How to manage compensation and benefits during mergers
| DOI | https://doi.org/10.1108/14754390780000959 |
| Pages | 5-5 |
| Published date | 01 March 2007 |
| Date | 01 March 2007 |
| Author | Ian Morley |
| Subject Matter | HR & organizational behaviour |
Volume 6 Issue 3 March/April 2007
HOW TO…
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Practical advice for HR professionals
DEPARTMENTS AT A GLANCE
STRATEGIC COMMENTARY
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e-HR
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HOW TO…
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PRACTITIONER PROFILE
Q&A
HR AT WORK
REWARDS
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RESEARCH AND RESULTS
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Manage compensation and
benefits during mergers
1
PLAN EFFECTIVELY
5
COMMUNICATE
CLEARLY AND
REGULARLY
4
ENSURE VALUE FOR
MONEY
3
CONDUCT
DIAGNOSTICS
2
HR needs to be actively
involved from an early stage
in M&A planning. In addition
to looking across the broad
spectrum of HR
considerations, the strategic
agenda should answer the
question: What are we going
to do with C&B post-merger?
The merging organizations
may have very different
reward practices. For example,
when two sales organizations
merged, sales people were
sitting beside each other,
selling the same product, but
being rewarded completely
differently.One was highly
incentivized; the other had a
higher base salary.This
resulted in very different
behaviors among the sales
force and, therefore,
inconsistencies in customer
service levels.
Once you have full access to
the organization, conduct
diagnostics to truly
understand the C&B
framework. This is more than
simply understanding what is
being spent where; it is also
about understanding who is
being rewarded for what and
how reward is influencing
behaviour.It is also
important to understand the
nature of any contracts the
organization has with, for
example, benefits providers,
and how pension schemes
are managed. Only when you
have a valid and detailed
picture of the C&B approach
can you start to instigate
change.
It is always easy to spend
money on harmonizing
upwards. If,for example, one
organization has 30 days’
annual leave entitlement and
the other has 25, it is easy to
raise all entitlement to 30
days. But is this ensuring
value for money? HR
practitioners and business
leaders must ensure that if
costs increase, then value
from those costs must also
increase.An understanding of
the total cost and
composition of the C&B
package for each
organization enables the
identification of what can be
harmonized at minimal cost,
and what trade-offs have to
be settled. A flexible benefits
solution and total reward
approach may be considered.
Source: Ian Morley,HR consultant, and Dr Christopher Kummer,professor at
Webster University and director at Institute of Mergers,Acquisitions and
Alliances (MANDA)
DEFINE STRATEGIC
AGENDA AND
DELIVER QUICK WINS
Once you have a clear picture
of the C&B environment,
identify what you want to
change, when,and how. By
developing a strategic
agenda you can use reward
as a lever to motivate people
to change. Ensuring the
agenda is aligned with the
M&A and business strategy
can influence people to
display behavior that is
conducive to the changing
environment. Identifying and
delivering quick wins can
help people accept the
merger and be motivated to
an extent that they want to
be an active part of the
future organization.
Examples of quick wins
include harmonization of
annual leave and company
car entitlements.
People will naturally be
anxious at the announcement
of a merger and during the
integration. Besides fears of
job losses, many will want no
changes to their C&B unless
there are improvements.
Reward is very emotive for
most people and everyone
wants at least the same, or
more, particularly if a smaller
company is acquired by a
larger one. Effective
communication of planned
changes and, most
importantly,quick win
benefits are crucial to
managing expectations. If
people understand what is
happening, why,and how it
applies to them, they will be
more willing to accept the
change. People should be
updated on how the strategic
agenda is being deployed.
© Melcrum publishing 2007.For more information visit our website www.melcrum.com or e-mail info@melcrum.com
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