May 2, 2003



on HRgyan I posted the following for HR due diligence :

my first reaction was ...

Can someone do a cutural compatibility audit?
What about compensation and levels and performance management
systems? How compatible are they?

On doing a search on the internet I came across the following
definition of HR due diligence:

The gathering, analysis, and reporting of the affect of human
resources strategies, financials, practices, policies, and procedures
on the corporate business decision to merge or acquire another
organization.

WHY?
 Compare the hr practices of the organizations involved
 Determine the cost of amalgamating the hr practices
 Determine the complexity of amalgamating the hr practices
 Identify issues/opportunities
 Set the stage for implementation
Areas to be compared and analysed :
Human Resources Strategy
Human Resources Polices & Practices
Topic/Practice Areas
 Human Resources Strategy
 Policies & Practices
 Group Benefits
 Perks/Incentives: Employees
 Additional Perks/Incentives:
– Executives; Sr. Management
 Performance Management
 Salary Administration
 Organizational Structure
 Employee Development
 Culture
Human Resources Strategy
What do they believe in?
What principles do they follow?
What are their values in treating employees?
HR Policies & Practices
 Examples
– Business Hours
– Work Week
– Definition of Status
– Breaks
– Vacation Allowance
– Car Allowance
– Allowable time off
– Corporate Attire
– Severance Packages
– Employee Surveys
– HRIS System
 Beware of special "deals"
Group Benefits
 Benefits Offered
– Include details
 Eligibility
 Administrator/Carrier
 Cost of opting out
 Cost: Employee/benefit
 Claims experience
– STD, LTD, absenteeism
 "Special benefits"
 Consider different groups
Perks/incentives:
Employees
 Group/Annual Incentive Plan
 EFAP
 Recognition Program
 Christmas Party/Bonus
Perks/Incentives:
Executives/Sr. Mngt.
 Incentive Plans
– Group, LTI
 Vehicles
 LTI
 Allowances
 Enhanced Benefits
Performance Management
 Performance levels
 % staff in each level
 Turnover ratios
 # terminations & reasons
 Existing HR legal liabilities
 Role definitions
 Competencies, performance measurements
 Format & process
Salary Administration
 Consider total compensation
– Base, incentives, group
 Salary structure
– Job bands/grades/job rate
– Market determination
 Calculation of merit/other increases
 Reasons for increases Salary Administration cont.
 Pay timing
– Payroll & adjustments
 Salary as a % of assets
 Payroll system
 "Special" comp. arrangements
Organizational Structure
 Obtain structures
 Compare to market
 Budget/s
Employee Development
 Strategy
 Budget
– per group or topic
 Educational Policies
– Loans & Assistance
 Type of training provided
– Statistics
Employee
 Training Methods
– Classroom, on-job, E-learning,
Self study
 Contractual arrangements
 Use of external resources
 Link to incentives/recognition