In mid-April of 2020, there was a formal announcement regarding the completed merger between two HR technology-based software companies, Kronos Incorporated and Ultimate Software. Given the state of the pandemic-related chaos impacting organizations across the globe, it seemed a bit unusual to find these two companies proceeding in, what appeared to be, a business as usual approach. As noted in the announcement, the CEO of the combined organizations acknowledged the impact of these turbulent times, while pointing out the successful collaborative efforts of both companies to continue providing HR-focused customer support. While the announcement of the completed merger appeared in April, the plans for that merger were identified earlier on, as noted in this analysis, published this past February. There is no doubt that the negotiations over the strategic alliance happened over a lengthy period of time, well in advance of any public communications that may have appeared this year.
On the surface, this merger is indeed “like no other.” HR technology-based tools are usually targeted for specific tactical or operational functions. Kronos Incorporated provides workforce management tools, such as time and attendance tracking. Ultimate Software focuses on the transactional payroll side of HR, along with talent management software, which includes a very strong focus on the Canadian HR market. Each party brings with it a separate puzzle piece. Once they are put together, they form a completely new entity, with a new name, in order to provide a wide range of HR software applications. From our strategic human resource planning studies, we know that this type of merger gives us a real-life example of a consolidation.
With this type of merger, there are multiple impacts on both internal and external stakeholders. While this is an exciting opportunity to increase the strength of HR technology-based systems, a consolidation of this kind comes with risks regarding market competitiveness and customer service. As noted in the analysis provided by the US-based Society for Human Resource Management (SHRM), HR customers may find increased competition, decreased availability of what they are used to, and having to go outside their existing HR technology-based ecosystem.
The reality for success, internally and externally, remains to be seen. One would hope that, as these two merging organizations are HR-based technology companies, they will proceed along the rocky path to successful consolidation with sound HR practices and strategic plans in place.
Discussion Questions:
- What are the cultural implications of this type of merger (consolidation) between these two technology-based HR software providers?
- Based on the information provided so far, what types of positions or departments might be declared redundant as a result of this consolidation, even with plans to increase the number of employees over the next three years?
- In your opinion, what type of restructuring plans should be put into place?
- What benefits does this merger offer to the HR profession?
