Engage your employees in the transition process to create a unified company.
When two construction firms merge or one company acquires another, the business owners often neglect their employees’ concerns—this is especially true in small- and medium-size firms that have limited resources and time. But in mergers and acquisitions, “the people factor” is vital.
To complete a successful merger or acquisition, follow these steps.
First, meet with the other company’s executive team to understand their company’s perspective, plans and expectations. Evaluate every system the other company has in place and how that fits into your business.
The Society for Human Resource Management (SHRM) polled senior HR executives who have had experience with mergers, acquisitions or joint ventures and found the following common obstacles: loss of productivity, incompatible cultures, loss of key talent and a clash of management styles.
Certain preparations must be made to avoid these obstacles:
- Assemble a transition team to discuss all the decisions that need to be made. This team usually includes the CEO, CFO, president, an HR rep and other important decision makers. Decide who will be your main contact at the other company during the acquisition, and meet in person if possible. Find out in the first meeting if the company has complied with HR best practices and employment law and how they have handled employee issues.
- Review the organizational chart, salaries, employment contracts, titles, department heads, compensation plans and fringe benefits. Also, gather demographic information about each employee. You need to know who is exempt and non-exempt and if any employees have taken a leave of absence. Read the employee handbook, and compare policies to decide what should be changed, integrated or deleted. Find out what the employee performance expectations have been and how employee issues have been recorded. Also, consider the technical expertise you will need to merge two different Human Resource Information Systems (HRIS).
- Find out if any employment lawsuits or pending litigation exists. Obtain copies of any non-compete, solicitation and disclosure agreements. Determine if any terminated employees are still bound by these contracts and whether any contracts were made orally. Also, obtain copies of all forms and applications.
- Manually access the employee files to make sure recordkeeping has been in compliance. Do the employee files contain anything that should not be there? For instance, all medical records should be separate from an employee’s main file. Also, ask each employee to complete a new I-9 form. Find out the immigration status of any employees working with a visa.
- Review the current employee benefits and insurance plans. Gather all the vendor contact information, including company names, contact, email, phone numbers and account numbers. Gather all medical, dental, vision, life, disability and workers’ compensation insurance plan documents, and understand who is on each plan, the costs and premiums. Determine if any duplicate coverage exists. You may need to schedule a meeting with your insurance professional.
- Retrieve all retirement or savings plan documents, and work closely with your financial manager on yearly tax filings, such as the 5500 form and Employment Retirement Income Security Act (ERISA) compliance. Determine which benefits you will keep and which ones you can eliminate.
- Consider how much vacation time the other company offered. If you will be offering less time off, how will you get new employees to accept this? Will you consider their tenure with the company and let them stay on their current plan?
- Learn of any accidents, deaths or OSHA fines and citations that have occurred in the last six years, and decide if any safety issues should be addressed.
- Training also needs to be considered. What training was provided in the last three years? Has any anti-harassment training been conducted? What skills do employees lack? Try to find some cross-training options and training manuals.
After you have obtained this information, you must decide how to resolve differences in each of these areas.
Once these decisions have been made, a communications plan must be created. Change is difficult under any circumstance, and a communications plan will make it easier for employees to embrace the many changes to come.
The transition team should develop a timeline for each important communication and include the person responsible for making the communication. You must determine what staff meetings need to be held and what must be delivered in writing, including notifications about retirement plan changes, salary or compensation changes and anything related to finances. Decide if department heads can make certain decisions. Always keep employees informed of any changes that affect them. Open communication will help boost morale and retain top talent.
Integration starts with upper management. At this point, you will have decided who stays, goes and moves or changes positions. Employee emotions, imaginations and sensitivities will run high, and this air of uncertainty can have a negative impact on productivity, morale and retention. This, ultimately, can affect your bottom line and lead to a volatile time for your company.
The loss of key staff could be counter-productive to your goals. As a result, the sooner you develop a plan to engage your employees in the transition process, the faster you will have a unified company with higher productivity.
After everyone has settled into their roles, evaluate the transaction’s success. Many small companies omit this step, but evaluation is key to understanding how the successes and failures impact the business and staff. Plus, you do not want to make the same mistakes again if more mergers or acquisitions are on the horizon. Employee feedback combined with financial analysis can give you the strategic edge you need.
Strategies for a Smooth Merger
1. Analyze current roles and responsibilities, and create a tentative plan.
2. Use your transition team as a starting point to brainstorm the best integration and engagement activities.
3. Conduct employee surveys to gauge satisfaction. The results will serve as a baseline satisfaction rating.
4. Make sure each department head conveys the same messages about company goals and plans. Conflicts happen when employees get contradictory information.
5. Create department team-building events with employees. Allow supervisors to have a role in development.
6. Put together employee focus groups, and get their suggestions on integrating roles.
7. If you have employees who work in different locations, hold video conference calls to bring employees closer.
8. Make it understood that each company will have different ways of conducting business, and everyone is expected to refrain from criticism.
9. Decide on cross-training opportunities, and look for any mentor/mentee relationship possibilities.
10. Conduct informal SWOT (strengths, weaknesses, opportunities, threats) analysis meetings for management and employees.
11. Compare the two company cultures in open company discussions.
Construction Business Owner, October 2011