Guiding Principle

As organizations expand through the introduction of different business units, a transition plan should be developed and implemented to assure the successful differentiation of the business units.

Purpose of Transition Plan

The transition plan should include strategies for:

• Effective communication between business units so that the information

           required is obtained in a timely manner by all parties.                       

• Recognizing and addressing fears, hopes and concerns of employees at each business unit.
• Orientation of managers and employees about the mission and culture of each business unit and the desired mission and culture of the new business units.
• Ongoing support at each business unit to address emerging and related issues.

Responsibilities of Leadership for the Business Units Involved

• Define nature of the change.
• Define and clearly communicate the timetable for the leadership groups of each business unit.
• Establish a Transition Team with members from each business unit to include areas such as: Human Resources, Finance, Operations, Public Relations, Organizational Development & Training and business unit leadership.  Appoint a Transition Team leader and key contact(s) at each business unit and involve these groups as soon as the decision is made. 
• Announce the new structure in a joint letter from the Executive of each business unit to all employees with information about the transition team and the time frame for the changes.
• Sponsor scripted "welcome" meeting for all employees at each business unit, with the business unit leader and the transition team.  Follow-up the meeting with a question and answer session and an informal social event.
• With input from Transition Team, send regular updates on the status of the changes to all employees.

Responsibilities of Transition Team

• Be visible and actively participate in "welcome" meeting and informal social event when the changes are announced at each business unit.
• Identify as a group the key activities and key information necessary for success and assign responsibility for obtaining this information within an agreed-upon time frame.
• Consider the impact of the changes on other departments at each business unit and immediately notify the leadership group of any potential problems.
• Coordinate the schedule of visits by the transition team members (or their designee) to each business unit so that neither feels overwhelmed or abandoned.
• Distribute a "who's who" directory of key contacts at the new business units so they know who to go to if they have questions about processes or procedures during the transition.
• Identify a Human Resources Representative to implement a plan to address individual employee concerns.
• Develop and distribute a question and answer communication to employees and/or conduct monthly information meetings.
• Provide regular progress reports to both leadership groups.

Responsibilities of Human Resources

It is essential that Human Resources review the following information for an assessment and identification of areas of potential problems or concerns.

Welfare Plans

• Group life, health, accident and disability
• Insured and unfunded
• Compliance with ERISA Title I disclosure
• Information for all plans:
• Carriers for each plan
• Amount of premium paid by employees for each plan
• Amount of premium paid by employer for each plan
• List of people on Long Term Disability and their diagnosis and prognosis
• List of people on Short Term Disability, the first date of absence, diagnosis and prognosis
• COBRA - Determine past COBRA compliance and ensure proper assignment

          of COBRA responsibilities and liabilities.

Qualified Retirement Plans

• Defined benefit and/or defined contribution
• ERISA compliance
• Qualification status (IRS determination letters)
• If defined benefit:
• PBGC filings
• Funding status
• Actuarial Reports (Form 5500)
• Trustees Annual Reports (Form 5500)
• ERISA Title I Disclosure
• Summary Plan Description
• Annual Reports and Summary Annual Reports

Effects of Structure of Changes

• Effect on Control Group
• Carryover of tax attributes

Prior Terminated Plans

• Frozen or terminated
• Carryover of tax attributes

Method of funding existing plans

Employment agreements, consulting agreements, non-compete agreements

Deferred compensation plans and supplemental retirement plans

Effect of changes on adoption of plans

Commitments to retirees

Other agreements or promises

Copies of short-term and long-term management incentive plans

Copies of severance pay plans.

Management

• Review of organization chart
• Arrangement of management functions
• Employee handbook or guidelines
• Employment contracts (written and oral)

Workers' Compensation

• Insured or self-insured
• Individual claim files
• Loss experience
• Potential large claims

Unemployment Compensation

Compliance

• Copies of EEO-1 reports for past five years
• Copies of VETS 100 reports for past five years
• Copy of affirmative action plan
• OSHA 200 report for the past five years
• Schedule of any employment related legal proceedings or charges during the past five years with settlement costs, if any

Other

• Unwritten practices affecting compensation and/or benefits
• Wage/Hour Matters

• Employee claims for overtime
• Employee claims for minimum wage
• Review any files regarding Wage/Hour Division investigations
• Conciliation agreements with Wage/Hour
• Compensation philosophy
• Pay delivery method (market, merit, combination market, merit and/or across the board
• Market jobs
• Associated jobs
• Equity jobs
• Job evaluation method(s)
• Market survey data used

Human Resource Planning

The issues involving the workforce will be numerous and complex.  Because of the sensitivity particularly around the employee relation aspects of theses changes, it is important that Human Resources approach these issues deliberately and with as much information as possible.

In developing the plan, desired outcomes must be stated and embraced by both organizations.

Example:  Is it the intent of the organizations to work toward a one-employer model (with common human resource policies, employee benefits and compensation practices) in order to facilitate the movement of staff and resources to respond appropriately to needs? 

Will the organization's policies serve as a basic template for the "new" human resource policies at each business unit?

Once the vision for compensating the workforce is agreed on, objectives identified should be set and serve as guiding principles in the implementation of the plan.

Possible outcomes should include:

• minimal disruption of the workforce
• ease of movement of employees between worksites
• consistency in implementing any changes
• open and honest communications with employees
• where appropriate promote blending of best practices
• achieve identified reductions in workforce through attrition or other appropriate means
• achieve cost efficiencies and economies of scale where possible

Summary

These key points are intended to provide a global perspective as to what has to occur, from a human resource perspective, in order to mitigate predictable employee relation outcomes.

A specific work plan should be developed to facilitate the changes and assure employee support of the mission of the new organization.

Gary R. Thornton, MBA, SPHR, CEBS, RPA, GBA is the Principal of Thornton & Associates, a human resources management consulting firm located in Scarborough, ME. He has more than 25 years’ experience in human resource management for both private and nonprofit organizations. He holds credentials as a Senior Professional in Human Resources (SPHR), Certified Employee Benefits Specialist (CEBS), Retirement Plan Associate (RPA) and Group Benefit Associate (GBA). He currently serves as a Special Expertise Panel Member - Total Rewards, Compensation & Benefits for the Society for Human Resource Management (SHRM). He has also held leadership roles in the Maine Employee Benefits Council and the Human Resources Association of Southern Maine. For more information about the information contained in this article, you may contact him at 207-885-9333 or email gthorn@ThorntonAndAssociates.net