How to Integrate HR Systems During a Merger & Acquisition
Following a merger or acquisition, HR departments often find themselves immediately overwhelmed with integration activities.
Leaders are tasked with consolidating systems and processes while reducing costs, identifying synergies, and ensuring long-term organizational fit. Of course, this is in the midst of ensuring minimal disruption to day-to-day operations for an increasingly anxious and concerned employee population.
While this may sound less than ideal, I’ve seen many clients succeed in their integration efforts by embracing the process early on and using their knowledge of the acquiring company’s history, goals, and objectives to holistically tackle the project.
One of the largest integration efforts in terms of time and scope is the integration of HR Systems.
With all the regulatory and compliance requirements under HR’s purview, a thorough systems integration is absolutely essential to the success of the business. This can also be viewed as an excellent opportunity to take a closer look at current systems and processes and identify ways to incorporate efficiencies and industry best practices.
Depending upon your situation, you may find yourself starting at different steps within the process. Sometimes, an acquiring company with a strong HR system in place will require all acquired companies to integrate into their existing infrastructure. In that case, you’d tailor the steps below to skip the system selection phase.
We’ll look at the steps that incorporate a successful HR system integration with more detail, but first…
During an M&A - Communicate Always
When reviewing the integration steps below, keep in mind that communication is essential to the success of the integration. Make it a priority to communicate early and often with employees. Even if there isn’t much information to offer at times, the fact that you’re regularly checking in with them will go a long way to calm nerves and build trust.
Take some time to understand the cultures of the companies impacted by the M&A. Look to meet these employees at their current state and begin to set expectations that guide them towards the future state. Make sure you communicate changes in a way that meets the needs of all employees, whether they’re on customer sites or on different schedules in various time zones.
When putting together your implementation team, make certain you have a representative selection of stakeholders from all functional areas within the company. Not only will this help to guarantee that you’re taking all pertinent information into account, but it will also help build buy-in and support for the process from departments and employees across the company.
Step 1: Project Objectives
The project objectives will guide you through every step of the implementation and ensure you remain aligned with the organization through what’s sure to be some tumultuous weeks and months following the M&A.
In order to define your objectives, you must understand the long-term plan for your organization as well as the current culture of your employees. The goal is to ensure your objectives and the overall system integration tie back to your organization’s mission, vision, and values.
Having intentional objectives and sticking with them will set the stage for a successful systems selection and will pave the way for a comprehensive and thorough implementation plan.
During this stage, take time to review your current processes and workflows, analyze any identified gaps, and look for areas where you can introduce best practices that aren’t already in use. This can be a huge opportunity for clients to voice concerns over current inefficiencies and look for solutions to these issues.
- An HRIS that delivers seamless functionality across the organization
- Best in class ATS that attracts the brightest up-and-comers to our company
- An intuitive and low-maintenance performance management system with global capabilities for our ever-expanding global workforce
Step 2: System Selection
If you’re unsure of which systems that you’ll be moving forward with, you’ll need to compare your options and determine the best fit for your organization. A simple way to do this is by creating an evaluation sheet with custom attributes.
Your attributes should be in line with your business objectives, HR strategy, and IT infrastructure. Each attribute would be assigned a numeric value based upon its level of importance. Then, competing systems are granted a numeric value for each attribute and a total number.
When evaluating current systems, identify when current licenses expire and whether current systems are hosted locally or by a third-party vendor. Identify any current interfaces and determine whether they will be required in the future.
While the selected system will need to meet your business needs today, make sure they’re also scalable to where the organization will be five or ten years from now.
Make sure you know the history around the companies behind the systems you’re evaluating – while more established companies with long-standing systems have often worked through all the initial kinks, it’s possible that a new company and/or system will experience more trial and error.
Finally, be sure to identify whether any of your current systems are known as best-in-class for your organization’s size and/or industry.
The following are some examples of attributes that can be used for an HRIS evaluation:
- System functionality and fit with my company’s technology strategy
- Self-service capabilities
- Need for configurations
- Reporting capabilities
- Recording keeping and audit trail
- Total Cost
- System Security
- Need for data or module interfaces (automatic and manual)
Step 3: Action Items
After the system has been selected, you’ll need to begin identifying implementation steps. List all the deliverables that are required in order to finalize the system integration. Look to leaders from various functional areas (i.e. Payroll, Recruiting, Finance, Security, etc.) for valuable insight into how HR’s processes, procedures, and workflows coincide with theirs.
If possible, make sure employees from the acquired company are included in this discussion as they often have valuable historical knowledge on data and processes that need to be identified and shared.
This is also an opportune time to bring any lingering questions to the group. Discuss your plan for sunsetting current systems and how that data will be stored in the future.
Keep in mind that you’ll still be required to complete employment verifications and investigations or comply with court subpoenas and audit requests as they come in.
Sample action items:
- Final data migration
- Interface builds
- Process mapping
- System testing
- Quality check
Step 4: Integration Plan
Once the majority of the action items have been identified, begin to put together your integration plan by prioritizing, creating milestones, and assigning timeframes. This document will give you a visual “big picture” of the implementation as a whole and will keep you on track through the duration of the implementation.
Create a communication plan of action and tie it to milestones and deliverables while also making sure updates are scheduled to be sent at appropriate intervals to stakeholders. Determine the responsible functional area for each action item and assign a team member to see the task through to completion.
Once the integration plan has been created and implemented, be sure to meet with the implementation team often to track progress. This detailed plan should be a working document with status updates and notes being added constantly.
Doing so will help keep you on track and lessen the odds of items slipping through the cracks. Celebrate milestones when they’ve been reached and make an effort to support your team members as you all work towards this common goal.
Step 5: Lessons Learned
While you may not experience another M&A immediately or in the near future, it’s still a great practice to reflect on what you’ve learned and think about how you may have done things differently given the chance.
Overseeing a systems integration can be an enormous and tiresome task, but you’re guaranteed to learn valuable information about the systems you’re using and how the company operates as a whole.
Use this to your advantage as you navigate within your company and never stop looking for ways to streamline and introduce efficiencies elsewhere within the business.