Wholly owned subsidiary & P&P's

dchr9203

We're spinning off a wholly owned subsidiary and will be transitioning some existing employees from the now "parent" company to the "new" company. Benefits will be administered by parent company; payroll processed by parent company; etc. For those of you who support this type of structure, what are your thoughts on HR P&P's? Intent is for HR day-to-day admin to be decentralized to "new" company; however, its my firm belief that the HR P&P's should flow down from the "parent" company since ultimate liability for entity activites will flow back up to the "parent" company. Feedback will be helpful as this is a new experience for me.

Thanks!

marc

A couple of different perspectives to share.

First of all, don't be so sure that ultimate liability will flow up to the parent company. One of the frequent reasons to create wholly owned subsidiaries is to create a "wall" between companies. Lots of different ownership structures can make that happen. A seperate corporation or LLC is not uncommon.

While those walls are not impenetrable, it often takes quite a bit of doing to make it happen. If this is indeed one of the reasons your company is doing this, legal should be involved, because the use of centralized policies and procedures, along with centralized P/R processing and benefit management can serve to weaken the wall.

From a practical standpoint, you can probably dictate those policies and procedures that the parent company wishes to be "panoramic." Certainly procedures around payroll, timesheets and the like would make sense.

You probably wish to maintain the same types of holiday recognition, vacation and sick pay, etc. Ultimately, if the subsidiary or parent has a valid business reason for a different policy, that hsould prevail.

For example, if one of the ocmpanies was a resort or had to be open on holidays to serve clientele, then attendance and work schedules would reflect that difference?

Otherwise, why reinvent the wheel?