Integrating Benefit Plans for Real Benefit
One place where the difference between running businesses and merger them shows up in magnified form is in the combining of two disparate benefit plans.
The Merger Verger was discussing this issue recently with a mid-level executive in a service business that was being acquired. This contact was not a part of the integration team but was concerned for the impact of benefit changes on her own staff. She had recently been informed of the intended changes in a manner that was informative but not at all helpful.
She felt that the integration team – most of them senior staffers – had not walked in the shoes of their subordinates’ subordinates (and below) and that both the changes and the manner in which they were dictated reflected little thought. She foresaw disgruntlement arising from lower levels that would be challenges to the integration and to mid-level managers … challenges that senior managers might never get a real feel for. All because no one walked in the shoes of those being affected.
Example 1: If you, the buyer, have a vacation policy that is less generous than that of the target, forcing conformance with your plan may seem like the most efficient way to go but to the target’s staff, it represents a pay cut. Yes, that’s right: a pay cut. They now have to work a day or a week or whatever more for the same amount of money; that’s a pay cut.
Example 2: If you recast your benefit plans to have some give and some take, do not presume that what you – as a senior executive – think is a “good trade” will be received as such down lower into your staffing layers. In the case above, there was a decrement in paid-leave days but an increase in 401(k) coverage and match. That might be a reasonable swap for higher-paid executives for whom investment accounts matter but people counting their days off or without spare cash are not likely to see it that way.
Think your new staffers will be happy about that? Think they’ll drink the new Kool-Aid with enthusiasm and gusto? Wrong. They will gripe, take reduced initiative, spread bad Karma and generally prove that the kind of “savings” you were hoping to achieve are frequently not worth it. So think again.
Lesson: What a buyer might think of as an efficient answer to an integration issue may not be for reasons that relate to people’s responses way on down the food chain. Before you foist some new program on the target’s people, take off your Lobbs or your Louboutins and walk in their shoes for a while.