Divestiture Planning: A Step-by-Step Guide to Sourcing Competitive Employee Benefits

When a company undergoes a divestiture or spin-off, one of the critical challenges is ensuring a smooth transition for the employees who will be moving to the new, independent organisation.

A key aspect of this transition is developing a robust and competitive employee benefits package that can effectively attract, retain, and motivate the workforce.

As the company that is being spun off, you have a unique opportunity to thoughtfully design a benefits program that aligns with your organisation's culture, values, and strategic objectives.

This is your chance to move beyond simply mirroring the benefits offered by the parent company and to truly differentiate your employee value proposition.

In our recent live interview, the COO of Soundtrap, Oli Raghall explained how to ensure you’re incorporating competitive employee benefits into your divestiture planning.

Speaking to Omnipresent’s Director of GTM, George Brittan, Olle laid out the steps that helped Soundtrap migrate their employees from Spotify quickly, compliantly and transparently.

Assess the Existing Benefits Landscape

The first step is to thoroughly understand the current benefits landscape for your employees. Olle and the Soundtrap team were needed to secure competitive benefits without the larger HR infrastructure of Spotify.

First, review all of the benefits your newly divested employees are currently receiving from the parent company, including medical, retirement, insurance, holiday and any other perks.

Gather data on current plan utilisation and employee satisfaction to gain a comprehensive understanding of your staff’s experience of the benefits they’re already using.

This assessment will not only inform the design of your new benefits package but also help you identify any potential gaps or areas for improvement that can be addressed.

Understand How Your Workforce Needs and Priorities Align With the Divestiture Plan

With the current benefits landscape mapped out, the next step is to gain a deeper understanding of your workforce's unique needs and priorities.

If you have time, undertake employee surveys, focus groups, and one-on-one interviews to gather insights on which benefits are most valued, where the current offerings are falling short, and what improvements or additions your employees would like to see.

This employee-centric approach will help you design a benefits package that resonates with your workforce and addresses their specific needs, ultimately enhancing your ability to attract, retain, and engage top talent.

Benchmark Against Competitors & Industry Standards

While your employees' needs should be the driving force behind your benefits program, it's also important to benchmark your offerings against those of your competitors and industry peers. This will help you ensure your benefits package remains competitive and aligns with market standards.

For example, Olle benchmarked Spotify’s employee benefits against Omnipresent’s recommended providers.

Gather data on the benefits packages offered by similar-sized companies in your industry, as well as key players that you may be competing with for talent.

Pay close attention to medical, retirement, and annual leave policies, as well as any unique perks or wellness programs.

It’s also important to be realistic about where you won’t be able to offer the same benefits as your parent company and prepare a plan to proactively and transparently communicate this to your affected team members.

Leverage Your New-Found Agility

One of the key advantages of transitioning to an independent organisation is the newfound agility and flexibility you'll have in designing your benefits program.

Unlike the parent company, which may have had to navigate complex legacy systems and bureaucratic processes, you now have the opportunity to be more nimble and innovative.

Take the time to explore alternative benefit delivery models, such as offering employees a defined contribution rather than a defined benefit plan, partnering with a Professional Employer Organization (PEO) or Employer of Record (EOR) to access a broader range of benefits, or incorporating more flexible, on-demand benefits like telehealth and lifestyle spending accounts.

By leveraging your agility, you can create a benefits package that is tailored to your specific needs and resonates with your workforce in a way that a one-size-fits-all approach from the parent company may not have been able to achieve.

Prioritise Clear Communication

Throughout the process of designing and implementing your new benefits package, clear and transparent communication with your employees is essential.

Remember, this transition can be a source of uncertainty and anxiety for your workforce, so keeping them informed and engaged every step of the way is crucial.

Develop a comprehensive communication plan that includes frequent updates on the benefits transition process, opportunities for employees to provide feedback and ask questions, and detailed information on the new benefits program, including plan details, enrollment instructions, and available resources.

By maintaining a constant dialogue with your employees, you can build trust, address concerns, and ensure a seamless transition to the new benefits package.