When a company is going through a merger or acquisition, one of the key risks is losing top talent. Mergers introduce a period of instability that can make even the best performers nervous and jumpy. Suddenly those Linked In recruiters they've been politely ignoring start to look more appealing. Not to worry. One way to retain top talent during a merger or acquisition is to get in front of the new compensation plan. While this can be an arduous process, finalizing and communicating compensation for the new organization can go a long way to keeping your best employees from jumping ship.
Before you can communicate with employees about compensation, human resources and executives need to determine how compensation will be handled for the new company. Unfortunately, there's no easy answer for how to handle compensation as it depends on the organization, culture and business objectives. Here are a few options with pros and cons for each depending on the situation.
If both companies have a compensation plan that follows best practice, is competitive with the current market and is well-integrated within the organization, it might be an option to keep the compensation plans separate. A few things to think about in this case are:
Maybe only one of the companies has a compensation plan in place or maybe one company has recently updated its compensation plan and it makes sense to adopt this for the larger organization. A few things to think about in this case are:
If both companies have compensation plans in place, consider integrating the two and creating a hybrid. A few things to think about in this case are:
If neither of the previous compensation plans makes sense for the new company and combining the plans isn't a reasonable option, then it might be best to completely scrap the previous plans and create something from scratch. A few things to think about in this case are:
When it comes to handling compensation during a merger or acquisition, there isn't one right answer for every company. However, by being strategic with your compensation dollars and communicating well with employees, you can ensure you're paying competitively and setting your new company up for success.
For more information on best practices, read the PayScale Compensation Best Practices Report. Â
Read the December edition of Compensation Focus.
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