Download free M&A Human Resources Integration plans, playbooks, presentations, charters, and checklists.
In M&A, Human Resources has to integrate the HR function while at the same time supporting the rest of business. The below M&A HR deliverables from actual integrations can help HR teams perform due diligence, develop plans to consolidate HR, onboard employees, communicate new compensation and benefit changes, create staffing and retention plans, and survey personnel about the integration. HR also plays a critical role in developing cultural integration and communication plans.
HR Post Merger Integration Planning
Key Organizational Changes
Key Issues & Assumptions
Necessary Process Maps
20-page detailed Human Resources Acquisition Integration Plan that covers:
- Organization Comparative Analysis: What are the key similarities and differences between the 2 organizations? How do we operate currently?
- Future State Recommendation: How will we operate in the future?
- Day 1 Items: What actions do we need to take at close?
- Risk Analysis: What are the risks associated with transition?
Early Wins: Are there any immediate actions we can take to demonstrate benefits and success?
- Cost/Benefit Analysis: What are the costs and benefits associated with transition to the future state?
- Outstanding Issues & Decisions: What open issues still need to be resolved in order to realize transition?
- Communication Plan: What needs to be communicated (when & to whom) regarding the decisions that have been made?
22-page HR M&A Playbook when printed that includes 3 plans from 3 different actual integrations. Plans cover over 350 tasks/initiatives.
Excerpt from 1st M&A Plan
|Current Org Structures Data||Gather Top Levels Organisation Stuctures for both sides & conduct joint review to understand the rationale of the current org structures||None|
|Prepare People data to enable rapid data analysis and actions from Day 1 onwards||Create a template for gathering all relevant employee information from both sides|
|Prepare People data to enable rapid data analysis and actions from Day 1 onwards||Distribute template to Acquirer and Acquired Co. HR to prepare, collect and get data ready to be shared by Day 1||All Employee Data|
|Prepare People data to enable rapid data analysis and actions from Day 1 onwards||Build Hi-performer / Key talent list for both sides||High performer list|
Final review of the HR game plan prior to close between the players who have been involved in all the planning to date and the players who will be involved in the implementation.
1.0 OD - Succession Planning
2.0 OD - Leadership Development
3.0 OD - Training
4.0 OD - Tuition Reimbursement
5.0 OD - Performance Management - Next Year
6.0 OD - Performance Management -- Future State Design and Implementation
7.0 OD - Office Logistics ...
10 Key HR Activities in Mergers & Acquisitions
- Develop Workforce Integration Project Plan
- Conduct HR Due Diligence Review
- Compare Benefits and Analyze Differences
- Compare Compensation Analyze Differences
- Develop Compensation and Benefits Strategy for Workforce Integration
- Determine Leadership Assignments
- Addressed Duplicate Functions
- Prepare Employee Communication Strategy
- Define Transition Data Requirements
- Develop Employee Retention Strategy
HR Acquisition Integration Checklist that covers areas such as organizational design, benefits and compensation, policies, and HR systems.
- Define acquired company org. structure
- Identify formal and informal org. relationships
- Determine organization similarities / differences
- Gather information on relevant positions
- Map acquired company roles to acquiring company roles
- Identify organization differences to address
- Position titles, areas of overlap, etc.
- Align positions & titles
- Review / Align job descriptions ...
Three things that are guaranteed to give HR a better seat at the table:
- Preemptively prepare for M&A. Anticipate. Provide in-depth training for HR staff on the fundamentals of due diligence, merger integration strategy, how to reconcile culture differences, etc. Ensure that the HR Team is very sophisticated on merger dynamics and positioned to serve as a merger-savvy resource to people in other functions.
- Rethink HR's conventional wisdom on how success should be measured. HR is the guardian of workforce issues such as morale, trust, job satisfaction, stress levels, and employee loyalty, but those metrics will take wicked turns for the worse during a merger. Success is better measured by tracking productivity, quality, market share, customer satisfaction, and– above all– profitability. This is highly counterintuitive for HR people, but these are the critical markers for the integration process...
When an acquisition will be integrated and its current corporate identity reshaped, the parent (or surviving) firm has an obligation to bring acquired employees into the fold. This calls for comprehensive, sustained onboarding. People in the acquired firm need to develop a feeling of citizenship in the new corporate structure. They need guidance on what to expect and how to fit in. They need help in making social connections that can provide a new sense of belonging.
Yes, it takes time and money, but the return on investment is huge. Acquirers that skimp in their onboarding efforts pay a far heavier price in the long run as they wrestle with integration problems which easily could have been prevented.
