Total Rewards in M&A: Don’t Confuse ‘Integration’ with ‘Harmonization’
Total Rewards impact people and their families directly, making them intensely personal for employees. Too often, buyers approach Total Rewards integration disconnected from the overall deal goals and as a result experience business disruption and loss of productivity. In this four-part series, we will discuss how organizations should approach Total Rewards integration.
Let’s remember that integration following mergers and acquisitions takes time, and time can be your enemy when it comes to achieving deal goals. Failures in the integration stage can result from a slow-paced integration or from hastily executed integrations that do not account for the necessary change management. So, what’s the balance?
Our clients often start by asking for a “typical” integration timeframe. But that’s not the right question. A more appropriate question is “what’s a realistic timeframe for this deal given its unique factors and risks?”
Major factors that impact a Total Rewards integration timeline include:
When it comes to Total Rewards, immediate integration helps achieve synergies earlier and gives employees clarity about the new organization and their future sooner. But that all depends on the materiality of the impacts to employees. Material impacts can create even more distraction and loss of productivity at a time when you need stability in the business.
Delayed integration on the other hand can be advantageous when you need to avoid added distractions and keep people focused on business continuity. It also provides additional time to understand the acquired company’s people, programs and systems, particularly if the level of integration planning that was done pre-close was limited. But don’t forget that people will likely expect changes. Short term, this means you aren’t necessarily avoiding the distraction. Longer term, maintaining the “status quo” may give people the impression that no changes will come, so much so that when integration does occur reactions may be more intense, feeling like the story has changed.
Perhaps the best way to think about the timeline for Total Rewards integration is as a journey, as opposed to a single event. By understanding the business drivers and impacts of changes you can structure the right Total Rewards integration roadmap to achieve the goals of this deal. The desired end-state will be a critical factor as you are mapping the milestones in this journey appropriately.
Key enablers and barriers to success in Total Rewards integration
The road to integration is not easy and is influenced by a range of factors. Depending on your integration strategy, you can either speed to the destination while navigating change on the way or you can test the objectives from the onset, anticipate risks and navigate change while taking your time, leveraging tools and tactics, involving the right people from beginning to the end.