The intersection between HR strategy and HR technology

systematicHR Avatar

I must say that sometimes M&A transitions are a pain in the *** for HR and HRIT practitioners.  It’s quite rare in my experience that a merger will be a pure 50/50%, more often than not one of the merger partners is getting a tiny fraction more than 50% and so can govern the decisions within the deal.  Additionally, mergers often deal with business systems and sales synergies first, financial systems second, and anything else that is not HR.  Pretty much, HR comes last, but while often considered a tactical decision, our stuff is far from tactical.

Especially with domestic M&A, the tactical decision is often about how to merge payrolls in the quickest and most efficient manner.  I’ll hazard a guess that if there are 2 organizations and one is on PeopleSoft and the other on ADP outsourced, the organizations that only focus on the tactical will more often than not put the entire population on ADP.  ADP has a pretty incredible ability to get large organizations onto a single domestic payroll quickly and effectively.  However, mergers often fail to look at the impacts of the HCM and talent systems which are critical.  If you were to combine core HCM and Talent systems, then the combined organization might actually have a different perspective on how to merge payroll data.

I’m totally ok with in-house HCM with outsourced payrolls and benefits by the way, but taking the easy solution often does not account for strategic long term systems design.

When we get to global organizations, it’s often more complex.  Many global organizations will simply take whichever system the acquirer already has.  Once again, this is more of a function that HR is last in line rather than what is best for HR.  Systems integrators in M&A are looking at the core business solutions and really could care less about HR.  A couple of the decision criteria here should be about who is more integrated to start with, and who has the more powerful system.  We should be looking at long term systems planning instead of short term gains for the combined business (but M&A is often about short term shareholder gains unfortunately).  We should also be looking at long term integration possibilities and who has the roadmap that gets the combined organization there sooner.  Integration is not just about systems that contain the whole global population, but also about achieving process standardization across multiple divisional organizations and systems such as talent acquisition, talent management and HCM.

It’s a tough call of who should win the HCM battle in M&A, but all too often it’s not even a valid decision point as M&A system integrators (consultants usually) don’t put enough thoughtful analysis into HR.  At the end of the day it’s about synergies, not easy and tactical wins.

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4 responses to “M&A – Whose System Wins?”

  1. Nikhil Avatar

    More often than not, HRP system of the bigger organization (the one who is acquiring) is taken to be “the” final system..& the HR processes of the big brother are (unfortuntely) what the small brother(!) has to follow..

  2. Stephen Avatar


    Typically, it would be considered a benefit for the large organization to move to single domestic (or global) payroll quickly and effectively. The fact that an ADP can do this so reliable time and time again, leads me to believe that once the tactical is accomplished with minimal risk, the strategic initiatives actually have an opportunity to be investigated and the efficiencies of the combined organization explored. I agree with you that long term planning is imperative, however, as you state, in M&A the short term and the brick wall timeframes require a reliable vendor to handle the necessary evils so that everyone can win.

  3. systematicHR Avatar

    Thanks guys. I’ve seen many variations of this. It’s definitely true that the system of the acquirer (IMO often wins, not the larger organization, although many times if not most of the time, the acquiring organization is larger.

    I’ve also seem many organizations go after ADP or Ceridian solutions simply because they were divestitures and were being forced off of their originating system.

    My only complaint is that by the time the large IT aggregators and consultants get to HR, they really don’t care anymore. I’ll agree that often ADP is the right solution, and is quite effective for many organizations. But I advise against letting the “bigger guy” win or going with the fastest implementation (if not under a strict time crunch) without the appropriate diligence.

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