Four Key Benefits of Onboarding
A well-crafted onboarding program can be your best counter-offensive against the chronic and troublesome merger dynamics of ambiguity, a weakened trust level, and self-preservation …
What to Avoid in Employee Orientations
- A tedious data dump
- Boring presenters
- Executives who do “touch-n-go’s” or “flyovers” without any real engagement
- Dumbed-down orientations for employees (separate from managers) …
111 Human Resources tasks to be completed grouped into the following categories:
Reduction In Force
New Hire Plan
Identify and define the future state OD/HR organization, philosophies, policies, procedures, programs, and support systems. In addition, identify high-level activities, tasks, and costs required to combine the two organizations into the future state organizations. Special attention will be given to high-priority (Day 1) items as well as milestone components to reach the decided end state.
In-depth Human Resources Acquisition Integration Checklist that covers compensation, retention, deferred compensation, severance, health insurance, COBRA, LTD, STD, 401(k), pension, communications, recruiting, data conversion, organization structure, workers compensation, training & development, educational assistance, travel & expense, plus 9 more areas
|Payroll Disbursement Bank Accounts|
|Coordinate with HR to identify payroll strategy for each country (e.g. Firm A payroll, outsource payroll vendors beginning Day 1)
|Coordinate with Legal and HR to identify where payroll disbursement accounts will be needed by country
|Create plan in conjunction with Treasury to open any new payroll disbursement accounts by Day 1 in conjunction with legal entity strategy and setup
|Identify all Firm B payroll disbursement accounts by country
|Create plan to close Firm B payroll disbursement accounts or transfer to Firm A legal entities and change bank signatory names by Day 1
|Payroll and Expense Disbursements ...|
Benefits and Compensation
Synergy Plan Overview
- Executives have a synergy-based incentive target on top of the current annual incentive plan (AIP)
- Department heads will have the ability to allocate discretionary pools to other employees
- Eligibility: Management plus other employees involved in workstreams
- Synergy goals are set as an add-on to the current AIP
Acquiree's Pre-Merger Compensation and Benefits Plan and the Acquirer's Post-Merger Changes in 40 Areas:
- Salary Plans
- Incentive Plans (Cash)
- Restricted Stock
- Exempt Overtime
- Overtime Meals
- Call-Out Pay
- Shift Differential
- Cafeteria Plan ...
- Acquired Co Employees Impacted In 3 Ways
- Required Co Employee Selection and Placement
- Engaging with Acquired Co Employees Pre-Close
- Rules of Engagement
- Selection Process for Functions Being Scaled Back
- Step 1: Workforce Planning Results in Acquirer Talent Needs
- Step 1: (Cont.) Workforce Planning Identifies Acquired Co Positions Being Affected
- Step 2: Candidate Pooling Identifies the Talent to Be Assessed
- Step 3: Selection Will Be Driven by Assessment of Experience and Performance
- Step 4: Employees Not Selected Will Be Considered for In-Placement and Out -Placement
- Guidelines for Selection
- Service Eligibility
- In-Placement Services
Discuss how all retention, severance, outplacement, transition and synergy-linked incentives will support the goal of engaging and motivating people to perform and behave appropriately through the transition period
- Meeting Objectives
- Timing of Announcement of Job Status to All Employees
- Timing Dependencies
- Timing of Announcement of Tier 1 Organization Design and Staffing Decisions
- Pre-Close Retention Incentives Acquirer
- Severance for Acquirer Employees Post -Close ...
As a hiring manager, you may have participated in the interview process when hiring externally at ACQUIRER or TARGET. The staffing of NEWCO will be somewhat different from what you’ve experienced previously. You will be asked to interview ACQUIRER and TARGET employees to gain a better sense of their overall skill set and competencies. During this process you need to keep an open mind about where they might be fits within your division and the new company. This will be an emotional time for people who are being interviewed; therefore, please be conscious of the fact that many of the candidates will be nervous since there is uncertainty about their future job status.
Unfortunately, there may not be a position in ACQUIRER for some of the candidates you interview. Let the candidate know that someone will get back to them as soon as a decision has been made. The interview process will move much faster than our typical external interview process. No job offers or eliminations will occur until after the merger has been completed ….
The top management in the acquirer might argue that it is best to allow some time to get to know the abilities and potentials of the management team in the target organization. But that assumes that those people will hang around long enough for such a familiarization process to occur. Often, they do not.
