Payroll Merger of Pretty Me Company Ltd & Impact Fashions

Craig F
PRETTY ME COMPANY LTD & IMPACT FASHIONS
Merger of Payroll Departments

Table of Contents
Introduction.......................................................................................................................2
Payroll system costs...........................................................................................................2
Pretty Me Payroll......................................................................................................................2
Impact Fashion..........................................................................................................................4
Literature Review...............................................................................................................4
Information required.........................................................................................................8
Staffing levels....................................................................................................................8
Training requirements.....................................................................................................10
Risk management............................................................................................................10
Risk identification...................................................................................................................10
Positive risks...............................................................................................................................................10
Risk Prioritization (Hallows, 1998).........................................................................................11
Communication management plan..................................................................................15
Gantt chart......................................................................................................................17
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Introduction
The aim of this project is to develop a simulation of the payroll merger between Pretty Me
Company Ltd and Impact Fashions. The report would be prepared post examining the current
costs of running payroll systems in both companies and would explore how the merger of the
system would an impact on those. The report would monitor the key performance indicators
in the process and would develop a merger project plan to make changes in a way that have a
positive impact illustrated by these KPIs. This would help in learning how payroll processes
work and how they can be merged with another company with different structures and
processes such that the merger challenges are taken care of and the resulting performances
are improved. The report would identify the risks that may be caused as a result of merger
and present a plan to overcome them. Specific activities that would be involved in this
research include assessment of the project activities, comparison between he potential savings
as well as costs before and after the merger, exploration of the implications that would be
caused on the staff as a result of the merger, identification of risks associated with processes,
and provision of recommendations based on the study for a successful merger.
The Pretty Me Company Ltd is a clothing store that runs a chain of 39 clothing shops across
south of England. There are currently 500 employees associated with the shops and the Head
Office of the company that is set up in Salisbury. Impact Fashions is the sister company of
Pretty Me that also sell clothes at the lower end of the market. Impact Fashions has its
headquarters in Glasgow that comprises of 60 employees along with 300 other employees
working in 36 shops of the company. The project includes the mergers of the payroll
department of Impact Fashions with Pretty Me Company Ltd. The reason behind the merger
is the enhanced number of errors and frauds in an overdue audit conducted at Impact
Fashions. The project shall be completed by 23rd July 2018.
Payroll system costs
Pretty Me Payroll
Total number of employees = 500 (approx.)
Let’s suppose for example:-
Description
Weekly/
4weekly Annual Salary No of Staff Salary Per year Salary Per month
2

Monthly
Shop
managers £ 12,000.000 43 £ 516,000.00 £ 43,000.00
Monthly
Head office
staff £ 18,000.000 75 £1,350,000.00 £ 112,500.00
4 weekly Shop Staff £ 500.000 372 £ 26,071.60 £ 2,172.63
Weekly
Average Staff for
Costing
Casual Staff £ 100.000 23 £ 119,928.90 £ 9,994.08
£ 2,012,000.50 £ 167,666.71
Pretty Me Payroll staff salary is as follows:
Pretty Me
Staff Salary Per month
Payroll Manager £35,000.00 £2,916.67
Payroll Assistant No. 1 £23,400.00 £1,950.00
Payroll Assistant No. 2 £19,800.00 £1,650.00
The payroll assistants work around 208 hours of overtime in a year and is paid at time and a
half. This will equate to an hourly rate of 11.967 for assistant 1 and 10.128 for assistant 2.
Assuming they both work the same no of hours of overtime (104 hours each) this will amount
to a yearly gross total of £3,446.90
From above it can be concluded that in a year, Pretty Me spends around £81,446.90 gross on
3 payroll staff alone and if above mentioned assumptions on salaries of other resources are
taken into consideration then the annual gross salary for all staff comes to £2,09,000.50 .This
is besides the costs of overtime and on-costs of managers and other staff. If the on-costs are
also included then there will be around 30% additional costs.
Besides these costs, there are bank charges and computer costs.
Computer cost 1200/system
Annual maintenance 3840
Bacs 263
Bank charges
Cost 1 10p/item
3

cost 2 5/transaction
timesheet 6/thousand
Self-seal 47/thousand
Paper 1500
Postage
4-weely staff 1.45/delivery
Weekly staff 500
Shop manager
staff
65p/letter
So, it can be observed that all these can add up to over 2 million pound and with every 3
years there is an additional renew charges on computer and other components.
Impact Fashion
For Impact Fashion the cost is low but major cost lies in relocation:
Impact fashions
Head Office 60 Monthly Bacs
Other 29 Weekly Bacs
Relocation cost
Deboarah 20000
Her husband 25000
Literature Review
The objective of any payroll system is to pay the employees of the company on time and
maintaining the accuracy. Each company may have a different structure and processes to a
payroll system. When a merger takes place between two payroll systems, HR workers would
have to work hard to bring out synergies between the two systems such that the processes
used by the two companies complement each other when merged. However, this presents a
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variety of challenges that companies would be facing while handling the merger activities.
The initial challenge would in merging the governance structure that would differ and would
need leaders to adapt to the change of control. A senior leader who could be responsible for
taking in charge in a company before merger may have to start listening to another leaders
post-merger which can cause conflicts and resistance in leaders.
Another major challenge would be the chaos that would be created because of the fact that
two companies may be using different systems for managing payroll. Service structures,
monitoring systems, benefit programs, and payment structures would not be aligned with
each other so combining them can be very challenging. This would need a company to make
an assessment of the cost of misalignment and developed a roadmap for smoother integration
so that these costs are reduced and consolidation is achieved.
Besides the operational differences, the companies would also face a pressure for bringing
harmony mainly because of introduction of technologies that may happen post a merger,
legislation that would demand protection of laws of equal pay and anti-discrimination, and
the changes in the personnel administration that would affect the cost of integration.
An integration can happen either horizontally or vertically. Horizontal merger is often the
case when two systems belonging to single company are to be merged. The challenges in
such a merger are less as their would be less modifications in the payroll or HR policies as
they may belong to same industry and may have some similar structures. Vertical integration
happens between companies having different cultures or may even be from different
industries. In such a merger, new terms and policies may have to be formulated replacing all
the old systems (Fuchs, Joseph, Mansfield, Seliga, & Usdin, 2017).
In an HR or payroll integration project, major challenges would be related to people
including due diligence, cultural modifications, communication issues, legislation procedures,
job evaluation, payment grades and benefits, retention and redundancy. Thus, all these areas
have to be explored and assessed to consider the impacts of integration and a plan is made
accordingly to ensure that the challenges related to each of these areas are taken care of in the
plan (Geddes, et al., 2017).
In a payroll system merger, a major challenge would arise because of the differences that may
exist between the pay structures of the staff and contract workers in two companies. A
smaller organization may have employees working on similar profiles as the big organization
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