In today’s competitive business world, many organizations are choosing to focus their growth strategy through mergers and acquisitions. The value proposition for leaders is that by joining forces with another organization, growth can be more exponential and accelerated when compared with attempting to expand organically. When an organization is considering a potential merger or acquisition, they often place a priority on evaluating the prospect’s industry segments, geographic footprint, revenue, and service offerings. While this is critically important to achieve the desired goals, if the people & culture component is overlooked, there is a significant risk of turnover, low engagement, and low performing teams which in turn affects the experience for clients and ultimately organizational performance. This is where HR leadership has a critical role to play.

Before we dive into some best practices, I’d like to take a moment to differentiate between a merger and acquisition as these words are used interchangeably. A merger occurs when two organizations agree to join forces to create a new, joint organization. The recent merger of BKD and DHG to become FORVIS is a good example of a merger. Conversely, an acquisition is where one organization is absorbed by another. The recent agreement for tech giant Oracle to acquire Cerner is an example of this type of transaction. It is important to note that since an acquisition can have a negative connotation as a “takeover”, it is sometimes informally referred to as a merger, leading to the use of these terms interchangeably. Now that the business lesson has concluded, let’s return to the topic at hand.

Regardless of the type of transaction that is taking place, it is essential to have people strategies as a central component, particularly at the onset of conversations between two organizations. For this to occur and for HR leaders to be invited to this conversation, a prerequisite is for these individuals to establish credibility as a strategic business partner so they can have a seat at the table. For more on this topic, visit my blog and download the whitepaper “How to Get a Seat at the Table”.

To truly put people first, here are five best practices to consider for your next merger or acquisition:

Conduct People Strategy Due Diligence

At the onset, a people workstream should be formed to conduct due diligence for the prospect organization. This team’s responsibility is to evaluate the following elements of the potential transaction:

• Cultural Values
• Benefits Structure and Philosophy
• Compensation Structure
• Critical Policies
• Personnel Structure
• Performance Processes

The focus of the people workstream is not to look for 100% alignment in all of these areas, but to envision what the future state of the organization would look like given this information and how it would impact the employee experience. Even if the prospect organization would be forced to transition to the acquiring organization’s policies and practices, how would this transition play out and would differences have an impact on employee morale and retention? Alternatively, would there be elements of the prospect organization that you’d want to adopt? These are just a few of many questions that you’ll want the people workstream to dig deeper into.  

Develop a Consistent, Repeatable Due Diligence Process

Especially if you are an organization that plans to have significant M&A activity in the future, there is great benefit to having a well-thought-out process that can be replicated and scaled up/down as you look to evaluate a variety of different prospects for a merger or acquisition. It is important to have an “apples to apples” comparison process so that you are consistently looking at the same metrics of each organization being evaluated so that you can be objective in the decision-making process. This does not mean you would need to have similar size organizations you are evaluating, but rather a consistent set of principles to operate from as you do the due diligence. For example, if you are looking at three different organizations, using the same principles for evaluating benefit structure and philosophy will help you clearly identify the best fit given your goals for the transaction.  

Develop a Robust Internal Communication Plan

Likely one of the most important elements of the M&A process is communication, and more specifically, internal communication. There are two components to this: the announcement and the integration. During the announcement phase, important elements will need to be considered such as how and when your employees find out about the deal, who they hear it from, and what type of medium the information is being disseminated in. Moving forward to the integration, employees need to feel as though their organization cares about them, regardless of what side of the transaction they are on.

Below are three key goals that should drive your communication plan:  

1. Engagement and Retention: How will you provide the opportunity for team members to stay informed, feel invested in the change, and have a compelling reason to stay?
2. Career Planning and Development: What will you to do help your team members connect the dots between now and the future as it relates to their career growth?
3. Team Building & Connection: When the transaction is complete, what will you do to empower your leaders to facilitate high performance and connection within newly formed teams?   

