My company regularly acquires other companies, and we always roll their employees into our single, centralized payroll system, which pays employees on a bi-weekly basis. We rarely find that acquirees have exactly the same pay periods, or pay periods that end on the same date as our centralized system. Since changing the timing or amount of an employee's pay can cause consternation, we use a number of techniques to ensure a smooth transition. They are as follows:
- Does the acquiree have a longer pay period? Problem solved! If an acquiree pays on a monthly schedule, then there is an automatic advantage in proclaiming that they are about to be paid about two times more frequently.
- Compare payment options. If the acquiree only pays employees with a check, then emphasize that your system is designed to issue direct deposit or paycard payments, which not only increase the speed of deposits, but keep employees from waiting in line at a bank to deposit their pay checks. Further, even though it has nothing to do with payroll, point out to employees that you can even direct deposit expense reimbursements directly into their bank accounts (if not, contact your local bank to see if they offer this service). In short, this strategy is based on showing how your technological superiority will help them.
- Bridge the gap. If the acquiree has been paying its employees more frequently than your company, then the best solution is an interest-free bridge loan to all affected employees. For example, if you are switching employees from weekly pay checks to bi-weekly paychecks, then the bridge loan covers one week of their net pay. Then set up a standard deduction plan that gradually pays off the advance over a large number of future pay periods. Of course, work with employees to determine what size bridge loan they need - some may not require one at all. A more generous approach is to offer a bridge loan, but then forgive the loan if the employee stays with the company for at least one additional year. In effect, this represents the conversion of a loan into a retention bonus, and will go a long ways toward gaining employee acceptance of the change.
- Use accrued vacation pay or sick time. Many companies only allow a small number of accrued vacation or sick hours to be carried forward into the next year. If so, allow employees a one-time exemption to use any excess hours they would otherwise lose to bridge the gap between a shorter pay period and a newer, longer pay period. A similar option is to allow employees to draw down some of their next year's vacation or sick time accruals for the same reason.
And above all, absolutely bury employees with an excessive level of communication about the change. No one likes to be surprised by a change in pay period. To be absolutely certain that the message reaches everyone, start with a broadcast form of message, such as an e-mail, and then have every manager be responsible for personally contacting each of their employees about the change. Taking the extra time to communicate about this key issue may also result in some great implementation ideas bubbling up from the ranks, so the next conversion will be easier.