Many independent grocers we’ve spoken with have either recently purchased or will soon be purchasing new stores. Whether you are evaluating a potential acquisition or preparing for a merger, HR (human resources) is a crucial, yet often overlooked, consideration.
Here are three important areas that need to be considered to avoid HR headaches when acquiring or merging stores.
1. Plan and clearly communicate to blend cultures
What’s the biggest thing I’ve learned in my years of experience with acquisitions and mergers? Their success or failure hinges on whether the cultures of the two companies are compatible. The consequences of culture clashes include workers protecting their territory or working toward different objectives. When this happens, you’re left juggling low morale, unwanted employee turnover and decreased productivity—all while trying to integrate processes.
Companies often have precise plans for integrating financial and operational processes when they acquire or merge with other organizations, but they are often not prepared for meshing cultures and promoting teamwork between the employee bases.
We’ve counseled our clients to create a plan to integrate cultures just as they do for financial and operational processes. Clearly communicating the vision of the newly combined companies, the reporting structure, processes, etc. is vital to:
- Helping workers understand their roles,
- Alleviating stress
- Integrating people, as well as financial and operational processes
2. Indemnify against potential Affordable Care Act (ACA) penalties
Many business owners struggle to understand ACA and meet related compliance obligations. Therefore, ACA noncompliance can be a significant risk if you are acquiring a company. We recommend the following actions to reduce these risks:
- Perform due diligence prior to the acquisition to determine if the company is ACA compliant
- Include indemnities in the purchase agreement for any future ACA related penalties relating to the period prior to the acquisition
3. Proactively handle HR policy and procedure inconsistencies
The independent grocers we work with across the country have very different views on HR policies and procedures. Some have precisely detailed and documented HR policies and procedures while others take a looser approach.
We suggest comparing employee handbooks and other HR documents for the two companies as part of the due diligence process or at least prior to the acquisition date. This analysis lets you understand the differences and proactively determine the best strategy to address them.
We often see HR policy and procedure differences addressed as an afterthought once the acquisition is complete. When you proactively analyze and address the differences, you reduce risk of:
- Employee confusion
- Decreased morale
- Worker turnover
- Compliance issues due to inconsistencies in how you address a variety of employee situations
Chris Cooley is co-founder of MyHRConcierge and SMB Benefits Advisors. Grocers and other employers rely on him for HR compliance and administration, contesting SUI claims, ACA compliance, COBRACompli, employee handbooks, workforce management and benefits advisory solutions. Cooley’s companies specialize in helping small to mid-sized grocers throughout the U.S. Chris can be reached at 855-538-6947, ext. 108 or at [email protected].