Create Great Onboarding Experiences   

Particularly in the case of an acquisition, it is essential to have a thorough onboarding process. This begins with the sharing of basic organizational information, operations, and benefits, but extends beyond the first day to help new employees become assimilated into a new culture. During their first 90 days, employees will begin to form opinions about their role, their leader, and the organization overall. How they feel about these components will drive the likelihood of retention. As a result, there is a great opportunity to create a world-class onboarding experience for new employees to include elements such as the following:

• Local social gatherings
• Team building events
• Exciting project opportunities
• Intentional coaching conversations
• And much more!

If you can envision the first 90 days like a “red carpet” treatment where each employee is taken through a personalized experience, the chances of that person feeling engaged and connected is high and the probability of them staying is increased.

Mergers & Acquisitions: Closing Thoughts

There’s no way around it; mergers and acquisitions are hard. Having been through many of these through my career as an HR leader and employee, I can attest that there are always challenges to overcome and varying perspectives to navigate. But the one thing you can control is to have a well-thought-out plan in place that puts your people first. If you do this, your chances of success will only increase.

If you are looking to learn more about mergers & acquisitions or are getting ready to go through one and would like a guide to lead you or your team, I’d love to help!

Throughout my article series, The Role of a CHRO in CEO Transitions, I’ve discussed how the CHRO can be an influential part of a major leadership transition. I’ve shared strategies for creating a connection, educating on the HR function, and integrating the CEO into the organization. Once these steps have taken place, a relationship has been formed between the CEO and CHRO that creates the opportunity for collaboration on a strategic level.

At this stage, the question becomes: How do you best collaborate with the top leader of an organization on people initiatives? The short answer is that each scenario will be unique, depending upon the circumstances.

Speaking personally, our new CEO Tom Watson and I have been colleagues at BKD for quite some time and have developed an effective working relationship. Tom understands my priorities for our people, and I have also taken the time to understand his strategic priorities in his role as a Regional Managing Partner and now as a CEO. This type of relationship enables me to approach him with new ideas and bring him in easily when we launch a major HR initiative. If you don’t have experience working with your new CEO in the past as a colleague, or if the new leader is an external hire, your challenges may look completely different.

Regardless of your circumstances, there are four guiding principles that can be applied across the board to collaborate effectively with your new CEO or other senior leader:

Understand the Business

First and foremost, it is critical that you have a deep understanding of the business you are operating in. This includes the core business model, operations, competitive landscape, and organization strategy. When you understand how the business works, you can work with your CEO more effectively and have productive conversations about how people initiatives will influence the overall success of the organization and increase its competitive advantages.   

Connect the Dots to Their Strategic Priorities

In the first article in this series, Relating to Your New CEO, I shared the importance of learning the new CEO’s top strategic priorities and vision for the future. When collaborating with the CEO, connect the dots back to these priorities when you are collaborating with them on HR initiatives. Here’s an example of how you might frame up the connection between an HR initiative and a strategic priority:

“I know the organization is looking to expand and has some aggressive growth goals in the next fiscal year. I think to accomplish this, we will need an increasingly diverse workforce that can provide a variety of perspectives and connect with a wide range of clients. As a result, we’d like to put together a specific HR strategy to attract diverse talent to our organization.”

Speak Their Language

Along the same theme of connecting the dots to strategic priorities, it is important to speak in terms that the new CEO will resonate with. The highest executive within an organization will likely be focused on the following key elements (along with others):

• Revenue growth
• Business expansion
• Profitability
• Shareholder returns

When you are working with the CEO, it will be important to incorporate these concepts into the planning process when you are discussing your goals and aspirations with people initiatives.

Ask for Their Input and Implement It

One of the most important aspects to building a connection with a senior leader in an organization is to actively seek out their input. By doing so, you are communicating that you understand the value of a different perspective and are open to feedback. Secondly, and more importantly, strive to implement their feedback into your strategy and initiatives. As an HR leader this will help communicate a sense of unity between you and the CEO to your team, which supports your credibility and gain buy-in from your team.

Collaborating with Your New CEO: Questions to Ponder:

1. What could you be doing differently to collaborate more effectively with your CEO?
2. What challenges have you overcome in collaborating with your CEO?
3. How have you worked to understand your business as an HR leader?

