Trying to juggle multiple employee PTO and holiday policies?
Imagine sitting next to a colleague whose job title and tenure is the same as yours, you both work for the same boss and receive a paycheck from the same employer. You both started your career at the same time and have very similar work experience; however, you earn two weeks of vacation a year and she earns 4 weeks. The only difference between you is that you were acquired with the purchase of ABC Corporation, and she was acquired with the purchase of PDQ Corporation. What gives?
Such lack of parity in employment experience reduces engagement and hinders productivity. When handled well, alignment in employment practices after an acquisition can result in an increased perception of fairness by the employees. Fairness often translates to higher levels of discretionary effort on the job, greater job commitment, increased lengths of service and a more positive work environment.
Companies with an aggressive growth strategy, built on M&A, often find themselves operating under a multitude of legacy policies and procedures. These variations result from the differences in operating philosophies and styles of acquiring and acquired organizations. This can be especially true of the policies and procedures pertaining to paid-time-off, such as vacation, sick time and even holiday schedules.
It is extremely rare that upon closing, or Day 1 of an acquisition, the employees of the acquired company are immediately aligned to the policies of the acquiring company. In many cases, there is a continuation period, during which the acquiring company may not make material changes to the compensation and benefits previously afforded to the acquired employees. These periods can last from three months to two years from the date of the transaction.
Even after the continuation period has expired, many organizations fail to align these policies due to the tremendous effort it places on internal resources to research, analyze and align actual and philosophical differences which continue to exist. The impact of misalignment results in extra administrative work to maintain multiple payroll and timekeeping systems, various financial accrual formulas, numerous (and sometimes conflicting) employment policies and employee handbooks, and perception of inequity across different internal employee populations.
Colloquia Partners, LLC recently completed a Paid-Time-Off (PTO) Harmonization project for a mid-sized life-sciences client, with an aggressive growth-by-acquisition strategy. Following two significant acquisitions in fewer than 12 months, there were four distinct PTO policies each designed using accrued time-off formulas based on employment status, salary grades, employee tenure and other factors. Complicating the policy harmonization was the employer’s concern that none of the policies was competitive in the labor market.
We were able to analyze the existing polices, identify market comparators, and model a competitive future state including harmonized Paid-Time-Off program. The new model provides greater internal alignment across operating locations and business segments, and aligns these benefits with industry benchmarks to increase attractiveness in the marketplace.
Establishing consistent PTO policies significantly reduces the administrative costs and burden of managing multiple schedules, promotes fairness and equity of pay practices across the entire organization, limits risks inherent in maintaining multiple pay and benefits programs, and creates a positive and supportive climate for your most valued asset, People.
Together for a strong future™,
Jason A. Wood,
Colloquia Partners, LLC