You’ve acquired the company

– you don’t own the people

What are the key issues you need to address when integrating a
human resource consulting
creating Value for your Business through People

new acquisition?
Buying a business only gets you to the starting line – it’s what you do with it that
determines future success or failure. Employees are crucial to the success of any
business, but too many acquisitions fail to deliver the anticipated increases in
shareholder value because ‘people issues’ are not addressed effectively or
quickly enough.

Being tasked with directing a successful integration programme is a huge challenge.

Your job should start with a careful assessment of people issues during the due
diligence stage of a deal. Focused up-front research, combined with careful
planning, is essential to ensure a quick and effective transition once the transaction
has been completed. Yet the deadline-driven pressures of completing a transaction
often means critical people issues are overlooked or given inadequate attention at
the pre-deal stage. This will inevitably result in delays in implementation and
sometimes the full potential of the acquisition is not achieved.

The need to act quickly cannot be overstated, but this needs to be balanced with
having a clearly defined strategy, clarity on ‘what success looks like’ and a structured
plan of action. And these need to be fully understood and committed to by you and
your colleagues.

Planning an effective integration requires you to have answers to most, if not all,
of the following wide-ranging questions:

Organisation structure and governance

• What corporate structure best responds to your strategic objectives?
– Will the acquired business be fully integrated or be a Strategic Business Unit?
– What are the key drivers that influence this decision?
• What are the key synergies to be exploited and captured through the organisation
design process?

• How will corporate decisions be made in the future?

– What executive forums are required?
– How will these executive forums interact?
• How will your corporate risk be managed through effective governance in the new
business – both during the transitional period and in the long term?

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 Culture and values
• What are the culture and values that you wish to
promote in the future?
• What are the culture and values within the acquired
business and to what extent should these be modified
to achieve compatibility with your vision?
• Have the key challenges to achieving cultural
compatibility been identified and how can you best
engage employees in the change process?
• Who are the key influencers and stakeholders who
have an interest in any potential culture and values
change programme?
Workforce
• How is the inherited workforce structured?
• What is the workforce composition and corresponding
cost base for each group (permanent, temporary, part
time, contractors etc)?
• What are the future resource requirements?
• Does the workforce capability profile match your
organisation’s future needs?
• Who are the key individuals in the workforce who are
critical to the success of the business and what is the
succession cover for these individuals?
• Where do you have duplication of effort between the
two organisations?
• How will you resolve skill gaps?
Executives
• What is the management style that you wish to
promote in the future?
• Do you have a clear understanding of the leadership
cadre, their capabilities, roles and responsibilities, and
development needs?
• How will the prevailing management style and
capability of the acquisition fit with your organisation?
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• Which managers’ departure or poor performance
could cause a serious disruption to the smooth
running of your acquisition?
• What retention programme (golden handcuffs) should
be put in place to ensure that key executives are retained?
• Is the executive group adaptable and committed to
corporate change?
– What specific barriers must be overcome?
• How will the performance of executives be measured?
– How will this link to future remuneration
arrangements?
• What succession issues have to be managed?
– How should these be prioritised and supported by
an appropriate executive development programme?
Compensation and benefits
• What is the fit of the two organisations’ compensation
and benefit structures?
– How do these compare against industry norms and
best practice?
– Do these meet the future vision of the organisation?
• What outstanding liabilities are there in the acquired
business?
– Do existing arrangements represent value for money?
– Are these sustainable?
• Are the payroll systems and associated processes
existing in the acquired organisation adequate for
your future needs?
– Should these be integrated with or replaced by your
existing facilities?
• Are the grading structures in place in the acquired
organisation consistent with future needs?
Employment terms and conditions
• For acquisitions operating across international
boundaries is there clarity on employment legislation
and custom and practice in each of the countries
where the organisation operates?
• Is a common set of terms and conditions of
employment required?
– What are the key drivers and constraints that should
be considered in reaching this decision?
• What is the current employee and industrial
relations landscape?
– What threats/opportunities does this present to
your integration project?
• What cost benefit issues should you consider when
considering ‘buying out’ employment terms and
conditions?
• What collective bargaining arrangements are
in place?
– How are these likely to help/hinder the change
process?
– What are the protocols and who are the key
influencers?
Effectiveness of the HR function
• What capabilities exist within the HR function
to support your change programme?
• What should be the future role of the HR function?
– What are the relative merits and disadvantages
of a centralised HR model?
• Do you have a comparative analysis of the two
organisations’ HR policies and procedures and their
relative strengths and weaknesses?
• Has a plan been put in place to make any required
short-term changes and harmonisation of HR policies?
• Is a comparative analysis available of the two
organisations’ HR systems giving their relative
strengths, weaknesses and costs?
HR integration planning and delivery
• Who will sponsor the post-deal integration project?
– Is there clarity on terms of reference, freedom to act
and your reporting relationship with executive forums?
• What programme and project management framework
is required?
– What resources (number and type) are required
to make the transition process a success?
• How quickly should you plan to complete the transition?
– What budget is required?
– How will you control quality and manage risk?
• How will your post-deal integration workload
be planned?
– How will you measure and report your
performance throughout the transition period?
Stakeholder management and employee
communications
• Who are the key stakeholder groups?
– How will you identify the particular needs and
issues of each group?
• How quickly and frequently will you communicate
with each stakeholder group?
– What should be your key messages?
– What medium should be used for each
communication?
• How will you ensure effective stakeholder feedback?
• How will you balance and respond to potential
conflicting needs of different stakeholder groups?
• How will an employee communication plan be
produced to ensure staff buy-in to the acquisition
and any subsequent organisational changes?
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 PricewaterhouseCoopers HR Transaction Services specialists can help you to:

• gather and analyse information to answer these critical questions

• develop your transition plan
• implement the transition plan
If you would like to discuss any of the issues outlined in this document, please contact:

Birmingham: London:
Paul Southern 0121 232 2200 Marc Hommel 020 7804 6938
paul.southern@uk.pwcglobal.com marc.hommel@uk.pwcglobal.com

Bristol: Tina Hallett 020 7804 1704

David Knight 0117 923 4280 tina.hallett@uk.pwcglobal.com
david.j.knight@uk.pwcglobal.com Martin Miles 020 7804 3914
martin.w.miles@uk.pwcglobal.com
Glasgow:
Isabel McGarvie 0141 242 7326 Jeffrey Rowney 020 7212 4453
isabel.mcgarvie@uk.pwcglobal.com jeffrey.h.rowney@uk.pwcglobal.com

Leeds:
Claire Wesley 0113 289 4107
claire.e.wesley@uk.pwcglobal.com

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