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Nothing. Business as usual. I get paid accurately and on time.  

This is the most basic expectation that all employees whose companies are going through mergers and acquisitions (M&A). 

Payroll is vital to the employees as production  is to the company. Noone can dare to disrupt it.

Like two single people transitioning to married life, during an M&A, the two companies merging go through changes on multiple layers: individual corporate cultures don’t disappear and gel overnight, work processes and systems co-exist and production of different products continue in different factories during the pre-determined transition period. Human resources can also afford a transition time to amalgamate the performance reviews, training plans or recruitment process but payroll cannot wait. 

Payroll has to work like a clock from day one: everyone needs to be paid on a timely and accurate manner. For errorless and timely payroll, there needs to be preparation behind the scenes that can start from the moment the M&A agreement is signed.

The process of transferring employees over the new payroll in order to ensure their income tax and social security contributions are not affected should be a priority. 

Both companies exchange significant amounts of employee and customer information during the due diligence before signing the deal. The pay structures and benefit challenges need to be carefully taken into consideration in the integration process.

A representative from the Payroll Team should be working on the organizationational change plan with the M&A team. Payroll systems of the two companies should be assessed and best method should be identified in order to bring the data sets together.

Payroll integration should be led by the Head of Payroll and all areas from compensation to benefits, labor relations, data analytics to human resources systems should be part of the integration plan. If necessary, an experienced project manager should be engaged to manage the integration process.

During payroll integration, data sets should be secured by data back ups, assembled, assessed and cleaned up where necessary. Tests should be conducted after data transfers in order to spot errors. 

Employees should be informed about milestones in the testing phases and expectations should be clearly set before the start.

Majority of companies going through mergers prefer to engage human resources and payroll outsourcing companies. Consulting companies are found especially useful in the initial phases of integrating systems and processes of back office functions including HR, IT and finance and helping customer facing functions run smoothly. External expertise is particularly useful to help companies focus on their core businesses while merging and restructuring.