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By Sarah Herd, Head of Workplace, Wren Sterling
When companies acquire others in order to grow, very often they’re concerned with the headline numbers: how might our revenue increase, how can we combine our businesses to enhance our product / service / route to market, or where can we see cost efficiencies.
An often-overlooked aspect, although probably not by the readers of HR Grapevine, is the challenge of managing multiple workplace pension and benefit schemes. The monthly payroll reconciliation alone is a case itself for looking towards consolidation, but what else could be gained?
Firstly, when companies expand through acquisition, they usually increase headcount. In the workplace benefits market, headcount is your best negotiating tool with providers. By consolidating, you could unlock better rates for your business and your employees, so everyone wins. You could also unlock completely new benefits for some members. Private Medical Insurance is a good example of this. It’s tough to get competitive schemes as a micro business, but moving to a bigger company can present a much better opportunity.
Secondly, it’s a chance to create a platform for future growth. One recent client of mine had nineteen(!) schemes to consolidate, such was the pace of their growth, but since we harmonised their benefits, they can now confidently plot future cost reductions and enhanced member benefits in their mergers and acquisition strategy.
Thirdly, it’s a fantastic internal message and a chance to re-engage employees on the value of their benefits, which your employer provides. Particularly in the post-acquisition space, new employees might be less trusting of their new owner, so going out with a message that you care about their financial wellbeing is a very useful tool.
How to go about it
If all the benefits of consolidating workplace schemes sound good, then you might be wondering how to go about doing it. I work in three stages, usually.
Firstly, an audit. Let’s get all the schemes in scope and map them so we can see who gets what, how much they cost, and whether there are any non-compliant schemes so we can address risk straight away.
Secondly, it’s time to go to market. I work with all the leading brands in the market on a regular basis, so I know instinctively who might be a good fit for a certain scheme. If you’re doing this in-house, take your time to thoroughly research the market, as depending on the size and complexity of your organisation, this could be worth a lot of time and money. Also check the additional services available, as they can really enhance what you’re offering to the workforce.
Thirdly, implementation and communication. You’ve got a brand new scheme that’s great value for money and will make everyone better off financially and mentally. How do you properly communicate it? Who can people speak to for more advice? Just because you’ve built it, don’t expect people to appreciate it or use it if you don’t tell them. And more than once!
If you need help
Workplace benefit schemes can be difficult to get right, as there are so many moving parts in an inherently complex market. I’ve been doing this work for companies large and small for twenty-five years, so I can help you with any aspect of your consolidation and harmonisation work. Whether that’s a full review, due diligence on a potential acquisition, or simply a second opinion, so please feel free to get in touch via wrensterling.com
