When HR integration comes up
After an acquisition or merger, two HR worlds run side by side for a while: different contracts, pay bands, systems and co-determination structures. The longer that lasts, the more expensive and unsettling it becomes for both workforces. Employees compare salaries across the corridor. Managers do not know which rulebook applies to whom. The HR team runs two payrolls with double the effort and double the error rate.
Integration does not sort itself out over time. Without a project the patchwork stays, and the first resignations come from the side that feels it lost, which is usually the acquired one. In Germany there is an additional dynamic: the acquired company's works council will read every unilateral change as confirmation that its people are second class, and it has the legal tools to slow the integration down accordingly.
For international acquirers the trap is familiar. The deal team assumed that the German subsidiary would adopt group policies after closing. Then it turns out that working hours, bonus schemes, the HRIS itself and any system that could monitor performance are co-determined topics, and the rollout that took two weeks in Ireland takes six months in Germany, or fails.
What I take on
How the project runs
Contracts, pay bands, systems and co-determination structures of both organisations captured, including pension commitments and works agreements with after-effect.
Agreed with both leadership teams: what gets merged first, what can wait, what stays deliberately separate.
Pay bands aligned, systems migrated, both works councils involved on one timeline.
The new rulebook is running, managers on both sides know it, open items have an owner.
What gets merged first
Not everything at once. The sequence decides whether the integration is perceived as fair or as a takeover in the worst sense of the word. Three questions set the priority:
Aligning pay bands without losers
The most expensive and most sensitive part of any integration. Two compensation systems that grew historically are supposed to become one, without anyone earning less and without the payroll total exploding. The way there runs through grandfathering, transition periods and an honest assessment of where the differences actually lie. In my experience the gap is rarely where both leadership teams assume it is. It sits in a handful of roles and in benefits nobody had valued in euros before, company cars, pension contributions, the extra leave days from a works agreement signed in 2009.
Two works councils, one timeline
If both organisations have a works council, two negotiations run in parallel, on one shared timeline. That is more work than one negotiation, but it is the only route on which neither side feels bypassed. If the establishments are merged, a joint works council emerges at the end; until then, transitional mandates apply. Works agreements of the acquired side may continue to apply with after-effect, depending on the constellation. That is one of the points I settle with your law firm during the assessment, before the first meeting with either council takes place.
A practical note for acquirers from outside Germany: the works council is not a union, and it does not go on strike. It is an elected body inside the company with defined rights to information, consultation and, on certain topics, co-decision. Treated as a partner with a seat at the integration table, it is often the fastest route to a workforce that accepts the new rulebook. Treated as an obstacle, it becomes one.
Merging processes, systems and contracts after an acquisition is something I know from my own work, not just from theory. What can be told from it in anonymised form will join the case studies once it is complete.
System consolidation after an acquisition from my own work, reorganisation across nine countries at a software company. More about me
Frequently asked questions
How long does HR integration take after an acquisition?
Three to six months for the core topics: contracts, pay bands, systems. Cultural integration keeps running in the background well beyond that and cannot be closed like a project.
What if both companies have their own works council?
Then the merge runs through both bodies at the same time, on one shared timeline, so that neither side feels bypassed. Whether a joint works council emerges depends on whether the establishments themselves are merged, which is a decision with legal consequences that I take to your law firm early.
When should HR be involved in an acquisition?
As early as possible, ideally during due diligence, so integration risks such as unequal pay bands, pension commitments or works agreements with after-effect are known before signing rather than discovered after.
Do all employment contracts have to be rewritten?
No. Employment relationships transfer, contracts remain valid. What gets aligned are rulebooks: pay bands, working hours, benefits, systems. Changes to an individual contract need the employee's consent, and German courts take that seriously.
What if the acquired company had better terms?
They do not get cut. The transition is designed instead: grandfathering, transition periods, alignment upward where the numbers allow it. Cutting terms through integration fails at the works council and then again through attrition.
The acquirer is outside Germany and wants global policies rolled out. Is that possible?
Partly. Global policies can be adopted where they do not touch co-determined topics. Working hours, monitoring systems, bonus schemes and similar are subject to the works council's co-determination and need a works agreement, not a group announcement. Separating the two is one of the first things I do.