Guidelines for Determining Stay Bonuses
Payout Terms and Conditions
Engagement to Departure Process
Major Events (Like an Acquisition)
Events That Trigger Disengagement
Four Fundamental Human Needs
7 Hidden Reasons Employees Leave
Over 70 Staffing and Retention Activities Grouped into these Categories:
- Finalize Organizational Structure for All Functions
- Deploy a Staffing Process to Assess, Select, and Announce All Levels of the Organization below the Management Team
- Management Team Design Tools to Retain Key Talent Prior to Close and Throughout the Transition Period
- Develop a Process for Managing Reductions in Force and Administering Separation Packages and Outplacement Services
- Design an Issue-Free Day 1 From the Employee Perspective
- Provide the Communication Team with Guidance on Messages Related to Retention, Severance and Staffing
If you’re involved in a merger, some of your best people in the acquired company are job hunting. Count on it.
Maybe you don’t have many who are circulating their resumes yet, but you can bet the majority are considering their options. Mergers are good at getting people’s attention. Everybody wakes up, looks around, and wonders how his or her career will be affected.
Some people can’t stand all the uncertainty and ambiguity, so they start looking for opportunities somewhere else. Others have a pretty good idea of what’s coming, but don’t like the looks of what they see. So they, too, decide to check out other job possibilities. The most talented people, of course, typically have the best alternatives. Executive recruiters aggressively seek them out, knowing that mergers always loosen the ties that bind.
Research shows that acquired firms, on the average, lose four out of ten managers during the first twenty-four months of a merger. This turnover rate is three times the rate found in companies …
Here’s how the familiar story unfolds…
Company A acquires/merges with Company B. Part of the logic driving the deal is that, in combining the two firms, headcount can be reduced. Accounting runs the numbers and promises annual payroll savings of, let’s say, $20 million.
But, of course, you can’t afford to let all those people go immediately. Some of them will be needed to help do the heavy lifting during the integration process. A few of the folks have critical skills…or they possess key information that has to be transferred to other employees who’ll remain. So, in order to keep the integration from going off the rails, you offer a big chunk of money to select people, the bonus to be paid only if they help out for a specified period of time.
Sounds practical. But research shows that stay bonuses can produce unintended consequences …
During mergers, people reexamine how the organization being created fits with their personal goals and ideals. As leaders, it is important to identify those individuals most critical to the success of the merger and “re-recruit” them to stay. This document is intended to give leaders a framework for organizing their thoughts on re-recruitment. The key is not to focus only on those viewed as a risk for leaving, but also on those whose departure would have a significant negative impact on the organization.
“AMA study found that 25% of top performers leave within 90 days of major change event”
I. Reasons Why Talent Leaves:
- Targeted by recruiters/competition
- Net/net perceive they are “worse off”
- Perception of loss of sponsor/access to key decision makers
- Changes to reporting relationships/key job responsibilities
- Loss of compensation/benefits
- Perception job will not meet career goals
II. Talent Assessment: ...
A direct by-product of the acquisition integration process is an increase in employee turnover. It’s a fact of life that, whether planned or not, there will be attrition.
Most of the time merging companies can survive operating with fewer people, but not fewer quality people. So, you can’t just sit back and let nature take its course so far as turnover is concerned.
Natural attrition during a merger produces a loss of good employees and minimal turnover among marginal, weak players. The reason for this is obvious—it’s easy for good people to find new jobs, but much more difficult for the lesser talents to reposition themselves successfully elsewhere.
In most cases it’s advantageous to consolidate and downsize. The financial logic driving the merger probably is based on the assumption that certain economies can be achieved through …
The trust level drops dramatically when major changes are made in an acquired company post-sale. Morale heads south. Loyalty, the tie that binds, comes unraveled. Job stress hits new highs. The overall effect can be punishing, like a hard fist slammed into the stomach of the organization. And it can knock the wind out of work groups..
As a manager, you’d better take these emotional matters seriously. Strong feelings strongly influence people’s behavior. What all this means is that your job gets a heck of a lot harder. It does not mean that you should make attitudinal issues such as morale, trust, and employee loyalty your top priorities. You shouldn’t.For now you should focus on problems, not symptoms. Tangibles rather than intangibles. Hard results instead of soft issues. You could waste a lot of precious time and energy chasing the wrong rainbows ...
This Retention Bonus Agreement (the "Agreement") is made and entered into effective as of October 1, 2030 (the 'Effective Date"), by and between John Doe (the "Employee") and ABC, Inc. (the "Company").
A. The Company has announced the execution of an Agreement and Plan of Merger pursuant to which the Company may be acquired by another company. The Board of Directors of the Company (the "Board") recognizes that such announcement can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders ...
HR Due Diligence
11-page comprehensive comparison of HR Programs of the Acquirer and Acquiree in 125 Areas.
The programs are grouped into the following categories:
- Defined Benefit Plans
- Retiree Medical Plan
- Defined Contribution Plan
- Health And Welfare Plans
- Career Development
Leadership Qualities Rated
Understands overall business goals; maintains or increases financial performance and market share through the application of sound business principles and knowledge.
