5 Things to Address During Mergers & Acquisitions

Mergers and acquisitions can be great opportunities for growth and development. They can, however, be very disruptive, too. Throughout the chaos, diversity, equity, and inclusion (DEI) can easily be put on the back burner. If you’re saying “We’ll get to it when things calm down,” you’re already jeopardizing the success of your new business direction.

Mergers and acquisitions are actually advantageous times when it comes to addressing pay equity. By prioritizing this, you can ensure that your new organization is more inclusive and equitable than ever before. If you avoid it, the issues will pile up and you could quickly face talent shortages and legal issues.

We’re going to discuss five things that you should consider during a merger or acquisition to create an opportunistic outcome for the success of your business and your employees.

Job Titles

When merging two companies, you’ll need to align job titles. This can be tricky, as the hierarchy of roles in your organization may not align with the other. As you restructure, you may find yourself combining roles and giving them new titles so you don’t end up with duplicates.

One of the downsides of mergers and acquisitions is that some roles may become redundant. Often, admin staff, directors, and support staff overlap. Rather than losing top talent, recognize new opportunities. Offer training to redefine the role someone holds in your organization and in doing so, improve retention rates. Ensure that you’re providing equal opportunities for everyone.

Total Compensation

When you give someone a new title or job responsibility, you’ll have to revisit their compensation package. With a new title comes a revised job description. Salary shouldn’t reflect a title – it’s the work that matters. Within your pay grades, align job responsibilities to ensure that actual work is compensated equitably.

You also need to consider the value of benefits and bonuses as they can skew the pay balance. All forms of compensation need to be taken into account as they contribute to the total compensation. It may be difficult to change this immediately. Make gradual adjustments. Consider how you can balance packages with flexible benefits. Employees can trade pay for perks. Reduce the next cycle of pay rises for those in higher pay grades or reward employees with bonuses.

Location

You need to calculate regional differences when scanning for pay equity issues in mergers and acquisitions. The same role in your company may require different compensation depending on their location. That means that a pay discrepancy may not be the result of pay inequity and can actually be explained by the cost of living in that location.

You’ll need to have the data to prove why there is a difference in pay in case any employee decides to question it. If you’re merging with an organization with employees in new locations, do your research to understand the geographic differences. Likewise, you may find that a new location has higher living costs than you previously anticipated meaning you need to offer a better total reward.

Pay Practices & Philosophy

Inheriting one system of pay practices can prove challenging. Many organizations already have grading systems in place. You’ll need to choose just one or create a new one altogether to suit your merger or acquisition. If you’re acquiring a company or its pay practices, there are some questions to ask. Is pay equity being analyzed with thorough and accurate datasets? Does the other company have appropriate policies around pay equity? Are they properly grouping employees that perform comparable jobs?

The other consideration is pay philosophy. It’s important to enter a merger or acquisition with the right pay equity approach engrained into your company values. If you fail to do so, you could quickly run into litigation issues or see poor retention rates. Establish what pay equity will mean to your new organization and how it will reflect in your pay practices.

Company Culture

Attitudes around diversity, equity, and inclusion within your company culture say a lot about you. When merging or acquiring in business, you’re likely to experience employee clashes. There may be initial hostility about management shifts, office practices, or role changes. These will likely blow over as everyone adjusts. The one thing you really want to avoid, however, is carrying over any discrimination or biased perceptions.

Pay equity and encouraging diverse, inclusive environments should be at the forefront of your company values. This can be stressed during team meetings and the introductory phase. HR and leadership teams should be trained appropriately so they know how to look for pay and diversity gaps. Establish a proactive, fair company culture from the get-go.

Take Home Message

A merger or acquisition is the perfect time to address pay equity. If you’re aware that either company has identified pay gaps in the past, use the opportunity to rectify these issues and move forward with fairer pay practices.

Usually, a merger or acquisition means your company is expanding. It means you’re doing something successfully. Continuing this growth requires top talent, satisfied employees that remain loyal, and pay practices that align with legal and social obligations. As such, pay equity will have to be on your priority list.