Who’s afraid of Change?

Who’s afraid of Change?

Answer: People are

OK, so when there’s a leadership discussion on changes in a company, they consider the impact on people, right, it’s obvious?  Errm…maybe.

 

It was Woodrow Wilson (US President 1913-1921) who said, “if you want to make enemies, try to change something”.  And it was Mary Anne Radmacher (author & artist) who said, “change of any sort requires courage”.  Perhaps then, we are fearful of informing people about changes because it would take courage and make enemies…. bit of a dilemma really.

But if you Google (or Bing) “why change fails”, then 27,500,000 results will tell you of many reasons: ineffective communication, resistance, can’t change the culture, lack of training, losing employees, ignoring key stakeholders… the list goes on.  And if the “only constant in life is change” (Heraclitus), then we really do need to plan for it, prepare people for it and promote the change, to ensure that the envisaged benefits are realised.

And that’s, basically, the essence of this white paper: plan for change and start the planning early. We need to be pro-active, not re-active when it comes to planning.

Let’s look at two scenarios.  Business Changes and Mergers & Acquisitions.

  1. 1.    BUSINESS CHANGES

From 1989 to 2019, the message is the same.  Success is hard to find when implementing changes to systems, processes and ways of working.  Questions:

-       What is Success? Success is ultimately realising the business benefit that was anticipated when embarking on the changes.

-       Why is Success so hard to find? Because the changes are not adopted nor utilised as well as they should be.

-       Why is that? Because people are afraid of and do not accept change and people are the key to successful business change.

-       How can we ever make a change successful then? Well:

  • make the change essential for everyone
  • make the new ways of working feel inspiring
  • answer everyone’s concerns/questions about the impact on them
  • explain the implementation journey and guide people through it
  • enable everyone to use the new methods/systems
  • benchmark, then continually measure & communicate the improvements

Success can be found by having a People Change Plan, that focuses on Stakeholder Management, Communication, Training and Benefits Realisation.

  1. 2.    MERGERS & ACQUISITIONS

In the pre-m&a phase, the focus is on financial assessment and analysis.  But concentration should also be given to organisational differences (and similarities) and employee concerns, because this is also the time for employee resistance, rumour and resignation, as they become anxious and concerned over their futures.

Two tasks should be included in the pre-m&a phase plan:

  1. Carry out an EDEM Scorecard® review of the two organisations.  This will provide information on where there are differences and similarities in their non-financial dealings.  This will then be a solid foundation of knowledge on which to produce the second task.
  2. Develop a People Change plan. This will initially focus on Awareness and Communication, ensuring that everyone knows what will happen and what changes there will be, developing the shared vision and creating a harmony between the organisations. People will have concerns and questions about their jobs, roles, IT, data, Clients…indeed about everything. So, address their concerns and answer their questions.  Then continue the plan into the next phase.

In the post-m&a phase, the integration could take time.  Day 1 may be a big celebration, but the integration itself may take some months. The People Change Plan should continue to be developed and include the necessary training and “preparation for integration” communication.

That’s it then, isn’t it?  We’ve retained the talent through the merger/acqusition, we’ve celebrated the change, integrated the teams and trained people on the new systems…but there’s one other task that should also be in the post-m&a plan:

  1. Develop an Employee Engagement plan.  Use the information gathered from the EDEM Scorecard® review and see if there are things that can be developed, incorporated or enhanced.  Is there a proper on-boarding programme, is there a good recognition scheme in place, are the promotions still ad-hoc and so on?  Now that the new organisation is integrated it’s time to make it the place to join, the place to shine, the place to grow and the place to be and create a unified organisational identity.

This article was written by Trevor Pullen, a veteran of hp and M&A business change management specialist

Trevor is also an Associate of TRUEDIL and a member of the IBD network

The EDEM Scorecard ®

If you Google “people problems in m&a” then the response will be Communication, Employee Retention and Cultural Differences.  And to quote Deborah Pikula (Queens University) “knowing the differences in the two organizations involved in a merger or acquisition and how they are managed are crucial to the success or failure of the process”.

So, during the due diligence phase it is essential to assess those differences… and the similarities.  Then we can communicate effectively from a very early stage, anticipating the concerns, reducing the rumours, alleviating anxiety and helping both companies to maintain a “business as usual” attitude through the process. Also, merging the best of both will create a common set of approaches that both organisations can relate to.

The EDEM Scorecard® can be used to help in the initial assessment.  It consists of four areas to assess and within each area there are seven topics for discussion

The EDEM Scorecard® will help to complement, enhance and support the non-financial due diligence process.  It could be another “below the waterline” section of:

f. CULTURE
• ENVIRONMENT: tools, colleagues, surveys & management
• DEVELOPMENT: training, certifications, promotions & succession
• EMPLOYMENT: benefits, processes, values & support
• MEASUREMENT: role definition, performance metrics & recognition

Let’s look at a couple of examples:

  1. Complete mismatch

It’s easy to see from the above that the two organisations are not aligned and that there will be difficulties with employee retention and culture mix in the acquired company, no matter how much communication is carried out.