Demonstrates the ability to grow our business in both current customers and the marketplace; knows and understands customer needs and anticipates opportunities.
Works across internal, external and geographic boundaries to deliver customer value; partners with individuals at all levels and in all functions to ensure that organizational objectives are met ...
Traditionally the merger due diligence process has focused on legal and financial issues—e.g., contractual matters, litigation points, economic and fiscal considerations, etc. Obviously that’s an important exercise.
But when mergers fail, as they too frequently do, the odds are it reflects a sloppy job of soft due diligence.
There is powerful logic in favor of systematically assessing the competencies of key players in the new organization. You should not automatically assume that people who have been successful in a pre-merger environment will perform with the same effectiveness under a new regime and in a different corporate setup. People’s strengths often become weaknesses during a merger transition period ...
60 HR Due Diligence Tasks
- HR staffing and its responsibilities
- HR reporting relationships
- Significant layoffs or closings in the past, progress or being contemplated
- Employees permitted and/or encouraged to work full or part time at home
- Executive search firms utilized. The firms and fees paid. Searches in progress
- Business’s pay scales or rates and benefit costs relative to competitors
- Status of litigation or potential litigation
- Plans, either contemplated or in progress, to modify or cancel any benefit programs for existing or retired employees ...
9-page list of data to gather and assess HR
Identify potential synergies/opportunities in these categories:
- Management Team
- Compensation and Benefits
- Recruiting ...
Results from Assessment of SVP (name of executive and details have been changed).
178 HR and Legal Due Diligence Questions
Checklists for each of these categories: Employees, Unions, Compensation and Benefits, Retirement Plans, 401(k)s, and ESOPs, Culture, and Legal and Regulatory.
1. Does this business have a human resources department? If yes, how is it staffed and what are its responsibilities? To whom does the senior human resources executive report? Are human resources personnel involved in signiﬁcant business decisions?
2. What is the number of full-time employees? (Exclude part-time, contract, and temporary employees.) Subdivide the total by country and business unit in which they are employed. Request lists, if needed, ...
7-Page HR Due Diligence Checklist
- Number of full-time employees in business (Exclude part-time, contract, and temporary employees).
- Employee names, job titles, and compensation.
- Total number of employees exempt from overtime: sales, administrative, professional and executive employees.
- Total number of hourly full-time (nonexempt) employees. Seasonal variations? Skill levels within each group?
- Total number of employees classiﬁed as temporary. Circumstances and conditions employees considered temporary.
- Total number of contract employees.
- Use and total number of part-time employees.
- Signiﬁcant increases or decreases during the past year in employee categories?
8-Page HR Due Diligence Checklist:
- Organization charts and a description of management structure, including principal functional areas, headcount by area. and reporting relationships.
- Job descriptions for all major job categories and minimum education, experience, and skill levels required for each.
- Current pay ranges and recent increases.
- List current personnel (including lists of officers and directors) with hire dates, current annual salaries, bonus targets (if applicable), commission targets (if applicable), years of service with the Company, site location, highest educational degree, and prior experience ...
Post-Merger Integration Employee Surveys
Survey includes twenty-one questions for employees in the following five categories: Demographics, Merger Announcement, Between Announcement and Close, During the Integration, and Overall.
1. Were you employed by the Acquirer or the Acquired Company before the acquisition?
2. Had you ever been through another merger before this deal?
3. What was your primary location at the time of the announcement?
4. Have your job duties changed significantly since the closing of the deal?
Regarding the Announcement of the Acquisition
5. How and when did you receive formal notification of the deal …
Summary of Results
Interpreting the Percentages
Key Drivers of Engagement
Ares of Strength
What Additional Remarks or Suggestions Do You Have
A Post-Merger Integration Audit answers key questions about the last acquisition:
- How were the events, decisions, communications, and actions surrounding the merger handled?
- What could have been done differently to make the integration easier?
- What additional actions remain unfinished?
- How have shareholders, customers, and employees perceived the merger?
- If the company were to merge/acquire again, what should be done differently?
- Determine the depth of review required
- Interview or conduct written surveys with executives, managers, employees, and if appropriate, customers and board members …
Each person was asked to rate twenty-one statements from 1 to 5
- I understand the reason for the merger
- I think the merger will be good for the business
- I have a good understanding of the company's goals and direction
- I know how the company is performing …
5-page guide includes questions such as:
- What is your perception about the general feeling in the organization related to this deal?
- What do you view as the biggest risks associated with pulling together these organizations?
- What do you view as the highest priorities for integration (e.g., integrating the systems, resolving client overlap, etc.)
- Complete the following sentence….I wish everyone on the leadership team realized ______
- What might be some important “home runs” and major successes that the combined company could achieve in the near term ...