Merging Compensation Strategies
Merging Compensation Strategies
Article Review/ Critique Assignment #1
MGT 645 Personnel Compensation Practice and Process
Merging Compensation Strategies
The article suggests that everyday HR issues such as employee compensation may be put on the back burner as countless financial and legal priorities take the center stage. Research suggests that HR needs to get involved in the earlier stages of mergers and acquisitions to ensure its success. There are four stages in the life of a merger and acquisition deals- pre-deal, due diligence, integration and implementation. Currently most HR professionals tend to have a big role in the later stages in which Wells frowns upon. According to Wells, “ HR needs to be more involved in the pre-deal and due diligence process, HR can better carry out the vital functions it performs such as; reviewing the target company’s compensation policies to compare organizational philosophy and cultural fit, educating financial and operating executives about possible risks, costs, and map out job descriptions at the target company.
When mergers occur often times HR is called upon to splice disparate payment plans into a program that fits the new organization, or discard the original plan and create a new plan. According to Wells, “corporate marriages generate rough tactical and strategic waters that HR and compensation professionals must navigate”. “Harmonizing the pay system of merging companies is a complex and difficult process; it is also an opportunity for HR to create a new and improved system which can dramatically affect both the culture of the new firm and retention success” (Wells, 2004). Acquisitions uncover an even better opportunity, the opportunity to do things that have never been attempted before. Acquisitions give the company an opportunity to rethink their strategy of competitive compensation, barring any legal pacts the company once had. Companies usually have the freedom to almost every
Article Review/ Critique Assignment #1
MGT 645 Personnel Compensation Practice and Process
Merging Compensation Strategies
The article suggests that everyday HR issues such as employee compensation may be put on the back burner as countless financial and legal priorities take the center stage. Research suggests that HR needs to get involved in the earlier stages of mergers and acquisitions to ensure its success. There are four stages in the life of a merger and acquisition deals- pre-deal, due diligence, integration and implementation. Currently most HR professionals tend to have a big role in the later stages in which Wells frowns upon. According to Wells, “ HR needs to be more involved in the pre-deal and due diligence process, HR can better carry out the vital functions it performs such as; reviewing the target company’s compensation policies to compare organizational philosophy and cultural fit, educating financial and operating executives about possible risks, costs, and map out job descriptions at the target company.
When mergers occur often times HR is called upon to splice disparate payment plans into a program that fits the new organization, or discard the original plan and create a new plan. According to Wells, “corporate marriages generate rough tactical and strategic waters that HR and compensation professionals must navigate”. “Harmonizing the pay system of merging companies is a complex and difficult process; it is also an opportunity for HR to create a new and improved system which can dramatically affect both the culture of the new firm and retention success” (Wells, 2004). Acquisitions uncover an even better opportunity, the opportunity to do things that have never been attempted before. Acquisitions give the company an opportunity to rethink their strategy of competitive compensation, barring any legal pacts the company once had. Companies usually have the freedom to almost every
References: Wells, S. J. (2004). Merging Compensation Strategies. HRMagazine. 49(5), 66-8, 72-4, 76, 78.