Feel free to share your thoughts in the comments!

First, there are all the employees who make it their duty to ensure their activity, even with fear in their stomachs. The fear of getting sick, the fear of infecting their loved ones. Employees are very often “forgotten” because their job seems so secondary at a time of intellectual services. Thanks to this crisis, their role has regained its full meaning. How will they be considered afterwards? Will they once again be workers in the shadows?

The current crisis is causing heckling among staff in companies

Then, there are all the employees who juggle the constraints of home schooling, of cohabitation with a spouse who has his or her own business, and those of telework deployed on a forced march. They mobilize without counting their hours, experimenting with autonomy, agile decision-making circuits, and meetings which tend to last less time. Thanks to this crisis, they are empowered. How will they be recognized professionally afterwards? How will they be managed? How will mutual aid and collective action continue to manifest themselves?

And, there are all the employees who have been deprived of activity for long weeks, worried about getting their jobs back. Some of them are in fact at risk of finding themselves without a job. Others will have to recover their place in a team, work with customers… How will they flourish under new conditions?

HR directors can take advantage of this time to prepare a return to companies that take care of the well-being of their employees

It is unlikely that anyone will emerge psychologically unscathed from the health (and economic) crisis and the period of containment it imposes. A variety of strong emotions will manifest themselves, explicitly or implicitly. They will have a definite impact on relationships. Managerial habits will be challenged.

The agility that prevails in emergency situations is a precious resource. The empowerment and autonomy expressed in telework are vectors of commitment. The ability to decide in uncertainty, allowing for mistakes, is a motivating factor. The solicitation of collective intelligence, the audacity to invent new products/processes are levers of innovation…

And yet some managers indulge in slow decision-making that makes them feel like they exist. Other managers still feel an almost visceral need to control everything, seeking reassurance. Still others show a level of demand, of sclerosing perfectionism.

It is possible, during these few weeks, to set up support systems

Rethink the system of objectives and remuneration… to focus on management style and expected results. Review the training plan… to adapt the contents to the new world. Rely on relationship professionals to listen, welcome, recognize the right to be human… to best accompany the expression of emotions and limit the risks on relationships and quality of life at work. Use professional coaches in individual and collective approaches… to best accompany the expected change in managers’ behavior.

It is crucial to anticipate the return to what, in the same place, will no longer be the same in order to limit psycho-social risks.

A recent straw-poll questionnaire highlighted the varying views and general confusion about the role of a Business Development Executive and especially their use to SMEs.

This article may help you if you are considering the benefits of a Business Development Executive for your company or if you would like to offer your services in this type of role.

The Business Development Executive’s role has been described as the following:

• Sales professional.
• Marketing and pre-sales professional.
• Sales, Marketing and related PR-Communications professional.
• A Project Leader.

The Business Development Director’s role has been described as:

• A sales and marketing expert
• A COO / Manager of change and administrative development.
• A General Project Manager / Director.
• A capable Strategist, with special focus on the combined application of Sales, Marketing and related PR-Communications and B2B alliances.

For SMEs a capable Strategist generally proves to be the most useful fit.

The importance of Business Development Executives for the SMEs

The importance of Business Development Executives for the SME sector is becoming more widely recognised. Their appointment, role, responsibilities, liabilities and remuneration are a source of frequent debate, but for SMEs they are more frequently being employed as multi-skilled professionals in preference to a sales professional, a marketing professional and perhaps an external PR-Communications firm. In most small enterprises the core management team should comprise the Company Secretary, Chief Executive Officer, Chief Financial Officer and Chief Marketing Officer/Business Development Director.

There are up to 30,000 medium-sized companies (10 to 250 employees) in the UK. Arguably Business Development Directors (BDDs) are already playing a vital role in a large proportion of these SMEs, especially in the newer industries such as hi-technology and new media.

