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Six things to consider when harmonizing employment terms and conditions in The Netherlands

Six tips to increase employee acceptance rates

Mergers and Acquisitions
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By Maurits de Graaf | June 08, 2021

An increase in (Dutch) employers are looking to harmonize or integrate their legal entities and respective employment packages. How to best reach the objectives of all parties involved?

As the COVID-19 crisis is starting to settle in 2021, M&A-activity is expected to pick up as companies try to reach their growth goals. Highly impacted companies are looking to consolidate or divest, while innovation-driven companies see a window of opportunity to compete (anew) in increasingly disruptive environments.1

It is therefore not surprising that we are seeing an increase in (Dutch) employers looking into harmonizing or integrating their legal entities and respective employment packages.

In addition, COVID-19 has re-iterated the importance of employee wellbeing and the need to maintaining an engaging employee experience despite drastic changes in the way we interact with our workforce. Combined with an increased scrutiny by governments, regulators, investors, rating agencies, unions and employees on the ESG-agenda, we are seeing companies focussing more and more on offering (or proving) fair and inclusive pay, benefits and equal opportunities as part of the Total Rewards harmonization offering.

While ambition levels differ, the essence remains to enable a smooth transition of legacy packages and employees to a harmonized set of employment terms and conditions, where possible seizing opportunities to modernise, segment or flex the package or its delivery, while keeping costs at an acceptable level.

As this is typically not day-to-day work for HR, we outline some key tips for you to consider.

Our six tips:



  1. 01

    In our experience, the best harmonizations are conducted and negotiated through a Total Reward lens.

    Employment conditions are not offered in isolation but form a package that is part of the 'deal' between employer and employee. Any adjustment to a term or condition affects this "deal" and could be offset in other terms and conditions. This means ensuring close collaboration and touchpoints between the different workstreams that might be involved in the harmonization.


  2. 02

    Set up harmonization and design principles upfront with all key stakeholders and refer to these during the design and negotiation phase.

    These principles should define the new package and serve as assessment criteria during the negotiation and evaluation.

    Typically covers areas related to affordability, future-focus, diversity and inclusion, segmentation/flexibility, market competitiveness, pay-for-performance, administration, governance, transparency and employee transition/compensation.


  3. 03

    Think about actively seeking employee insights to inform package design.

    Negotiations and individual consent is easier if key stakeholders feel heard and/or involved in the process and design outcomes. Understanding what workers value also gives you the opportunity to optimize your total rewards package.

    Think about undertaking total reward surveys and/or focus groups.


  4. 04

    Create a Total Rewards Model to quantify the value and cost levels of the different legacy packages and the new (proposed) package.

    Creating a model that encapsulates all employment terms and conditions, their interdependencies, and their aggregated gross cost and value reduces the risks of cherry-picking during negotiation and unexpected increases in costs post-negotiation.


  5. 05

    Build in the necessary time for employee (representative) communication and consent.

    Define a clear employee (representative) consultation strategy. Think about having a dedicated harmonization microsite/intranet page, organize townhalls and HR walk-ins to ensure employees are properly informed of the new package, and key changes.

    Employees (and representatives) should have adequate time to be able to reflect, assess and acquire external counsel on the new employment offer and contract (addenda). Depending on the complexity, companies tend to offer 3 to 6 weeks.

    Having clear timelines and an engagement plan in place helps to accelerate employee acceptance numbers.


  6. 06

    If the changes in the new package are considered complex and/or attractiveness is not apparent, provide individual statements to employees.

    Today’s employees increasingly expect to be treated like consumers in the workplace. Clear individual statements outlining the qualitative and quantitative differences between the packages and its impact, incorporating any compensation or transition schemes, improves (speed of) acceptance rates.

    These statements are typically bundled together with an employee’s new employment contract (addenda).


Keen to hear more on our experiences approaching total rewards harmonizations, or are you interested in finding out how to create total reward models and individual statements?

Please reach out to the author whom is happy to discuss this further. Also have a look at our Total Rewards Valuation brochure for more information.


Footnote

1 Bain global M&A report 2021

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Author

Work & Rewards Associate Director

Leads the employment, terms and conditions valuation and harmonization efforts in The Netherlands as well as oversees Fair Pay and Equal Opportunity initiatives in the Benelux. Co-leads Total Reward Priorization and Optimisation initiatives in Western Europe and is part of the Willis Towers Watson Fair Pay WE community.


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