February 16, 2021HCM System Support, Mergers & Acquisitions
Is Your HCM System Prepared For a Merger or Acquisition?
In a merger, acquisition or spinoff, there are many moving parts to manage at a quick pace. Focusing only on the bigger parts of the machine while neglecting the little pieces can mean trouble—just one loose screw or missing bolt can render the entire machine vulnerable. When beginning a merger, it’s easy to forget a screw here or there, especially if a team lacks the experience or knowledge of the crucial role of an HCM system. Augmenting staff with experienced professionals can ensure the machine runs smoothly, with all the bolts in place.
Below, Chris Davies, our VP of Mergers & Acquisitions, explains issues that can arise when companies undergo transition without the proper resources to implement their HCM. She also provides an overview of how Wise consultants, with expertise in HCM implementation, can help mitigate those issues.
Pressure on HR During Due Diligence
HR holds a pivotal role in a merger or acquisition. They are responsible for performing their day job, in addition to various due diligence tasks, which may include details involving new employee transfers, defining compensation plans, identifying key employees, evaluating policies and benefits, and planning retention strategies, to name a few.
In Davies’ words, “They have a lot on their plate. The technology should be there to support the effort, not to hinder. Having a team of HCM technology experts, who are skilled practitioners, to support these efforts is critical.”
Teams Need to Understand and Account for the Details
Every merger, acquisition or carve-out is different, and should be approached with an eye to identifying and managing its unique challenges before they become problems. The implementation, and how smooth or rocky it will be, depends on factors specific to organizational processes, people, and preparation.
According to Davies, the acquiring party also needs to know what level of support they will be receiving from the divesting party. “They’ll need two things: employee data and policy information. What information do they have access to? Who is responsible for providing this information? What changes will be made by NewCo?”
Davies continues, “Buyers need to understand all of the seller’s current policies to the level of detail that can be translatable into a system that will calculate time, pay and benefits. Some questions to consider: Will policies and practices mirror the seller? Will the merged employees be considered brand-new employees, treating them almost like new hires? Or, is it a successor/predecessor transaction with a continuation of employment with consolidated W-2’s? Be aware of the scope of the data necessary and the challenges often experienced transferring that data. Know the answer to these questions and call on experienced HCM consultants who can ensure your system is prepared accordingly.”
Common Pitfalls Companies Experience Early On
Some companies think they have all the information needed to successfully undergo a merger or acquisition. Failing to recognize the level of detail needed to set up the HCM to calculate pay appropriately while considering time, overtime and benefits is a substantial risk. “The common pitfalls early on, often lead to rework, compliance risks, and unexpected delays,” Davies says.
The biggest takeaway? Davies believes knowledge, experience and proactive preparation are key to avoiding pitfalls: “Know what it’s going to take to bring the system up, and marry that with the specific transactional details while gathering information before the implementation begins. This way, once the deal closes, you can implement right away.” This is a case when not knowing what you don’t know can be a big problem. Augmenting existing resources with experienced, knowledgeable professionals who can fill the gaps not only makes good business sense; it saves time and money.
Lean on Wise Consulting to Ensure a Successful Transition
When approaching a merger, acquisition, or spin-off, having the people and the bandwidth in place to be able to tackle it properly is essential. According to Davies, “It’s critical that HR understands their responsibilities when it comes to the implementation and long-term system success. Wise can help fill those roles. Teams need a partner with experience to provide the strategic and tactical support to maximize the HCM investment.”
During a merger, acquisition or spinoff, there are often not enough people involved in the process with the specific knowledge to correctly implement an HCM system or stand-up an accurate payroll. Especially amid the details and tight timelines associated with these critical projects. A missing screw or bolt can easily derail everything.
An experienced partner with a tested methodology to ensure total project success understands deadlines, budgets and the importance of change management. For single-source accountability and a holistic approach to supporting strategic, functional and technical requirements – contact Wise Consulting.
To learn more about our comprehensive Mergers & Acquisitions services, click here. To contact a member of our team, send a message to HCMHelp@WiseConsulting.com, call 800-654-4550 or visit www.WiseConsulting.com/contact/.
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