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(Editor’s Note: Today’s article is brought to you by our friends at UKG – Ultimate Kronos Group. Formed by two leaders in HR solutions, UKG combines the strength and innovation of Ultimate Software and Kronos. They are committed to inspiring workforces and helping pave the way for their people, customers, and industry. Enjoy the article!)
I read an article recently on NASDAQ.com that indicated advantageous interest rates and increased availability of capital could increase the merger and acquisition (M&A) activity in 2021. Mergers and acquisitions can be exciting times for businesses. M&As can create opportunities for new products and services. They can unleash innovation and disrupt industries.
But make no mistake M&As are also tough and present many challenges. One of the biggest is merging talent management strategies, such as employee benefits. Last year, we saw two of the world’s most recognized workforce management and HR brands merge – Kronos and Ultimate Software – to form Ultimate Kronos Group (UKG). I’ve had the opportunity to serve on the Workforce Institute board with Dave Almeda, chief people officer at Kronos and now UKG, so I asked if he would share how the two companies have come together to create their new employee benefits plan. Thankfully, he said yes.
Dave, thanks for sharing your experience today. Prior to the merger, both Kronos and Ultimate Software were known separately for their world‐class benefits packages. How did you evaluate the existing benefits packages to create a new unified one?
[Almeda] Very carefully and very thoroughly. It was a Herculean team effort by so many employees across UKG (now known as ‘U Krewers’), and especially in HR with our benefits team. As soon as we were permitted to do so within the guidelines of the then-pending merger, our combined HR teams immediately began compiling details around what each company provided employees.
We began by cataloging each company’s existing benefits, programs, and perks — including general benefits details, who was covered, and the corresponding cost to the company — in a side-by-side comparison worksheet.
Working alongside an outside broker, we asked ourselves several questions to compare what Ultimate Software and Kronos offered. We started with which company’s existing offering was more favorable? Why was that more favorable? From there, we compared the more favorable offering with the rest of the market. Between the two companies, we were checking all the ‘at-market’ boxes and, in many cases, one or both companies were above market.
Once we knew the differences between the separate legacy offerings, we dug into how we would select new plans. For each major line item, the goal was to ensure employees had at least equal to or better than what they had before. We meticulously ran this process for each benefit, to do what was best for our people and take care of every type of family. Of course, we had a budget to stay within. We engaged our procurement team to maximize the lower fees that were made possible as a result of our increased buying power as a much larger organization (UKG has more than 13,000 employees worldwide today). This process ultimately enabled us to secure the best products for our employees at a reduced per-employee price point that would not have been possible for either organization to secure on its own prior to the merger.
It required an unprecedented effort for the combined team to create a new benefits package in a short timeframe — including all the work involved to set up, educate, communicate to, and enroll over 10,000 employees in the U.S. and Canada — all with the backdrop of the pandemic, where everything had to be done virtually.
And that work is not done. As soon as benefits decisions were made for U.S. and Canadian employees, our team ran the same process for U Krewers around the world in Mexico, the U.K., France, India, Australia, Singapore, and more. And now, in continuing to listen to our employees, we’ve added new offerings throughout the year — including programs to help care for our employees and their families during the pandemic — as we’re reviewing and negotiating UKG benefits for 2022.
Knowing the history of these two companies, did you feel any pressure (even if it was self-imposed) to make sure that there was equal representation of employee benefits from each company? Why or why not?
[Almeda] There were certain offerings from both sides that were truly cultural pillars. We knew we had to preserve these — such as student-loan-repayment assistance on the Kronos side and premium-free healthcare for employees and their families from Ultimate Software. A small number of companies provide free healthcare premiums — and very few our size. Even fewer include spouses, partners, and dependents. It was a big cost to bring thousands more employees and their families under a premium-free plan, but it was the right thing to do for many reasons — most importantly to honor the commitments that had been made to employees by both organizations by their legacy leadership teams.
Yet, despite a handful of offerings we absolutely had to preserve, our aspiration was — and is — to build something new and great as UKG.
We have been using terms like ‘a marriage of equals’ and ‘best of both worlds’ to describe our merger. And those terms are absolutely true in myriad ways — from our products to customer success to our cultures — but creating our UKG benefits package was about far more than merely pulling together the best of both.
We took a philosophical approach to focus on what we wanted to be as UKG. What are we trying to convey? Who are we aspiring to be? How can we stay true to ‘our purpose is people’? How do we best care for U Krewers, their families, and the community? How do we provide equity for all employees?
I don’t want to take our employee benefits conversation off-track, but you’ve mentioned taking time to define the values of UKG. And I agree – it’s important to align benefits with values. Can you briefly share more about the alignment?
[Almeda] As we were pulling together the benefits-comparison database, we simultaneously created a second list: a list of values and behaviors that align with our UKG strategy and who we want to be as this new company. We identified the 10 key areas that drive the UKG culture (in no particular order):
- Hiring and onboarding
- Performance and development
- Rewarding, protecting and thanking
- Diversity, equity, inclusion and belonging
- Celebration and community
- Workspace and tools
- Corporate Social Responsibility (CSR) and giving
These values, behaviors, and strategy pillars directed us to focus on the areas that we felt were needed to help build an intentional culture — we often refer to these areas as ‘culture levers to pull’ — each with a desired future state. This ideological exercise provided a ‘North Star’ that helped to guide benefits decisions and priorities. The pressure wasn’t to ensure equal representation from what we had at Kronos or Ultimate Software. It was pressure to create something new, special, culturally aligned, and sustainable for UKG.
