Prepare.Equip.Execute. M&A HR Readiness

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Perhaps you are an occasional acquirer poised to engage in a number of transactions over the next two years. Or an experienced acquirer struggling due to inconsistent HR processes, policies and structure. Or an organization doing its fi rst deal without an appropriately skilled and experienced HR team.

Whatever your situation, your success depends as much on effectively managing people and the environment of the organization as it does on managing the timing and fi nancials. If not managed effectively or effi ciently, workforce issues like talent retention, reward strategies and cultural alignment can cost time and money, delay progress — and pose risks that derail a deal. From experience, we know getting people programs and practices right is the most

challenging part of many transactions. And that’s where HR plays a pivotal role. When anticipating or undertaking a transaction, your HR team needs to be prepared to execute a number of critical tasks, including:

• Evaluating the strategic rationale and potential candidates for a deal

• Assessing the potential costs and risks — including total costs of the target’s compensation, pension, health care, retiree medical and related reward programs

• Addressing a full range of integration issues — from identifying leaders and retaining key talent, to harmonizing workplace programs and managing the entire change process

HR teamIs your

ready?

PlaybookDevelopment

HR Readiness Training

HR PMO “Kick-Start”

Long-Term HR PMO Support

All our M&A support services are completely customizable — available either on a stand-alone basis or bundled in whatever combination meets your needs. For more information on these support services, contact your local Towers Watson M&A consultant.

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Our M&A HR Readiness Services

Towers Watson offers fl exible stand-alone or bundled M&A HR Readiness services that we tailor to fi t your needs across any or all of the four phases of a transaction. These include:

• Playbook Development: Your compendium of all information and guidelines relevant to a transaction

• HR Readiness Training: Your source for on-the-job training of your HR team, before or during a transaction

• HR Program Management Offi ce (PMO) “Kick-Start” Services: A rapid-fi re approach to managing the many complex work streams of a deal

• Long-Term HR PMO Support: Ongoing project management to keep integration on track and to manage change issues as well

Whether transactions are on the horizon and your M&A Playbook could use some refreshing, or you just announced a deal and your HR team needs to get

Sample M&A Playbook section

Module Content

Guiding Principles for HR Deal Teams

• Guiding Principles for Organization and Talent Management • Sample Retention Plan • Guiding Principles for Culture • Change Readiness Assessment • Culture Profi ler • Guiding Principles for HR Delivery • Enterprise/Division/Group Policy Standards • Guiding Principles for Compensation and Benefi ts • Guiding Principles for Labor and Employee Relations • Guiding Principles for Development, Training and Performance Management

• Rating Grid Standard for Short-Term Incentive Awards • Guiding Principles for Internal Communications and Change Management

“Towers Watson ensured that our due diligence was successful — getting the right resources on the ground across diff erent cultures and languages — and helping us develop our HR M&A Playbook. They had a strong understanding of our business and corporate strategy, and brought their considerable transaction experience to bear in helping deal with our particular situation. They are an indispensable partner to Hershey in helping us achieve our growth goals effi ciently and eff ectively.”

— Debora Robare,Senior Director, Global Benefi ts, The Hershey Company

up to speed, or you require PMO kickoff support or something longer term — or all of the above — Towers Watson has the experience, tools and resources to help get your HR team ready and able to embrace the task at hand — ultimately achieving your organization’s deal objectives.

Playbook Development

An M&A Playbook is your HR guide for the entire M&A process. It covers the latest HR best practice standards for managing M&A activities, handling due diligence, and assessing and integrating the people aspects of the transaction. It enhances HR’s ability to partner with other corporate teams by clearly documenting connection points along the way.

We help you customize your M&A Playbook to your unique circumstances. Along with a robust set of tools and templates (see sample below), your playbook becomes a go-to resource for the HR team as it tackles the numerous tasks at hand.

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HR Readiness Training

Our M&A HR Readiness Training is structured to prepare your HR team to play a more critical and infl uential role in supporting future transactions. Whether you’re an experienced serial acquirer or starting your fi rst deal, we work with you to customize the training curriculum to meet the skill needs of your team, the specifi c characteristics of your transaction history and any current deal activity. For example, when one of our clients was beginning its fi rst acquisition, we worked alongside the less experienced members of both the local and global HR teams to provide support and training in all aspects of the transaction. We created a go-to guide for communications, tools and processes related to integrating the acquired company. We also led a planning session to ensure tools would be used appropriately in light of the nuances of the deal, and we were onsite at key milestones to back up the HR integration team, providing support and guidance along the way.

