Guide EmployeesThrought a Successful Merger - Construction Business Owner's Magazine


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When two 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.

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Guide EmployeesThrought a Successful Merger - Construction Business Owner's Magazine

  2. 2. GUIDE EMPLOYEES THROUGH ASUCCESSFUL MERGER~TJgage your employees in the transition process to create a unified company.g v <ATHLEEN WEISS h en two construction firms out in the first meeting if the company has complied merge or on e company acquires with HR best practices and employment law and how another, the business owners they have handled employee issues. often neglect their employees ~ Review the organizational chart, salaries, employment concerns- this is especially contracts, titles, department heads, compensation true in small- and medium- plans and fringe benefits. Also, gather demographic size firms that have limited re- information a bout each employee. You need to know sources and time. But in merg- who is exempt and non-exempt and if any employees ers and acquisitions, "the people factor" is vital. have taken a leave of absence. Read the employee To complete a successful merger or acquisition , follow handbook, and compare policies to decide what shouldthese steps. be changed, integrated or deleted. Find out what the employee performance expectations have been andPREPARE how employee issues have been recorded. Also, con-First, meet with the other companys executive team to sider the technical expertise you will need to mergeunderstand their companys perspective, plans and expec- two different Human Resource Information Systemstations. Evaluate every system the other company has in (HRIS).place and how th at fits into your business. ~ Find out if any employment lawsuits or pending The Society for Human Resource Man agement (SHRM) litigation exists. Obtain copies of any non-compete,polled senior HR executives whohave had experience with mergers,acquisitions or joint ventures andfound the following common obsta-cles: loss of productivity, incompat-ible cultures, loss of key talent anda clash of management styles. Certain preparations must bemade 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 i:rr!portant decision makers. Decide who will be your main ro~ at the other company :.~~ :he acquisition, and =~ -= :;e::--on if possible. Find30 : _ =-= _:- CJ-l BUSI N ESS OWNER OCTOBER 2011
  3. 3. solicitation and disclosure agreements. Determine if on yearly tax filings, such as the 5500 form and any terminated employees are still bound by these Employment Retirement Income Security Act contracts and whether any contracts were made (ERISA) compliance. Determine which benefits you orally. Also, obtain copies of all forms and applications. will keep and which ones you can eliminate.~ Manually access the employee files to make sure re- ~ Consider how much vacation time the other company cordkeeping has been in compliance. Do the employee offered. If you will be offering less time off, how will files contain anything that should not be there? For you get new employees to accept this? Will you con- instance, all medical records should be separate from sider their tenure with the company and let them stay an employees main file. Also, ask each employee to on their current plan? complete a new I-9 form. Find out the immigration ~ Learn of any accidents, deaths or OSHA fines and status of any employees working with a visa. citations that have occurred in the last six years, and~ Review the current employee benefits and insurance decide if any safety issues should be addressed. plans. Gather all the vendor contact information, ~ Training also needs to be considered. What training including company names, contact, email, phone num- was provided in the last three years? Has any anti- bers and account numbers. Gather all medical, dental, harassment training been conducted? What skills do vision, life, disability and workers compensation employees lack? Try to find some cross-training op- insurance plan documents, and understand who is on tions and training manuals. each plan, the costs and premiums. Determine if any duplicate coverage exists. You may need to schedule a After you have obtained this information, you must de- meeting with your insurance professional. cide how to resolve differences in each of these areas. Retrieve all retirement or savings plan docu- ments, and work closely with your financial manager CONTINUED ON PAGE 46
  4. 4. CONTINUE D FROM PAGE 31COMMUNICATEOnce these decisions have been made, a communications TRY THISplan must be created. Change is difficult under any cir- Strategies for a Smooth Mergercumstance, and a communications plan will make it easierfor employees to embrace the many changes to come. The transition team sh ould develop a timeline for eachimportant communication and include the person respon-sible for making the communication. You must determinewhat staff meetings need to be held and what must bedelivered in writing, including notifications about retire-ment plan changes, salary or compensation changes andanything related to finances. Decide if department headscan make certain decisions. Always keep employees in-formed of any changes that affect them. Open communica-tion will h elp boost morale and retain top talent.INTEGRATEIntegration starts with upper management. At this point,you will h ave decided wh o stays, goes and moves or chang-es positions. Employee emotions, imaginations and sensi- 1. Analyze current roles and responsibilities, and create ativities will run high , and this air of uncertainty can have tentative plan.a n egative impact on productivity, morale and retention. 2. Use your transition team as a starting point toThis, ultimately, can affect your bottom line and lead to a brainstorm the best integration and engagementvolatile time for your company. activities. The loss of key staff could be counter-productive t o your 3. Conduct employee surveys to gauge satisfaction. Thegoals. As a result, the sooner you develop a plan to engage results will serve as a baseline satisfaction rating.your employees in the transition process, the faster you 4. Make sure each department head conveys the samewill h ave a unified company with higher productivity. messages about company goals and plans. Conflicts happen when employees get contradicto ry inf ormation.EVALUATE 5 . Create department team-building events withAfter everyone has settled into their roles, evaluate the employees. Allow supervisors to have a role intransactions success. Many small companies omit this development.step, but evaluation is key to understanding how th e suc-cesses and failures impact the business and staff Plus, 6. Put together employee focus groups, and get theiryou do not want to make the same mistakes again if more suggestions on integrating roles.mergers or acquisitions are on the horizon. Employee 7 If you have employees who work in different locations,feedback combined with financial analysis can give you hold video conference cal ls to bring employees closer.the strat egic edge you n eed. ... 8. Make it understood that each company will have different ways of conducting business, and everyone is expected to refrain from criticism. Kathleen Weiss, SPHR, is an HR consultant 9. Decide on cross-training opportunities, and look for any and the director of human resources for SWK mentor/mentee relationship possibilities. Technologies, Inc., an IT solution provider that u·orks with construction, manufacturing, pharma- 10. Conduct informal SWOT (strengths, weaknesses, opportunities, threats) analysis meetings for ceutical and other industries nationwide. Contact management and employees. Weiss at 973-758-6122 or kathleen.weiss@swktech. com. For more information, visit www.swk . 11 . Compare the two company cu ltures in open company discussions.46 CONSTRUCTION BUSINESS OWNER OCTOBER 2011