So, how do you find the most suitable Business Development Executive for your Company? A lot of appointments are still made through the ‘old boys’ network’, a somewhat unscientific approach to what will be a key role within the Company. The pitfalls are obvious: no systematic matching of skills/experience/qualifications; little reference checking; and no opportunity to short-list suitable candidates for comparison/assessment. Often this results in a short-list of one!

In the past I have been a Key Speaker and chaired panels on Business Development and was asked how Directorates find a good BDD.

Engaging a BDD is, in some ways, similar to the process of finding a good Non-Executive Director. Seek a professional with a background of success in a similar sized business, with applicable skill sets. Don’t be blinkered in seeking someone solely with experience of exactly the same industry sector and role. A good BDD must be able to understand quickly your company’s aims, objectives, products and services, have access to any/all research and become privy to/part of the Directorate’s development planning.

Look for independence of spirit, but avoid appointing someone who wishes to work independently and for more than one client; a BDD must be 100% focused on developing your company.

Don’t appoint the ‘salesperson-with-attitude’. Appoint a strategic thinker with a proven track record of implementing marketing, PR and communications initiatives and projects.

Avoid being impressed by someone from a big name Corporate. Do they have the multiple skills and mindset which will be required to deal with the many aspects of a project and also the ability to work solo as well as with a small team on a low budget?

Selection

Decide what you want from the relationship and the outcomes you wish to achieve in the short, medium and long term. The abilities of a Business Development Executive to think strategically and see the wider picture are of great significance but are often overlooked by too much focus on the fine detail of a specific functional role.

Start by analysing the skills/experience which are required to strengthen the existing team. The BDD will reflect your Company’s image so don’t be afraid to aim high in the quality stakes. Look for ‘agents of change’ and give them the opportunities to bring about beneficial changes – involve the Board from the outset to minimise resistance.

Contractually

Check that the BDD does not have any conflicts of interest in working with your company.

If you are worried about the cost of engaging the best person for the job and cash is tight, consider utilising shares.

Ensure the fee is appropriate for the amount of time committed. Get good value by ensuring the BDD is used correctly and that he/she contributes fully – plan their time with you, and ensure they are provided with adequate resources and support.

Create mutually agreeable objectives and measured performance but recognise that a lot of their contribution may not be visible in the short term. An ineffective Business Development professional can be more of a problem/distraction than simply an addition to the overheads!

Approach the arrangement in a professional way: don’t offer ridiculous ‘commission-only and share-option’ contracts and hope for a quality candidate and one with loyalty.

Length of appointment must be discussed at the outset (anticipate a 2-3 year contract). There should be a formal review plan with the understanding that the BDD should be the engine driving the business forward and upward; the CEO is the driver; the CFO the money-holding, clock-watching passenger; and the Company Secretary watches for road signs.

A BDD should be a core part of the Management Team/Directorate and, should the company expand, they should not be casually replaced once targets are met. On the other hand, a BDD who is successful with SMEs may not be so successful once a company grows to a larger, corporate size, therefore detail your agreement of appointment with short, medium and long-term vision”.

Summary

It’s hard for SMEs to go it alone in these days of rapid change and increasing competition. A BDD can make a real contribution and represent excellent value for money; they are often worth two or more ‘specialists’ due to their expertise in various disciplines.

If you decide to add a BDD to your Board, prepare the ground well and ensure a rigorous, professional search and selection process is carried out.

As with any senior appointment, time and effort spent on appointing the right person will reap dividends, so don’t forget to ensure their relevance and background to your company’s aims and size.

A mutually rewarding relationship is the aim.

“You can’t send a duck to eagle school”

You have to admit,  when you saw the headline of Colin Thompson’s short article. Ducks? Eagles? What’s this to do with business? But you will be simply stunned by the truth behind this kind of funny sentence. What about you? Do you think you can train a duck to become an eagle?

A few years ago I had lunch with a top executive from a company known for their legendary retail service. My wife and I are both huge fans, and over lunch I shared with him some of the great service stories his people had provided the Thompson family.