In another instance, we helped an experienced deal team that was making a signifi cant acquisition. The organization wanted to be recognized for best-in-class transaction management and integration,

Sample M&A HR Readiness Training module

Module Content

Phase of the Deal — Integration Planning

• Review Transaction Road Map and focus on integration planning and implementation

• Discussion of the link between due diligence and integration planning

• Overview of the PMO model and guidelines • Overview of the project management process and activities • Project team roles and charters • Discussion of the role of change management in the PMO process

• Exercise: Develop key integration risk matrix and HR plan

“Our organization had to deal with a large number of acquisitions over the last two years, and our HR team had to hit the ground running. We turned to Towers Watson for help in ensuring we were prepared to deliver what the organization needed. The HR readiness process gave our team a common framework and language to deal with multiple, often complex, work streams, as well as standardized tools and approaches for due diligence and integration that helped us successfully stay on top of such a large volume of activity.”

— Dennis T. Leonard,Vice President of Global Total Rewards & HR Services, Arrow Electronics

but had struggled in the past due to inconsistent processes, policies and structure. We gave its HR team a standard framework for communicating with all stakeholders during the transaction, used role playing and case studies in classroom training to reinforce HR’s important support role in M&A (see above for sample training module), and developed a reference guide on all critical elements of a transaction life cycle.

HR PMO Kick-Start and/or Integration Support

Given the vast number of work streams and activities involved in an integration, HR PMO can spell the difference between success and failure in achieving deal goals. The PMO brings order and stability to an often chaotic environment characterized by stress, strong emotions and internal politics.

Key objectives, activities and deliverables include:

• Providing strategic guidance for key decision makers to ensure teams are focusing on the right priorities at the right times

• Acting as a hub for information and communication — connecting day-to-day activities with leadership priorities

• Pinpointing accountability and ensuring execution • Delivering objective reporting to key stakeholders • Managing the scope, schedule and budget, as well as the key issues and risks

• Developing greater collaboration among work teams • Aligning stakeholders with a consistent set of priorities

• Creating tools and templates to streamline work effort

Towers Watson’s HR PMO helps build momentum and fast-track solutions, removing the administrative burdens to focus on issues that matter most and bring objective rigor to the process. And in the case of international or cross-border issues, we bring our deep expertise in managing global PMOs. Our HR PMO Kick-Start approach is illustrated below.

Be Ready. Partner With Towers Watson.

Don’t be caught unprepared. Towers Watson can help you fully appreciate and address the extensive people challenges that accompany most corporate transactions — from how to retain key talent and keep employees engaged, to new reward strategies, to how work will be organized, to how services will be delivered in the new organization — to implement workforce strategies that will drive achievement of broader business goals.

To Learn More

Contact your local Towers Watson consultant, or visit us at towerswatson.com.

“Towers Watson can help

you fully appreciate and

address the extensive

people challenges that

accompany most corporate

transactions.”

Step 1

Customize PMO approach and conduct PMO kickoff

Establish program management office (PMO) by defining out-comes and expectations.

These governance conversations shape the tools, processes and approaches used to manage the program each day. With approach solidified and the supporting tools in pocket, it’s time to engage your work streams and kick off the program.

One – two weeks

Step 2

Charter work streams and build integrated plan

The PMO team will partner with each work stream to help charter their projects by defining their scope and ultimately documenting their project plans. With the scope defined and plans in place, it’s time to execute.

Two – four weeks

Step 3

Enter “run model” and manage the program

As the PMO team enters the “run model” phase, energy shifts from planning to management. Each week, the PMO will work with the project teams to keep their plans current, manage issues and risks, objectively report status and engage the Navigation Team.

Varies by program

Snapshot of HR PMO Kick-Start approachThe PMO will be remembered for getting the program off to a quick start and finishing strong

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About Towers WatsonTowers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management.