The ink is still drying on the transfer papers. The champagne has been poured. You may not have heard it, but the starter gun has just gone off.
The first 100 days. Important in a new job, with a new baby, but crucial with a new acquisition. Ideally of course, you will have started planning beforehand, thinking through the new structure, incorporating new talent and identifying goals for the new company. In an environment where frequent acquisitions happen, there is usually a template to guide the HRD and Reward Director. But if it’s an infrequent or new stage in your company’s life, where do you start?
The first 30 days
The newly acquired business needs a management team – fast. Ideally someone senior from the parent company, who has the DNA of the acquiring business running through their veins. Their role is to explore the culture, the performance requirements for the organisation and be highly motivated to make this acquisition a success. After all, with 8 out of 10 acquisitions destroying value within two years, it’s a tough call. Their first mission is to conduct an audit; what needs to be amplified, valued, retained, and what is toxic and unhelpful. In other words, sorting the treasure from the baggage.
The first 60 days
Once the dust has settled, it’s time to check where the reality lives up to the sales brochure. As an HRD or Reward Director you might want to start with the basics – thinking about benchmarking, a Gender Pay Audit, a bonus review. Where can you shine a light into dusty corners and find those big spiders lurking? In practical terms, if you are going to closely align the two businesses and people will be working together, it becomes more of a priority to ensure employees working on the same projects have similar pay ranges, or total cash opportunity. Even if there is always going to be an arm’s length relationship between the two businesses, it’s important that you have covered reputational risk around pay and employee relations issues.
The first 90 days
If the businesses will become intertwined, or you intend on recruiting new people into the acquired business on your existing Ts&Cs, then integration becomes crucial. Some companies we’ve worked with have hired people into a hinterland where their package is unclear; key benefits like cars, holidays and pension, and bonus are not properly defined. This unsatisfactory state of affairs has continued indefinitely, leading to a lack of engagement. It’s HR’s role to create a meaningful package which may be a hybrid of the two businesses - or something completely new. New employees are the priority, but close on their heels comes everyone else.
A couple of businesses we’ve worked with have extended their levelling and pay structure into the new business, using the job evaluation process as a way of getting to know the new company and bring it closer. It also helps identify unexpected pay discrepancies, uncovering jobs with the same job title which are totally different or vice versa.
Finally, using flexible benefits as a device to reduce tribalism in the joined businesses can be helpful. By creating a flex pot, valued on the current package in each organisation, you can hand people’s choices over to them. This means employees can pick and choose the best of both organisations’ offers – ideally with a little bit extra in there too to sweeten the deal. It stops the ‘it’s not fair’ conversation in its tracks; everyone can have everything they want and chooses to pay for. It also sets up a helpful adult:adult relationship with employees, rather than a paternalistic ‘we’ve chosen what’s good for you’ type offer.
That’s it – you can go back to your champagne now. M&A activity is at its highest level for years. If a new acquisition is looming, or even if you are on the other side of the table and being acquired, we’re always ready to have a chat. We offer a real alternative to the Big Four and international management consultancies. Why not get in touch?
