When Mannington Mills implemented SAP ERP Human Capital Management (SAP ERP HCM) to roughly 1,500 employees across six manufacturing facilities, the Salem, New Jersey flooring company couldn’t foresee that it would soon nearly double its personnel. Just a few years later, Mannington added around 900 employees from two acquisitions, which entailed an initiative to on-board the new employees onto the SAP system and its functionality for personnel administration, organization management, time, benefits, and payroll.
The initiative to get the new employees up and running on the existing system and adopt the human resources (HR) process in place created a host of challenges. For example, the new companies both paid their employees hourly wages through the current week, whereas Mannington had always paid in arrears. And because one of the companies had a manufacturing facility in the UK, Mannington had to work around European safe harbor regulations that prevented a simple transfer of personnel data.
Yet despite these and other unforeseen challenges, Mannington finished both on-boarding projects on time and on budget, attributing the relatively seamless projects to the lessons learned from its earlier SAP ERP HCM implementation. Mannington also completed these acquisitions with no consultants and only one full-time resource — Manager of HR Technology and Compensation David Wisor, Jr. According to Wisor, the success is largely the result of the SAP software’s flexibility to handle the multiple configurations that were necessary due to the differences in core HR processes between Mannington and its new additions.
Building the Foundation
When Mannington replaced its aging legacy HR systems with SAP ERP HCM, cleaning up data was a primary concern to ensure that the business was maximizing its SAP investment. With a data entry clerk and a payroll administrator at each of its facilities managing HR data independently, inaccurate and inconsistent data was often the result, which posed challenges when cleansing and transferring data into the SAP system. In addition, an overly aggressive timeline, tax withholding issues, miscommunication, and inadequate training led to several implementation challenges and, ultimately, user resistance to the new system.
Almost immediately after the system was deployed, employees noticed some year-to-date payroll data issues as well as a number of inaccurate Social Security and Medicare withholdings. For example, employees who had maxed out year-to-date contributions to 401k plans were still being hit with payroll deductions.
“Our timeline was too short, and we were focused on finishing the project more than anything else,” Wisor says. “To meet our tight deadlines and get ourselves off the ground, we oversimplified configurations and made many compromises, and consequently, we had data accuracy issues well beyond our go-live date. It was a difficult time, and as we updated configurations and benefits, we found some less-than-ideal configurations that left an unearned reputation that SAP ERP HCM didn’t work. But the SAP software wasn’t the problem — it was our implementation.”
Mannington addressed many of its implementation issues by reevaluating process flows and reorganizing employee structure. Moving forward, one person would be in charge of all core HR data entry and data control, which included running roughly 600 nightly reports looking for inconsistencies. The business also hired a payroll analyst with prior SAP experience to concentrate on payroll.
“It took us several pay periods to get our arms wrapped around the new process, but ultimately, we became a poster child for a successful SAP installation in HR,” Wisor says. “We have significant savings, one data entry person for the whole company, cleaner and more accurate data, and a simpler process flow as opposed to many pairs of hands touching our data.”
Covering New Ground
Reengineered HR process flows and fewer touchpoints for the HR data paid dividends for Mannington when it later acquired Burke Industries — its first acquisition in about 25 years. Integrating core HR processes for Burke’s roughly 300 employees in two manufacturing facilities, each with its own HRIS and payroll-hosted systems, posed several challenges. For starters, Burke was unionized, and Mannington had never needed to negotiated a Collective Bargaining Agreement. Also, Burke paid its employees weekly, many workers were paid hourly, and one of the new facilities was located in California, Mannington’s first facility in the Pacific Time Zone.
“We didn’t have any experience acquiring companies, and we hadn’t built our systems with future acquisitions in mind,” Wisor says. “Our initial SAP ERP HCM implementation was based on the idea that Mannington would be the same company 10 years later. So we didn’t have any plug-and-play tables or schemas. Things weren’t set up so that we could just bring in a new company and easily add its business and employee data to our existing SAP system.”
Bringing on Burke: A Three-Step Process
Mannington on-boarded Burke employees in three phases: personnel administration, benefits, then time and payroll. Integrating personnel administration had to be completed first, before open enrollment for benefits in January. Having just one data entry person — a result of the initial SAP implementation — helped Mannington with the scope of its training for the first phase, which entailed creating a new enterprise structure and new personnel areas and work contracts for Burke’s union employees.
“Instead of training new employees to use every SAP transaction, all we had to do was train them to use our forms,” says Wisor. “This freed up time away from the configuration and let us focus on creating and modifying the reports we already had, which were designed for our existing locations. I just had to scrub them and see what needed to be added for this new implementation.”
