When two firms merge or one company acquires another, the business owners often neglect their employees' concerns- this is especially true in small- and medium size firms that have limited resources and time. But in mergers and acquisitions", the people factor" is vital. To complete a successful merger or acquisition, follow these steps.

1. VERSATILE MACHINES
OCTOBER 2011 I CONSTRUCTIONBUSINESSOWNER.COM
®
BUSINESS OWNER
THE BUSINESS MANAGEMENT MAGAZINE FOR CONTRACTORS
IN THE OFFICE ~ PREPARE FOR MORE SIMPLE STEPS TO
IN THE FIELD ,. GOVERNMENT AUDITS GREEN YOUR FLEET

2. GUIDE EMPLOYEES THROUGH A
SUCCESSFUL MERGER
~TJgage your employees in the transition process to create a unified company.
g v <ATHLEEN WEISS
h en two construction firms out in the first meeting if the company has complied
merge or on e company acquires with HR best practices and employment law and how
another, the business owners they have handled employee issues.
often neglect their employees' ~ Review the organizational chart, salaries, employment
concerns- this is especially contracts, titles, department heads, compensation
true in small- and medium- plans and fringe benefits. Also, gather demographic
size firms that have limited re- information a bout each employee. You need to know
sources and time. But in merg- who is exempt and non-exempt and if any employees
ers and acquisitions,
"the people factor" is vital. have taken a leave of absence. Read the employee
To complete a successful merger or acquisition , follow handbook, and compare policies to decide what should
these steps. be changed, integrated or deleted. Find out what the
employee performance expectations have been and
PREPARE how employee issues have been recorded. Also, con-
First, meet with the other company's executive team to sider the technical expertise you will need to merge
understand their company's perspective, plans and expec- two different Human Resource Information Systems
tations. Evaluate every system the other company has in (HRIS).
place and how th at fits into your business. ~ Find out if any employment lawsuits or pending
The Society for Human Resource Man agement (SHRM) litigation exists. Obtain copies of any non-compete,
polled senior HR executives who
have had experience with mergers,
acquisitions or joint ventures and
found the following common obsta-
cles: loss of productivity, incompat-
ible cultures, loss of key talent and
a clash of management styles.
Certain preparations must be
made to avoid these obstacles:
~ Assemble a transition team to
discuss all the decisions that
need to be made. This team
usually includes the CEO, CFO,
president, an HR rep and other
i:rr!portant decision makers.
Decide who will be your main
ro~ at the other company
:.~~ :he acquisition, and
=~ -= :;e::--on if possible. Find
30 : _ =-= _:- CJ'-l BUSI N ESS OWNER OCTOBER 2011

3. solicitation and disclosure agreements. Determine if on yearly tax filings, such as the 5500 form and
any terminated employees are still bound by these Employment Retirement Income Security Act
contracts and whether any contracts were made (ERISA) compliance. Determine which benefits you
orally. Also, obtain copies of all forms and applications. will keep and which ones you can eliminate.
~ Manually access the employee files to make sure re- ~ Consider how much vacation time the other company
cordkeeping has been in compliance. Do the employee offered. If you will be offering less time off, how will
files contain anything that should not be there? For you get new employees to accept this? Will you con-
instance, all medical records should be separate from sider their tenure with the company and let them stay
an employee's main file. Also, ask each employee to on their current plan?
complete a new I-9 form. Find out the immigration ~ Learn of any accidents, deaths or OSHA fines and
status of any employees working with a visa. citations that have occurred in the last six years, and
~ Review the current employee benefits and insurance decide if any safety issues should be addressed.
plans. Gather all the vendor contact information, ~ Training also needs to be considered. What training
including company names, contact, email, phone num- was provided in the last three years? Has any anti-
bers and account numbers. Gather all medical, dental, harassment training been conducted? What skills do
vision, life, disability and workers' compensation employees lack? Try to find some cross-training op-
insurance plan documents, and understand who is on tions and training manuals.
each plan, the costs and premiums. Determine if any
duplicate coverage exists. You may need to schedule a After you have obtained this information, you must de-
meeting with your insurance professional. cide how to resolve differences in each of these areas.
Retrieve all retirement or savings plan docu-
ments, and work closely with your financial manager CONTINUED ON PAGE 46

4. CONTINUE D FROM PAGE 31
COMMUNICATE
Once these decisions have been made, a communications TRY THIS
plan must be created. Change is difficult under any cir- Strategies for a Smooth Merger
cumstance, and a communications plan will make it easier
for employees to embrace the many changes to come.
The transition team sh ould develop a timeline for each
important communication and include the person respon-
sible for making the communication. You must determine
what staff meetings need to be held and what must be
delivered in writing, including notifications about retire-
ment plan changes, salary or compensation changes and
anything related to finances. Decide if department heads
can make certain decisions. Always keep employees in-
formed of any changes that affect them. Open communica-
tion will h elp boost morale and retain top talent.
INTEGRATE
Integration starts with upper management. At this point,
you will h ave decided wh o stays, goes and moves or chang-
es positions. Employee emotions, imaginations and sensi- 1. Analyze current roles and responsibilities, and create a
tivities will run high , and this air of uncertainty can have tentative plan.
a n egative impact on productivity, morale and retention. 2. Use your transition team as a starting point to
This, ultimately, can affect your bottom line and lead to a brainstorm the best integration and engagement
volatile time for your company. activities.
The loss of key staff could be counter-productive t o your 3. Conduct employee surveys to gauge satisfaction. The
goals. As a result, the sooner you develop a plan to engage results will serve as a baseline satisfaction rating.
your employees in the transition process, the faster you
4. Make sure each department head conveys the same
will h ave a unified company with higher productivity. messages about company goals and plans. Conflicts
happen when employees get contradicto ry inf ormation.
EVALUATE
5 . Create department team-building events with
After everyone has settled into their roles, evaluate the
employees. Allow supervisors to have a role in
transaction's success. Many small companies omit this
development.
step, but evaluation is key to understanding how th e suc-
cesses and failures impact the business and staff Plus, 6. Put together employee focus groups, and get their
you do not want to make the same mistakes again if more suggestions on integrating roles.
mergers or acquisitions are on the horizon. Employee 7 If you have employees who work in different locations,
feedback combined with financial analysis can give you hold video conference cal ls to bring employees closer.
the strat egic edge you n eed. ... 8. Make it understood that each company will have
different ways of conducting business, and everyone is
expected to refrain from criticism.
Kathleen Weiss, SPHR, is an HR consultant
9. Decide on cross-training opportunities, and look for any
and the director of human resources for SWK
mentor/mentee relationship possibilities.
Technologies, Inc., an IT solution provider that
u·orks with construction, manufacturing, pharma- 10. Conduct informal SWOT (strengths, weaknesses,
opportunities, threats) analysis meetings for
ceutical and other industries nationwide. Contact
management and employees.
Weiss at 973-758-6122 or kathleen.weiss@swktech.
com. For more information, visit www.swk tech.com . 11 . Compare the two company cu ltures in open company
discussions.
46 CONSTRUCTION BUSINESS OWNER OCTOBER 2011