Acquirer's Guide to Integrating HR

The Art of M&A® / Postmerger Integration and Divestitures
An excerpt from The Art of M&A, Sixth Edition: A Merger, Acquisition, and Buyout Guide by Alexandra Reed Lajoux

 

What are some general guidelines for managing human resources after a merger?

Following a merger, acquirers need to integrate specific groups of people, such as sales teams, senior management teams, and even the board of directors. Remote work and outsourcing add complexity It is beyond the scope of this chapter to give templates for each kind of integration, but resources are available.²⁵

 

When do human resources personnel typically get involved in a merger?

Most companies involve HR at the integration stage, but some companies involve HR earlier—even at the planning stage, as well as in due diligence. This is a recommended practice for important financial reasons, as mentioned in those earlier chapters.

This said, HR will do its most intensive work leading up to and during the integration phase. When two companies merge their human resources, they also merge their HR policies, such as approaches to recruitment, retention, compensation, training and development, and (sometimes immediately) outplacement. For a checklist of HR policies and processes, see Exhibit 9-4.

 

Exhibit 9-4 Acquisition Integration Plan for Human Resources Operation

Conduct integration planning kick-off meeting

HR INTEGRATION PLAN

Standardize HR policy

Integrate HR processes

Employee relations

Performance review and evaluation

Employee dispute resolution

Employee complaint investigation

Acquisition integration communication

Turnover reporting

Employee relations legal/regulatory compliance

EEO

OSHA

Benefits administration

Benefits orientation

Presentation of compensation/benefits at welcome party

Benefits conversion and enrollment

Medical

Dental

Vacation (varies widely across countries)

Benefits plan administration

Benefits-related legal/regulatory compliance

401(k)

Health/welfare

New hire process

Termination process

Compensation

Job mapping and redesign

Map acquiree and company job positions

Set pay scales

Manage changes in pay

Performance reviews and promotions

Equity/noncash compensation

Sales compensation

Payroll

Leave accrual and administration

Customer service

Payroll administration

Accounting reconciliation

Communications with treasury

Pay-cycle disbursement

Recruiting/staffing

Facilities management

Office/real estate consolidation

Update database of site/contracts, leases

Assign leases to company

Obtain acquiree staffing projections

Organization development/training

HR infrastructure integration

Employee setup in HR information system (HRIS)

Establish department numbers for acquirees

Collect acquiree employee information

Input acquiree equal employment (EE) data in HRIS database

Provide acquirees with company services

Provide acquirees with company intranet access

HR communications plan development

HR contracts and commitments

Source: HR checklist used by a midsize US telecommunications company acquiring multiple companies. Used with permission.

 

How can an acquirer integrate target company employment policies and data?

A target company may capture its employment policies and employee data in an HR system with a payroll component. The acquirer may want to migrate these data into its own system immediately. But first it must ensure that the data are clean—complete, relevant, and accurate. Meanwhile, people must continue to be paid. So during the initial postmerger phase it may be necessary to maintain two systems—at least for payroll. Eventually, the acquirer’s system may be used—and possibly upgraded. This may be a good time to implement “best practice” HR systems with secure employee data in a private or hybrid (not public) cloud.