital, diversification and short term growth. There are several phases or steps in the acquisition process and human resources will typically be involved in at least 2 to 3 of these phases including the due diligence and investigation process and the post-merger integration process.
The human resource role in the due diligence and investigation process is to perform a thorough review of all human resource contracts, benefit plans, plan documents, systems, personnel, employment records, all forms of compensation, policies and procedures especially related to human resource regulations that relate to all human resource disciplines including compensation, benefits, recruiting, employee relations, training and development and payroll and HRIS. Human Resources will also help to determine the organizational structure and staffing models for the new organization. Some other important items that fall under the Human Resources umbrella are wage and hour or other compliance claims, employment litigations, collective bargaining agreements, any FMLA, OSHA, Workers Compensation, EEOC and OFCCP compliance issues.
Transition issues need to be discovered and addressed, for example pay levels between the two organizations may be very different and a cost analysis may be needed to determine the cost of bringing pay levels more in line between the two merging entities. Other transition issues that often need addressed are transitioning pay increase and performance review cycles, differences between benefit levels in health care and retirement plans. Most items will need to be addressed immediately, and some items can be completed during the first or second year following the merger or acquisition. For example if the acquisition occurs in the first quarter and your merit increases are done in January, you may be able to wait until the following January for this transition. Conversely, it will be highly desirable to transition the acquired entity employees immediately to your health and welfare plans rather than take on the administrative burden and ownership risk of additional plans.
Human Resources is also responsible for layoffs, stay bonuses, culture differences and synergies and will play a key role in the orientation and welcoming of the new employees. These are just a few key items on the Human Resources Acquisition Checklist. And each item has its own list of key points and issues that must be addressed. While most of the transition work will happen prior to the closing date, the job of transitioning employees into your policies, pay models, practices, procedures and culture does not end at transition date and typically continues for 2 to 3 years following the transition date and requires continued review at the management level.
Change can be challenging and demanding. With over 5,000 properties in our lodging compensation database, 150 casinos, and 125 hospitals and clinics, we regularly see properties being acquired, divested, and rebranded. Consolidations are occurring at a rapid pace in the healthcare industry as well with hospitals buying physician groups and primary care practices. There are numerous human resources concerns to address every time a property changes hands. WageWatch consultants can guide you through the process of integrating two or more compensation models, rebalancing grades and ranges, examining internal equities between plan documents, developing a market based approach to resolve inconsistencies, and helping you along the way with all your transition needs. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.