Expert tips for payroll continuity during times of major business change

Many businesses in change scenarios fail to prioritize their people processes. This is possibly why as many as 50 percent of mergers and acquisitions (M&A), and possibly a higher number of divested businesses, fail to achieve their future potential. Client facing and finance processes tend to take priority to the detriment of employee experience tools and processes; those that enable employees to work well for you and to be rewarded and motivated for doing so.

What happens in an M&A scenario?

The existing HR and payroll systems remain in place and the functions continue.  On a mechanical process level this is fine. On a cultural level, until the HR and payroll processes of the merged businesses are integrated, you can never achieve a single culture and without unity, achieve best employee or business outcomes.

Financially, you also carry the costs and people resource of running, maintaining and administering multiple systems.This is neither simple, cheap or necessary to do. Furthermore, you have no workforce visibility and so no business intelligence from people data without a single source.

In the case of a demerger, the challenge is greater

The departing organization leaves the ‘mothership’ lock, stock and barrel. In some instances, there’s a period of grace where it can buy services and access to systems from the parent company, but the times scales and terms are rarely generous.

Almost immediately, there needs to be a fully functioning payroll solution in every country where there is workforce to the paid. This is not only a moral expectation, it is a legal requirement also.

This is where NGA HR and its teams really come into their own. Located around the world, we combine global best practice with local expertise. This removes any potential knowledge gaps that could delay such projects so we can effectively manage one-to-many country payroll transformations effectively. A recent example was with Coty, the global beauty brand.

The solution for Coty had to be designed, delivered and deployed in record time. There was no leeway in the timings. There was an 11:59pm deadline. At 12:00 it worked or the transition to the next stage of Coty’s business could not happen. Philippe Manzanares, VP HRIS, Payroll, Reporting & Global HR Policies at Coty explained;

“We had to face a very challenging situation. We had to set-up, in a record time, brand new payroll solutions in countries where we (Coty) had no existing footprint. Thanks to NGA HR’s solution and partnership, we managed to achieve our goal. All new employees were paid on time using the integrated solution.”

Get ready for change

A change in business model is inevitable to meet the objectives of the merger or demerger. This might mean over time a reduction in headcount in one location, moving staff to another and recruiting more countries to fill skills gaps. It’s very hard to do this if you have no engagement with your workforce. Even harder is you have no visibility of it either, an issue we touch on later.

Damage limitation

For your business, failure to plan can be catastrophic. Your brand and reputation are at risk and productivity will grind to a halt at just the time you need to assure clients, investors and prospects that it’s at least business as usual.

It’s for this reason we’ve seen the number of projects we’re working on with M&A and businesses divestment clients triple in recent years. It’s just too complex and high-risk to do alone.

In the case of Coty, and so many more organizations that our teams at NGA HR have worked with, we have become the vital component that links everything together. In times of change, you can’t afford to make mistakes. Your business needs to sit on top of an HR and payroll infrastructure that works and keeps your workforce enabled and working. Our business is to ensure that your HR and payroll processes work for you whatever the scenario.

In the second blog in this series, we provide tips on “Ensuring Payroll Continuity During Times of Major Business Change.”

In the meantime, if you would like to talk to NGA HR about your HR and payroll challenges, please contact us.