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ACQUIRING A BETTER BENEFITS PROGRAM

Background

A medium-sized corporation had targeted a potential acquisition. As part of the pre-acquisition due diligence phase, the company needed to evaluate the entire compensation and benefit program, find any hidden problems and evaluate the related cost and balance sheet impact – all within three weeks.

They needed an advisor with acquisition experience that offered a full range of actuarial, compensation and employee benefit consulting services – and a nimble team that would respond to the task at hand.

Approach

Compensation – We conducted a comparability study on positions, base pay and bonus plans at all levels.

Health & Welfare – We identified hidden and potential liabilities, unreserved claims and cash-flow implications. Taking into consideration demographics, managed care products, corporate culture and overall benefit plan strategy, we:

  • Benchmarked health & welfare benefit plan features against industry standards
  • Conducted a competitive evaluation of the existing benefits, rate structures, plan design features and the various employee benefit vendors providing services to each of the organizations
  • Designed a competitive benefit program to meet the combined companies’ needs
  • Prepared a Request for Proposal, evaluated the responses and negotiated the final contract

Retirement Plan – We analyzed the acquisition company’s defined benefit pension plan liabilities and associated future costs and advised the acquiring company against taking over the plan. Our comparability study determined that the acquirer’s retirement plan benefits were comparable to the acquisition’s existing plans. We worked with the retirement plan service providers to transition employees from their existing retirement plans [401(k) and cash balance] to the acquiring company’s 401(k) plan, working with the employees to transfer their existing 401(k) loans.

Communications – We developed a two-pronged benefit enrollment and communication strategy, first taking on the acquired group with an immediate enrollment need; and then focusing on the parent company’s annual enrollment. We prepared employee announcements, benefit summaries, enrollment kits and represented the parent company at exit meetings.

Benefit Administration – Our benefit center/call center/distribution center expertise included loading the employee data, mapping old-to-new benefit plan elections, managing the entire enrollment process (outgoing packets, incoming calls) and sending eligibility files to the insurance providers.

Result

Our analysis, report and surrounding discussions identified the potential employee benefit operating costs and liabilities associated with the acquisition.

Plan consolidation and negotiation yielded savings and an improved program for both companies.

Strategic communications and full-service benefit administration relieved corporate hassles.

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