If your business is about to embark on a global merger or acquisition, the way you do things is inevitably about to change and adapt. HR plays a huge role in the smooth integration of two (or more) businesses, yet the department can often be overlooked during the process. In fact, studies by The Employers Council suggest that 58% – 70% of mergers and acquisitions (M&A) fail to achieve their integration goals.
Absence management is a complex component of the M&A journey and all too often businesses get it wrong, with damaging repercussions.
Here’s how HR can avoid the absence management pitfalls of a global M&A…
1. Ensure you have a seat at the table – from the start
HR’s role in M&A is to align workforces to achieve new objectives. Fail to get a seat at the table before the ink has dried on the deal and you’re already on the back foot. HR needs to be part of the integration team to be involved in planning activities, drive data decisions, and outline communication strategies, otherwise your employees will suffer. Without proper representation, it is likely that teams will feel disconnected and lack motivation at what should be an exciting time for the business. Making it known from the beginning that HR will be taking a seat, and that absence processes will be a priority to integrate and get right, is a good start to the process.
2. Get your house in order
As an HR department, you will be under pressure to deliver a huge amount of absence data, and quickly. Any diligent acquisition process will want to understand, from all parties, employee data, financial liability, holiday debt, employee benefits, absence policies, cost of absence, and sickness rates (to name a few), to avoid any surprises down the road. Any compliance gaps will be found.
3. Planning and productivity
Harmonizing absence management across two businesses is hard and some businesses choose not to do it at all. This is certainly one path, but it’s a bumpy one with unexpected twists and turns along the way. When acquiring a new business or going through a merger, the HR teams of both organisations need to communicate. Processes that are currently used need to be identified, and at the very least continued in the short term so that employees are supported. If merging systems is the ultimate goal, then finding one solution that can be leveraged across the entire business, not only makes administration far more straightforward but contributes to an overall sense of belonging. Ultimately the biggest risk without proper planning is a lack of productivity, and this can be apparent when individuals are unable to easily access absence systems to book time off to relax. On top of this, your business will benefit from access to aggregated global absence data that you’re able to break down by location, team, or group.
Communication with employees is vital in any major business change, none-less so in an M&A situation where employees are likely to feel nervous about what lies ahead. Growing globally may mean expanding into previously unknown territories and it’s important to understand, in advance, the best ways to communicate with an expanded and more diverse workforce if you are to make them feel included.
Anthropologist Edward T Hall’s concept of proxemics considers a high and low context framework in line with certain cultures. For example, employees in Japan, China, France, and Brazil are more likely to respond better to high context communication. This focuses on not just the words used, but their tone, the underlining message, and any nonverbal communication. Delivering messages around an increase in holiday entitlement here, for example, would be better delivered via Zoom or, where possible, face to face. Conversely, low context cultures, often displayed in countries such as Switzerland, the USA, and Germany, respond better to more explicit direct information, where there is no risk of confusion or interpretation. Here, to deliver a message about a change in sick pay, for example, a document entitling the detailed plan, timeframe, new data, etc. is likely to be better received. And it’s not just country-specific culture. In highly transient, mobile environments with a high turnover of staff, it’s better to use lower-context culture communication.
The bottom line is, know your audience, know your people.
5. Cultural overlaps and policy clashes
When multiple companies join forces, you’re inevitably going to end up with multiple absence policies, so you need to plan in time to work out how you’ll tackle this.
If you’re expanding globally, make sure your absence policy is ready for your diverse workforce. Each country has different rules and entitlement when it comes to employee absence and each business has its own interpretation of these rules. If you’re managing a team in Denmark, don’t expect any additional leave to be taken outside of their statutory days in their first year of service – how will you factor this into your wellbeing strategy? And how will you resource those extra days off the following year once they have accrued holiday? Do you know how many children each person in your Singaporean team has? They might be entitled to extended childcare leave. In Italy, most employees are entitled to 104 hours of working time reduction (ROL) annually, intended for things like going to the bank or taking a child to the doctor.
You’ll need to know this information firsthand, as you can guarantee your new employees will. Do your research, or better still, partner with an experienced specialist provider and ensure your system is flexible enough to accommodate a huge new array of absence types, accrual policies, and carry-over rules.
6. Employee engagement and retaining talent
Are your absence policies in line with your Employee Value Proposition, and are they consistent with the type of organization you want to be?
Will you keep existing holiday policies for each country and business unit, or will you standardize across the workforce/globe? If you are making changes to any Business Unit’s holiday policy, how will you communicate this? A holiday is a very valued benefit and any poorly communicated changes will result in a huge number of queries to managers and HR teams. If these are dealt with poorly, it can lead to disengagement across the organization.
7. Systems consolidations and integration data
Incompatible systems, large-scale HRIS consolidation projects, data aggregation, it’s all a lot of work – not to mention costly. But what’s even more costly? Doing nothing. Running multiple systems, differing processes, and keeping siloed data is complicated, an admin burden, and super expensive. Instead, you need to understand how scalable your current HR systems are.
Slow or costly implementations or expansions of HR Systems can really delay the merger and any real value from your acquisition. Our experience in working with growing global businesses has taught us that rolling out the absence module of a global HRIS to new markets or business units often takes months or even years and often comes at a huge implementation cost. Depending on the distribution of your workforce, it may be time to take an ecosystem approach and integrate your Core HRIS with an absence specialist who can implement quickly and at a far lower cost.
8. Take the load off your plate
The rewards of growing a business through M&A are immense and exciting, but it’s also hard work. e-days works with businesses that are growing globally and understands the world of absence from a global viewpoint. Ensuring your systems can accommodate unlimited distinct absence templates or schemes, throughout the acquisition as well as accommodating for different holiday years, entitlements, carry over rules, and contractual sick pay is crucial to get right in the first instance. Equally, part-time staff in each business unit will need their own templates to reflect different rules around FTE, bank holiday entitlements, and working patterns. If you make this a priority from the start, then you make the journey so much easier going forwards.