**Case study two**

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Case Study: Navigating M&A workforce integration in Logistics

A leading logistics company purchased the shareholding of another smaller competitor, and it was necessary to merge the new employees into the existing team who were fortunately based within a five mile radius, although the owners and senior management team were not continuing under the purchase agreement.

As it was a purchase of the shareholding, whereby the Transfer of Undertaking & Protection of Employees (Tupe) legislation did not apply, it was therefore necessary to effectively restructure the company to reflect the fact that due to the consolidation, fewer employees were required to service their existing accounts and there was some duplication of roles.

The challenge

With the acquired company’s leadership stepping away, the logistics firm faced two immediate issues:

Duplicate supervisory roles: two supervisors, one from each company, now held overlapping responsibilities.
The logistics company already had a good supervisor who had been with the company for 10 years and while the incoming supervisor had a shorter service (4 years), this purchase meant they now had two supervisors. The purchasing company had sound appraisal systems on which to base an assessment of their own supervisor, however, with the owners of the purchased company leaving, they found that no appraisal records existed to provide any means on which to base the assessment of the new supervisor.
The challenge for the Company was how to fairly assess both the supervisors, yet they lacked enough details as to how effective the new Supervisor was in completing his role. If they saw fit to just select the new Supervisor and make the incoming one redundant, then they could produce no evidence to prove that the decision to terminate on the grounds of redundancy, was justified under law. As with many sectors, the supervision of the logistics and distribution function is a critical aspect in maximising the efficiency of the service provided to their clients and hence, the selection of the best Supervisor was an important decision to secure the standards of service the organisation provided to its clients.
Overstaffing in the warehouse: additionally, due to the efficiencies gained from the merger of the companies, they required two fewer warehouse assistants.

Our Solution

With regard to the duplication of supervisors, the logistics company had several options:

Firstly, they could discuss with both supervisors if one of them wished to consider taking a voluntary redundancy package and as this is not a situation where TUPE applies, there is no real legal risk as long as both are asked the same question and given the full facts of any package and reasonable time to consider their decision.
Secondly, they could apply a matrix assessment to select for redundancy, what appeared to be the weakest or less skilled one of the two Supervisors, but to secure the fairness of any assessment, they would need to have equivalent matrix assessments completed by the outgoing managers. However if the outgoing managers were either unwilling or felt unable to provide their own assessment of their Supervisor, there would be a high possibility of the matrix process being viewed as flawed by a Tribunal.
Thirdly, the company could make both roles redundant, offering both the Supervisors the opportunity to apply for the role and to then conduct an independent and impartial selection process so as to select the best suited person for the role.
Finally, they could try to simultaneously employ both Supervisors for a period of several months, so as to gain a clear picture and evidence as to the comparable effectiveness of each person and to then complete a matrix assessment of both, in order to base a redundancy decision on an accurate review of their competencies. Once again, as long as the process was thoroughly completed using two managers to complete individual, factually based and objective/unbiased assessments, this final option would generally be low risk and minimise the risk of a successful legal challenge at Tribunal.

PSM – HR & Commercial Advice – Warehouse Assistants

PSM advised the Company to apply a multi-level approach whereby they initially considered making redundant, any apparently “weaker” members of the team who had less than the minimum 2 years’ service required to make a claim. Such “weaknesses” would include a current or “live” disciplinary record, a lack of skills such a fork lift truck licence and knowledge of the business or that the employee had a poor absence, attendance or timekeeping record (except if the absences were due to a disability or other potential grounds for a discrimination claim such as parental responsibilities etc).

This enabled the number of further reductions in staffing to be reduced to one and the next PSM proposal was to offer voluntary redundancy to the remaining team, in case this suited their personal lives. However, no one came forward to consider voluntary redundancy, so finally, it was agreed to accept for the short term the additional one person and to either await either a leaver occurring whilst simultaneously, clarifying the standards of performance and conduct required for all employees and monitoring these standards. Therefore, by establishing the reasonable standards required to secure servicing standards for their client’s, the Company was soon obliged to take disciplinary action with an employee and shortly afterwards, the employee resigned. As a consequence, the Company were able to simultaneously achieve the correct staffing numbers, whilst ensuring that all the remaining employees were committed to the conduct, performance and servicing standards required by the Company moving forwards.

PSM – HR & Commercial Advice – Supervisors

Unfortunately, for the Company, the outgoing managers were unwilling to back up their claims of their Supervisor being as asset and to complete a matrix assessment, so PSM advised the company to discuss with both the supervisors in case that for personal reasons, either of them wished to consider voluntary redundancy and to give them several days to consider the option. However, in truth the Company were concerned as to the high costs of their own supervisor taking this option due to the redundancy costs and felt obliged to confirm that if either of them wished to consider this possibility, then for financial reasons, the Company would need them to work their notice period.

When both Supervisor’s confirmed that they felt unable to consider voluntary redundancy, PSM proposed that the Company make both roles redundant, whereby both then apply for the role and for the Company to conduct an independent and transparent interview process, so as to select the best suited and experienced person for the role. To secure the process, PSM proposed that an external, independent HR person conduct a full interview process, to ensure that a standard series of questions be posed to each candidate, so as to ensure a consistent assessment across both candidates and for the HR Manager to confirm their conclusions as to the candidate best suited for the role, with a full reasoning as to their conclusions.

The HR Managers’ remit, specifically stated that whilst personality/character should be an important factor, the conclusions on the key qualities required for the role should be as objectively based as possible on factual examples quoted by each candidate. The remit also included a requirement that in general, length of experience should be ignored, on the basis that the length of experience does not necessarily equate to quality of experience. The process was promptly completed and a full report and recommendations provided, the existing Supervisor was given feedback as to their strengths, weaknesses and why they were deemed to be unsuccessful for the role and contractual notice issued. The incoming Supervisor was appointed with effect from when the existing Supervisors notice finished, as he was viewed as the most suited candidate for the role going forwards.

The “Take Away” Message

Whilst all mergers, acquisitions or restructuring of organisations involve inherent and varying risks, by securing a careful and robust HR process and adhering diligently to its implementation, even in what are viewed as commercial decisions which necessitate taking a high level of risk, in the application of proper procedures, we believe that any level of risk can be minimised.