For the benefits phase, Mannington elected to add Burke employees to its existing benefit plan with two exceptions — keeping Burke’s 401k and the addition of a union-negotiated medical plan. By choosing a default plan and making changes later based on the return of a paper enrollment form, Mannington avoided major reconfigurations. Mannington normally uses an electronic enrollment form, but opted for paper to avoid giving the new employees too much to digest at once.
“Paper was better in this case because we didn’t want the confusion over training employees on this e-form while they went through their first enrollment period. It created a little more data entry work, but in the long run, it was a much better use of our resources with fewer errors,” Wisor says.
The third payroll phase created the biggest challenge for Mannington, primarily because of Burke’s vastly different payroll processes. After researching California wage and hour laws, Mannington made the necessary changes to its time and payroll schemas to accommodate the hourly employees and account for overtime policies that didn’t apply to Mannington’s current employees.
Another challenge arose when Mannington converted Burke’s pay period to payment in arrears. The default course of action given to Burke employees was to have one week of pay withheld, which would be paid out on their final day of employment. Many Burke employees felt like they were losing a week’s pay and had a difficult time grasping and accepting this option. In fact, many chose to either sell back accrued vacation time equivalent to a week’s pay or take a loan that would be repaid over the course of the year with paycheck withholdings. These options created added complexity for Mannington to track going forward.
Overall, Wisor says that changing the HR culture — with payment in arrears as the prime example — was the biggest challenge in on-boarding Burke employees. But the benefits far outweighed the difficulties, with cost savings from converting to the SAP platform being one of the more tangible benefits.
Acquiring Amtico: Constructing a Blueprint
Two years after bringing on Burke, Mannington acquired Amtico International, adding another 600 employees and three manufacturing facilities to the business. With a facility in Europe, the Amtico acquisition gave Mannington a global reach. Amtico’s HR systems consisted of a consolidated HRIS and payroll-hosted system in the US and a consolidated HRIS and payroll in-house system in the UK.
Having raised the bar with the Burke acquisition, Wisor was expected to deliver similar results with Amtico. However, this second acquisition presented vastly different challenges. Chief among them was European safe harbor regulations and having to implement a mid-year benefit enrollment.
“We finished on time and on budget, and we achieved cost savings. The data was accurate and employees were happy.”
— David Wisor Jr., Manager of HR Technology and Compensation, Mannington Mills
This time, Wisor tried to simplify the configuration process and avoid surprises by creating a blueprinting grid for HR policies, practices, and procedures for each of Mannington’s locations and comparing them to how the Amtico locations were set up. With a Microsoft Excel spreadsheet, Wisor mapped out categories such as each location’s benefit information, time rules, payroll rules, paid time-off policies, and overtime procedures.
“This blueprint was the beginning of the plug-and-play schema I was looking for, in the event we continue to make acquisitions,” Wisor says. “Now, we can hold the configuration that we’re already using for one location and pop it in someplace else. And since we plan to maintain it on an ongoing basis, we won’t have to recreate it for the next implementation.”
Of course, plug-and-play necessitated inputting personnel data from Amtico’s UK employees, which meant coming up with a solution to safe harbor regulations that prevented a release of personal data. The solution Mannington chose featured a signed contract spelling out how Mannington would use the data.
With a blueprinting grid in place, Mannington set out with the same three-phased approach it used for Burke. A mid-year benefit enrollment period, though, meant that personnel administration and benefits had to be completed within the same condensed timeline.
“We blueprinted for over three months and we used the same grid that had all the time and payroll rules,” Wisor says. “But every location is unique, and Amtico was no exception. The project required a lot of changes to the schemas, but this time around, we didn’t have any last-minute surprises.”
A Concrete Roadmap
Mannington also carried over the lessons learned from the Burke acquisition. This time, when moving Amtico employees to payment in arrears, instead of offering a loan program to make up for the withholding of a week’s pay, Mannington merely gave the Amtico employees additional notice of the upcoming change.
Just as the earlier SAP ERP HCM implementation helped the Burke implementation, the Amtico implementation was aided by having successfully gone through the Burke acquisition. “Again, we finished on time and on budget and achieved cost savings,” Wisor says. “The data was accurate, employees were happy, and we came out of it with a newly designed blueprinting spreadsheet and consistent pay rules.”
After experiencing two acquisitions close behind a full SAP ERP HCM implementation and aligning core HR processes despite nearly doubling its personnel, Mannington didn’t lack for lessons learned. One it will not soon forget: Acquiring two companies and 900 employees on its legacy HR and payroll systems likely would not have resulted in the same success.