Don’t forget the people during critical business transitions
By Peter Tulau, Director at AltoPartners Australia
Post-Covid many businesses are contemplating some form of transition, whether it’s a sale, IPO, merger, acquisition, or restructure. Here’s our executive team check-list for optimising your next critical business transition (CBT).
Share your strategy
You’ve spent months working on the numbers, but does it make for inspirational reading? Your business strategy has major implications for both the success of any proposed business transition and the capacity of the business to attract and retain high performing executives who can make that change happen. It’s worth getting it written up in a clear, compelling format so that everyone in the organisation can get behind it.
Keep your executive team close
In the initial phase, the focus tends to be on the owners, founders and Board, but the executive team is a critical constituency during any transition given that they tend to own the relationships with key customers, employees, suppliers, and influencers – stakeholders which are key to the success of the business now and in the future.
As a starting point, it is worth restating the implicit contract you have with your executive team. You want some combination of change, quality, speed, and value; and your team is seeking some combination of autonomy, purpose, mastery and money.
Aligning and sustaining these elements is a challenge at the best of times but more so during a transition as transformational change usually demands a sometimes uneasy mix of old and new executives.
Sticking to the following fundamental elements will help create the appropriate architecture to support the creation of a multi-skilled, motivated, cohesive team capable of driving business performance, even under new ownership or a revised structure:
- Clarify the notion of Director titles and associated governance issues.
- Clarify the status of executive contracts and existing remuneration.
- Develop Australian best practice employment contracts.
- Develop Australian best practice remuneration frameworks.
- Commence succession planning early to capture commitment.
Put people at the centre of the strategy
Careful consideration of talent acquisition, assessment and management are integral components of a broader risk management programme during a time of change. In a recent article, we shared the human capital considerations when contemplating an IPO, but the principles apply universally across the CBT domain. Bottom line: If your company is going to change significantly, chances are your talent needs – and their expectations – are going to change too.
Assess what you’ve got
What is your strategy? What skills are required to execute this strategy? Where are your talent gaps, and how can they be closed? These three questions form the basis of best practice talent assessments and enable you to take a proactive approach to potential challenges that may lie ahead around ownership, governance, strategy, structure, culture and skills.
Essentially, an executive team capability review aims to uncover the nature of the target business culture, values, strategy, and operations and explore the ways autonomy, performance, and accountability work in the target business. There is also a need to understand the leadership capability internally, and the executive team’s views on the business’s competitive advantage and threats to this advantage and their views on the approach the acquirer should adopt during the transaction. It is also important to understand their situations, both professionally and personally, regarding the forthcoming transaction.
Reviews of this type help mitigate risk and create a positive outcome for all parties. These reviews have broad application including merger, acquisition, pre – IPO or restructure and for general executive team optimisation purposes.
This useful case study of an Executive Team Capability Review in an M&A Context describes the value of an executive assessment where an offshore entity sought to acquire a substantial privately held Australian business.
Make yourself attractive to top talent
An organisation’s capacity to attract executive and managerial talent begins with an honest examination of its status as a potential employer, especially when it comes to sourcing a new CEO for an SME.
Talented senior executives and managers have many options and can afford to be selective. They want to know they are making a move to an organisation where there is good governance, a clear strategy, a strong culture fit and the likelihood of success. Organisations must be able to convey their executive and managerial opportunities with energy and insight and quickly establish credibility if they are to attract high-quality candidates capable of leading the organisation through the transition phase.
For some businesses approaching a CBT, it can be prudent from a risk mitigation perspective to undertake some talent mapping to identify external executives who may add value to the business in the future. A good executive search consultant will be able to create, store and manage talent across geographical boundaries to required business timelines as the CBT unfolds.
Review you remuneration
Market-related reward and retention practices are essential to motivate executive teams through critical business transitions.
At the individual level, this includes acting for the Board in determining CEO reward, preparing Board submissions for CEO’s, and assisting CEO’s to determine reward outcomes for their first line reports.
At the team level, this means focusing on discrete workgroups within the organisation that may be critical to the forthcoming transition, such as retaining technology / IP or locking down key individuals in the sales function.
At an organisational level, this includes organisation-wide remuneration audit/review processes focusing on competitiveness with the market given the organisation’s unique operating environment.
Conduct a human resources audit
HR audits are invaluable when it comes to identifying which critical human capital and organisational capabilities are strong, weak, or absent, and which are important in the context of the critical business transition. The audit evaluates the degree of strength or weakness of areas, outlines developmental or transformational change interventions, identifies barriers to such change, the cost of change and the benefits of change, which aids decision-making and helps get key stakeholders on the same page.
About Peter Tulau
Peter has enjoyed a diversified career in operations and production management in industrial and process engineering environments before joining one of Australia’s largest recruitment and human services companies. Over a 30 – year career, Peter has worked across executive search and organisational consulting and led major organisational transformations in the industrial and manufacturing sectors. Peter is currently a Director with AltoPartners Australia and the practice head for the industrial, manufacturing and infrastructure sectors.
Get in touch with Peter
+61 490 460 492