“Looking at silver linings in this pandemic, COVID-19 might be the catalyst that raises the industry conversation and motivates more organizations to provide better equity of benefits and perks between office-based, field, and virtual employees.”– Dave Almeda, Chief People Officer, Ultimate Kronos Group
Was there any employee benefit where you decided not to adopt either company’s existing benefit and just create something new? If so, what benefit was it?
[Almeda] There were a handful of examples where we took foundations from what each company offered and created something completely new. Running this unprecedented project during a pandemic as our offices remained closed provided opportunities to reallocate money from office-based perks to new programs that can better serve all employees. It also helped us rethink office-only perks that both companies historically provided.
Is it right to provide benefits that only a portion of your employee population can access? Is there a way to make perks that were traditionally for office-based employees available to all employees — regardless of their location? We are actively working on developing these types of ‘all-employee’ benefits today while also thinking about the approach we should be taking to make remote and office programs even more equitable for when we eventually reopen our offices.
Looking at silver linings in this pandemic, COVID-19 might be the catalyst that raises the industry conversation and motivates more organizations to provide better equity of benefits and perks between office-based, field, and virtual employees.
One benefit that Kronos was well‐known for was MyTime, an unlimited time‐off policy. I’m curious, is MyTime a part of UKG employee benefits? Did you make any adjustments?
[Almeda] Yes, we kept unlimited PTO — and now we call it UKrewTime. Both Kronos and Ultimate Software had successful policies for unlimited paid time off. And part of what made both successful was a focus on trust and actively reviewing time-off reports to ensure employees were taking enough time. That’s something even more critical today, as we enter year two of almost all employees working remotely. Managers and leaders not only need to set a healthy example for practicing self-care and taking time off, but also need to have active conversations with employees encouraging them to take vacation time, unplug, and unwind — even if their people don’t have the ability to travel anywhere.
UKrewTime can be used for anything the employee needs, from vacation, sick time, and personal errands, to taking care of a loved one, volunteering in the community, and voting. While the essence of the unlimited-time-off policy did not change specifically compared with the old Kronos myTime policy, a segment of our UKG employee population, namely part-time and hourly workers, have felt a ‘best of both worlds’ lift, as they now can take advantage of unlimited paid time off, where they could not before.
How was the new benefits package communicated to employees?
[Almeda] We wanted the internal announcement to be a celebration. A celebration of who we are together. Mergers often come with the connotation of cost savings and cutbacks. When you add in the backdrop of a global pandemic and economic crisis, it would have been easy to assume we were going to cut back — not invest forward like we did. Ours was always and is a merger of growth.
Well before our benefits-program details were ironed out — around February or March of last year — our board and investors approved to spend an incremental $35 million more on benefits than what our companies spent combined the year prior. Yet, with the backdrop of the pandemic, people struggling at home, and so much change due to the merger, we purposefully held off announcing the benefits internally because of economic uncertainty and, as importantly, because we wanted it to be a celebratory moment when we finally did tell our employees.
Once the timing was right, we treated it much like a product launch. We hit multiple channels. Our CEO Aron Ain provided a preview of the benefits package in one of his regular aron@work video blogs sent to all employees. I sent a comprehensive email to all employees with more details and resources about the new offerings. We held several live webinars specifically about our new healthcare options to coincide with open enrollment. We built documents and pages on our new intranet site, UKG Today, where the HR team continues to write follow-up stories and create videos about specific offerings and policies.
We debated whether to include the total monetary investment on benefits we’re spending, in my email to employees. We wanted to remain humble, but we also wanted employees to know that we are investing in our UKG culture. At the end of the day, driven by our values to be completely transparent and show yet another proof point that this merger is about growth, we let employees know the dollar commitment we made as a company to them and their families.
Final question. I’m hoping that you’ll share how employees are reacting to the change?
[Almeda] Overall, employees continue to express gratitude for the UKG benefits, as well as the various other ways we continue to care for our people and their families. Aron and I often receive unsolicited, emotional emails from employees thanking the company for various offerings they’ve taken advantage of to help care for their families. I’ve personally received a lot of heartwarming pictures of employees and their children who enrolled in the virtual summer camp and afterschool ‘Kids’ Klubs’ we set up in 2020 to help families balance homeschooling and working from home.
But let’s be honest: Change is hard. That’s not a surprise to anyone in HR and people management. And with our merger happening while so many are working differently today, many of our employees have felt more change in the past year than they have in their entire careers.
Regardless of how many employees you have at your organization, there’s no way to make every employee happy all the time — so we focused hard and thoughtfully on making benefits equitable across various stages of life. We also worked hard to ensure that employees coming from either company did not feel we went backward in any area.
We actively capture employee feedback — as well as feedback from pulse surveys, open forums on UKG Today, our engagement surveys, in Great Place to Work surveys, and by encouraging employees to speak with their managers and HR business partners — as we look to continually enhance our benefit offerings well into the future of UKG. We will never be done or completely satisfied in this area. There will always be opportunities for improvement.
I want to extend a HUGE thanks to Dave for sharing his experience with us. As he mentioned, mergers are tough. There are lots of decisions to be made and we often don’t make everyone happy. But, if we make decisions in alignment with company values, and if we’re transparent about how we made those decisions, then I believe employees will respect the process.22