I said, “With the service your people give…you must have a training manual 2 inches thick.” He looked up and said, “Colin, we do not have a training manual. What we do is find the best people we can find and we empower them to do whatever it takes to satisfy the customer.”

Then he said something I’ll never forget. He said, “We learned a long time ago that you cannot send a duck to eagle school.”

“Excuse me,” I said. He repeated… “You cannot send a duck to eagle school.” He said, “You cannot teach someone to smile, you cannot teach someone to want to serve, you cannot teach personality. What we can do, however, is hire people who have those qualities and we can then teach them about our products and teach them our culture.”

As long as I live I will never forget this simple analogy about hiring people. It is branded on my brain forever. And since that day, with every hiring decision I’ve made, I find myself asking the question: “Am I hiring a duck thinking they will become an eagle?”

I can also honestly say that asking this simple question has saved me from making some important hiring mistakes. I just wish I’d heard it 20 years sooner.

About the author: Colin is a former successful Managing Director of Transactional/Print Manufacturing Plants, Document Management/Workflow Solutions companies and other organisations, former Group Chairman of the Academy for Chief Executives, Non-Executive Director, Mentor – RFU Leadership Academy, Mentor – Coventry University, Mentor – The Chartered Institute of Personnel and Development, helping companies raise their `bottom-line` and `increase cash flow`. Plus, helping individuals to be successful in business and life in general. Author of several publications, research reports, guides, business and educational models on CD-ROM/Software/PDF and over 1000 articles published on business and educational subjects worldwide. Plus, International Speaker/Visiting University Professor. View Colin’s short bio

Consultants can turn top management roles more effective and less lonesome…

Taking risks is inherent in top management roles, but some often suppressed aspects are isolation and doubt. With the increase of economic and political uncertainly and complexity, top managers need to be able to ponder alternatives and decisions with stakeless peers – something that they cannot find in their Boards or management groups.

This need to be addressed through an innovative combination of people and technology.

It is no secret that the 50+ employment market for senior managers is shrinking at an accelerated pace. Many seniors turn to consultancy services as an alternative. This move is not only motivated by economic reasons (income), but also by professional and lifestyle reasons. Indeed, life science and healthcare extended our life expectancy to a point where many seniors are fit and eager to continue working well into their 70’s.

The Internet and related technologies prompted and enabled tailored and personalized conduct of business (“The Long Tail”), where individualized products and services are sold in unit quantities to large numbers of consumers – at mass market prices.

Emerging business consultancy practices build upon these new realities and offer long tail senior management consulting. The underlying idea is to promote the wealth of knowledge and experience of available senior managers via relevant internet platforms, offering very flexible and tailored engagements – a phone conference, web session, several day missions or long term engagements.

Now, top management roles can be more effective and less lonesome, and obtain stakeless peer support in virtually any field. When faced with a critical decision, top managers can resort to one of these practices and obtain just the right amount of the right support – without having to pay arm and leg.

About the author: A Swiss based Board-level professional, Avigdor Luttinger helps technology providers achieve their business objectives by leveraging their competencies and the market opportunities; he is one of the founders of Magic Software Enterprises, and continues to dedicate a significant amount of his time to the company, where he functions as Vice President of Corporate Strategy. With over 25 years of experience and recognized expertise in the software industry, Luttinger is a frequent speaker and contributor at industry conferences and publications, and is also Executive Consultant at APL Technologies & Management Ltd. Luttinger currently covers Cloud Computing, Mashup technology, High Performance Workplace, Application Platforms, BPM and Integration. He holds an MBA from INSEAD in France and M.S. in computer sciences from the University of Lyon.

Part 1: Interim Management: Life at the Sharp End of the Business
Part 3: Interim Management: Turnaround

Interim Management – The First Week

Never is the saying more true to the letter “There is no second chance for a first impression” than when you first enter your new company as an interim general manager. You prepared yourself well, you have your script and you have the necessary authorisation by the board.

So you feel well prepared for the task. At this point, let me say a word about the dress code and I do not mean white tennis socks. You will have to fit in which means that if your client is a manufacturing SME in a more rural area of the country it is a bad idea to show up in Oxford shirt and pin-stripe suit. Do not overdress nor underdress.

