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.
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Exhibit 9-4 Acquisition Integration Plan for Human Resources Operation |
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Conduct integration planning kick-off meeting |
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HR INTEGRATION PLAN |
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Standardize HR policy |
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Integrate HR processes |
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Employee relations |
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Performance review and evaluation |
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Employee dispute resolution |
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Employee complaint investigation |
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Acquisition integration communication |
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Turnover reporting |
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Employee relations legal/regulatory compliance |
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EEO |
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OSHA |
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Benefits administration |
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Benefits orientation |
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Presentation of compensation/benefits at welcome party |
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Benefits conversion and enrollment |
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Medical |
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Dental |
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Vacation (varies widely across countries) |
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Benefits plan administration |
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Benefits-related legal/regulatory compliance |
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401(k) |
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Health/welfare |
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New hire process |
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Termination process |
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Compensation |
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Job mapping and redesign |
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Map acquiree and company job positions |
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Set pay scales |
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Manage changes in pay |
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Performance reviews and promotions |
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Equity/noncash compensation |
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Sales compensation |
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Payroll |
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Leave accrual and administration |
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Customer service |
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Payroll administration |
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Accounting reconciliation |
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Communications with treasury |
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Pay-cycle disbursement |
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Recruiting/staffing |
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Facilities management |
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Office/real estate consolidation |
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Update database of site/contracts, leases |
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Assign leases to company |
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Obtain acquiree staffing projections |
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Organization development/training |
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HR infrastructure integration |
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Employee setup in HR information system (HRIS) |
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Establish department numbers for acquirees |
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Collect acquiree employee information |
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Input acquiree equal employment (EE) data in HRIS database |
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Provide acquirees with company services |
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Provide acquirees with company intranet access |
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HR communications plan development |
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HR contracts and commitments |
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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.
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25For sales team integration: “Integrating Sales Organizations After a Merger : Five Keys to Success,” Fast Company, April 14, 2023. For outsourcing: How to Preserve Outsourcing Relations in the Midst of a Merger” Undated; accessed June 24, 2023, at . For board integration, here are two undated articles accessed June 24, 2023: “Don’t Underestimate Board Integration After a Merger,” by Joanne Bouchard and “Save My Seat: Directors Who (Somehow) Stay on After Mergers” Korn Ferry
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Lajoux, Alexandra Reed with Capital Expert Services. The Art of M&A, 6th Edition: A Merger, Acquisition, and Buyout Guide. United States of America: McGraw Hill, 2024.
