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Integrating Acquisitions into Shared Services

Introduction

Even when Shared Services is involved early in the typically complex Mergers & Acquisitions (M&A) process, carrying out the actual integration with an existing operation can be quite challenging.  With often daunting issues faced in such areas as technology, culture, and overall change management, this type of transition carries with it significant risks for both the entity being migrated and the existing Shared Services organization.

Company Experience

Recently, a member company with global operations and over $15B in annual revenue, was featured on a Peeriosity PeercastTM.  This company has carried out more than five major acquisitions in the past few years which have resulted in the company growing from 10,000 employees to more than 30,000 employees. 

As the result of a transformation of the Human Resources organization starting in 2016, their HR Shared Services organization was in optimal shape to integrate new employees from their most recent acquisition into the overall company organization.  That transformation included the implementation of Workday as their primary HR technology platform, as well as ServiceNow as their employee portal and issue tracking system.  Changes were also made to the HR global service delivery structure, as well as the consolidation of payroll vendors, and the implementation of a streamlined pay and performance program. 

The latest integration was the top priority for the company in 2019 and so it received the necessary support throughout the organization.  Some of the opportunities the HR organization envisioned as part of this integration included the following:

  • Advance the Acquired Company’s Operating Model – Give employees a globally consistent experience of HR, enable HR Business Partners to be more strategic.
  • Visibility to Talent – Key priority for the CHRO, given that they saw the cross-pollination of talent almost immediately.
  • Vendor Consolidation – Hard savings that came along with vendor consolidation and leveraging the benefit of scale.

One of the first steps in the integration was the use of Early Design Workshops.  The purpose of the workshops was to determine what the future-state processes and support would look like for the acquired company. They approached this through a lifecycle lens of an employee, and throughout the process focused on how they supported them through their Shared Services teams.

Another important part of the integration was a the creation of a coordinated change, training, and communication plan in order to be mindful about all of the changes that are hitting employees at once.  One best practice in this area was leveraging a Change Champions model to build internal, grass-roots support for the transition and to also serve as a venue to get feedback about how people were feeling during the change, which allowed for quick pivots, as needed.

The member company shared a significant amount of additional details surrounding this integration, which can be found on the Peeriosity member website.  The end result was the successful integration of the HR function of a major acquisition in unprecedented speed for the parent company.

iPollingTM Results Review

In conjunction with this PeercastTM, research was conducted with the Peeriosity membership utilizing iPollingTM technology.  The first of two poll questions looked at the level of M&A activity that had been experienced by their Shared Services organization of the past five years.

Reviewing the results, 47% of the participating companies in the research had either a Very High (21%) or High (26%) level of M&A activity, with an additional 16% of the companies indicating that they had experienced a Moderate level of this type of activity. These results certainly highlight the significant levels of M&A related activities being experienced by the majority of Shared Services operations.

The second iPollingTM question then looked at the effectiveness of the processes and tools that are utilized within Shared Services to manage the M&A activity, with the majority (67%) saying that they have adequate processes and tools, but that those could be improved.  An additional 20% said they were emerging, with effort being expended to get them in place, while just 14% indicated that had either world class or very good processes and tools in this space.

Some of the member comments associated with this poll include the following:

Consumer Products & Services Member: Robust processes in place; we have a small A&D team as a core group, then typically staff a project team to manage integration, evaluate going needs (resources, systems), and ensure our operational teams understand any new /different work they may be absorbing.

Manufacturing Member: We are seeing both M&A as well as divestitures. Processes and tools are certainly important, we are finding that discovery is crucial as well as assessing cultural impact of process change.

Healthcare, Pharmaceuticals, Biotech Member: Operational integration is often delayed for 6 – 12 months. HR and Payroll systems are accelerated as soon as practical.

Closing Summary

As mentioned earlier, being included early in the M&A process is certainly one major factor in the successful integration of the new company, but, as our feature company demonstrated, having an existing Shared Services organization that has been fine tuned in the key areas of People, Process, and Technology will enable even the most complex efforts to be carried out in an efficient and effective manner. 

How well prepared is your Shared Services organization to effectively integrate new mergers and acquisitions?  Are there further improvements to this critical process that can be put into place with a reasonable amount of time and effort?

Who are your peers and how are you collaborating with them?

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“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.



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