The First Week – Day One and beyond

Most importantly, do not enter the company on your own, having to explain to the receptionist who you are. The chairperson of the company or his/her deputy is at the reception to meet you and introduce you to whoever they deem necessary on your way to the boardroom.

There, the first meeting of the executive committee (on the continent, the executive management members usually are not members of the board but members of the executive committee or Vorstand as it is called in Germany) will start immediately. The situation is different if massive lay-offs are necessary.

These have to be prepared before the first day and the executive meeting serves as a last briefing about the script for the information meeting with the entire staff. So let’s assume that the following is a company without the need for mass-layoffs to balance the situation.

After the introduction round which has to be broad to give you a feeling about the character of every person present in the room you start with the first meeting, after having explained a few ground rules some of which may seem like trivia but you will need to establish yourself as the new boss immediately.

• All personnel hirings and redundancies go over your desk. Replacements need your authorisation.
• There is an investment moratorium until you have a full grasp of the situation.
• You want daily sales reports and liquidity statements plus weekly financial key figures until further notice.
• By the end of day three you want a list of all the products listed in order of their mar-gins and yearly sales (sorely enough, many SMEs do not know on which products they earn money and on which they loose it). If it is such a company, the demand usually sends shock-waves through the finance department.
• You want resumes of all key employees by the evening of the following day.
• Each attending executive has to list the three top priorities/problems of his/her department right in the meeting.
• Executive meetings have a structured agenda along the functional lines. Quality assurance and quality control are standing items on the agenda as are investments.
• Last but not least, minutes: You let the person write the minutes who usually did so in the past and you decide who will do so in the future after you have seen the draft. The minutes have to give the key arguments in the discussion of every agenda item and the decisions taken, without dwelling on the subject. In my last blog I mentioned the importance of hedging your legal exposure. Minutes are a cornerstone in doing so; consider them to be a legal document.

After the executive meeting it is time to go round the company starting with the shop-floor, then HR, marketing and sales, finance and finally IT. A meeting with your immediate direct reports (e.g. PA, secretary etc.) concludes the day. Not for you; you will have to revise your script, complete action lists and fill your work schedule which will help you for your own re-porting to the board as well as the invoicing.

Numbers, Numbers – People, People

The priorities of the remains of the first week are numbers and people. This is because you will need all possible accounting and statistical information to get the full picture of the situation and to be able to identify the problems. Your foremost priority is to confirm the diagnosis or to modify it. This means a lot of number crunching in cost accounting and balance sheet analysis. Which are the problems? Where are they hidden?

Remember, the therapy starts only after the diagnosis has been corroborated. Once you have established the A-list of problems, you will have to think about the next steps. And, in doing so it is helpful if you have a structured approach with check-lists. We will expand on this next time. Whatever structure you choose, always watch out for quick wins.

Why people? Apart from establishing which problem you have to tackle your other uppermost priority is to man the bridge of the ship with the right crew and therefore the call for resumes of key people earlier on. The question here is “skill and will”. This you can only find out in individual discussions.

You will have to decide who is not up to the task and who is but has reservations about change. Interim-management jobs after all are invariably about change. You need a crew who want and who can. Don’t take me wrong, I do not advocate hiring and firing but the steering crew has to be top or as we say here, the fish starts to stink at the head. This you want to rectify.

Next time we will talk about the structured approach and company myths.

About the author: Peter is an interim manager, management consultant and entrepreneur. After an international career in life sciences industry working for Swiss and US multinational groups he started his own company, Management Support, in 1996 in Basel/Switzerland. Since then he had consulted with numerous clients in industry, the health care sector and services. As an interim manager he helped change organisations in difficult circumstances, optimised business processes as a project manager and consultant and co-founded companies in the biotech and service sector, with successful trade exits and an IPO. He holds a PhD in physical chemistry from the University of Bern and an MSc in Business Studies from Warwick University. This blog on interim management has first been published on www.managementsushi.com