Payroll professionals need answers during mergers, acquisitions
Mergers and acquisitions complicate payroll administration, forcing payroll professionals to take on new, often unfamiliar responsibilities in an uncertain, transitional environment.
However, there are steps payroll professionals can take to reduce risk to their employers or clients and allow for a smoother, more successful transition.
It all begins with organizations ensuring their payroll manager is well informed.
It’s critical to include payroll managers in the planning process once organizations are hammering out the logistics of an agreed merger or acquisition.
The payroll manager should identify a core team of payroll professionals who can help the overall payroll team during the transition and ensure all of the necessary stakeholders have a seat at the table.
Involving the payroll manager also enables each organization to get a realistic view of what its payroll team can handle and what support it will need.
It’s critical these organizations have a realistic view of how long it will take to combine their payroll systems and how much work is actually involved.
Having this information allows for more accurate planning and achievable deadlines.
Due to the confidentiality of any merger or acquisition, it is always difficult to judge when a payroll team should get involved.
The payroll team will need at least three to six months to prepare. They will also need additional time to adjust depending on the complexity of the new payroll setup.
The most critical factor is ensuring effective communication between each organization involved in the merger and its payroll team.
That’s the key, the biggest factor for success.
The organization needs to communicate as much information as possible under the Personal Information Protection and Electronic Documents Act (PIPEDA), allowing the various teams leading the merger to set up and pay the employees correctly. Even the payroll teams should communicate at least enough to share information about their organizations and employees.
The consequences of ineffective communication can be frustrating at best and damaging at worst.
Ceridian recently worked through a merger involving multiple payrolls and the company being bought didn’t want to provide any information to the new owners.That made the process more difficult and riskier than it ever needed to be. Hard feelings or resistance to change must be overcome.
The first step is for each payroll team to map its current system, including:
•Payroll processing software/system
•Time and attendance tracking software/system
•Number of employees (union and non-union)
•Frequency of payroll runs
•Earnings and deductions
•Benefits and pension plans
Then each organization involved in the merger needs to decide how it is going to convert employee data. They need to know what data is going to be transitioned over, such as vacation plans, and how that data will be merged, such as employee seniority.
Once the organizations determine how their data will be merged, they need to decide which software and systems will survive the transition.
They even need to choose which benefits and pension plan will come out on top. This is perhaps the most crucial information the payroll teams involved need — and they need it as early as possible.
The payroll teams need to know, for example, what payroll processing software they’ll be using.
No two systems are the same so there will be a learning curve and it can often be challenging. Even a simple change, such as switching from paper pay statements to electronic ones, will require at least one payroll team to be retrained.
Training is critical if employees are going to be paid correctly and on time. And it can be time-consuming. But it’s time well spent.
If the organizations involved in a merger or acquisition communicate effectively, involve their payroll managers and teams, and give their payroll professionals enough notice to complete the required training and tasks, they can make the transition as easy as possible.
It’s important to remember that employees, including the payroll team, are probably a little stressed during a merger.
Keeping them informed takes a lot of the fear away and reduces their stress.
Organizations need to do whatever they can to ensure employees know their paycheques will be correct and on time during the merger and after it’s complete.
Lucy Zambon is the national core setup manager at Ceridian Canada. She can be reached at (519) 661-8307 or [email protected].