  1. Similar with some differences

From this assessment we could recommend that they look to use:

-       Communication plans from Company B

-       Employee Surveys from Company B

-       Promotions Process from Company B

-       Onboarding Process from Company B

Conclusion

Start the Business Change planning early with an EDEM Scorecard® review of the Organisational differences and similarities during the due diligence phase.  Then :

-       incorporate organisation culture into the change planning

-       assign a team to blend the similarities (e.g. job descriptions, recognition schemes, employee surveys)

-       communicate, keep everyone informed

-       ensure everyone can relate to the new ways of working

-       enable everyone to use any new/different processes and systems

Continue the growth of the new organisation culture by incorporating an employee engagement plan and implementing any new practices that may be missing from both organisations.

The EDEM Scorecard® – it plays a vital role in non-financial due diligence.

This article was written by Trevor Pullen, a veteran of hp and M&A business change management specialist

Trevor is also an Associate of TRUEDIL and a member of the IBD network

Do you need True Spirit and True Purpose to have True Leadership?

Do you need True Spirit and True Purpose to have True Leadership?

Conviction – to be a billionaire you need it.

Jay Z famously said “I’m not a businessman, I am a business, Man !

He certainly gives it his all which is what one must consider to be a key element of #True Spirit

Dignity – one of the hallmarks of True Leadership

In the heat of battle, India’s Cricket Captain, Virat Kohli asks the crowd to stop booing Australian Captain, Steve Smith #ICCWorldCup  #trueleadership  It was has his respectful initiative in the #truespiritofcricket

Knowing your Why and even redefining it?

#SimonSinek correctly emphasises that to succeed, we need a clear sense of purpose :-

For Richard Branson, his space travel business is his passion and purpose today.

He started in the music business and then moved into the airline business and then again into space travel, each time redefining his #truepurpose

Uplifting others

Taking people along with you on a rewarding, purposeful entrepreneurial journey requires both inspiring true spirit and leadership.

True Great Leaders with true fighting spirit and real purpose are few and far between.

When one element is missing (for example, the cause /purpose or priorities have changed), true leaders can become ineffective. Winston Churchill was a brilliant war time leader and much less effective once WW2 Liberation had been achieved. He had fulfilled his purpose  

Charles Smee, Founder and Senior Partner of Transaction Focus and Co-Founder of Truedil

www.transactionfocus.com @tfocus @charlessmee

www.truedil.com @truedil1

MERGERS AND ACQUISITIONS THE ROLE AND NECESSITY OF NON- FINANCIAL DUE DILIGENCE FOR A CLEARER PICTURE

Image flouhttps://www.pinterest.co.uk/pin/317363104971833636/

BACKGROUND

Today we know from Professor Aswath  Damordian of Stern Business School in New York that 80% of Mergers and Acquisitions fail.

HBR and McKinsey endorse these statistics.

We also know from Price Waterhouse Coopers that 85% of change management initiatives fail and that this applies to integration initiatives undertaken after the acquisition/merger is completed.

One might think that with a 24% increase in mergers and acquisitions during 2018 and with more overall experience in the discipline that the results would be better than they are.

If anything the situation is getting progressively worse.

We know too ,from Miller Heimann one of the leading sales training companies in the world that organic growth, particularly with external salesforces is progressively worsening to the point where sales teams in 2012 would meet their  targets 63% of the time and by 2017 were only doing so 50% of the time.

Examination of website sales and call centres shows similar diminutions in effectiveness across all the regions of the world despite the use of technology, better training, CRM packages, pipeline management, time and attendance software and the use of NLP style hypnotic language patterns to improve strike rates.

WHAT IS HAPPENING TO ORGANIC GROWTH ?

Organic growth is slowing and conversion ratios are degrading and worsening because:

There is more buyer choice

Buying processes in many complex sales situations are becoming more complex and may well be spread across multiple jurisdictions completely removed from the salesperson’s home territory

Attention spans are shortening making it harder for salespeople to persuade anyone about the benefits of anything

There is more regulation of the sales process , adding cost and complexity to the process in more and more industries

 

WHAT IS HAPPENING TO MERGERS AND ACQUISITIONS?

 

Here the drivers of failure are different:

To begin with the M & A process is driven by accountants and lawyers and their technology and consultancy advisors in the Big 4 accountancy based management consultancy arms and their outriders : the systems integration houses.

Naturally they collectively focus on clever ways to value a company, negotiate the lowest possible price and identify, quite properly all the myriad of legal issues that buyers and sellers must be made aware of. Some of the risk of these transactions has been transferred to insurance providers who have created specialist products for just these purposes.

Shareholders and institutional investors are increasingly impatient for results so whilst these legal, financial and risk obviation processes work well enough , the non- financial elements are rushed or are overlooked.

Cultural differences are overlooked to the detriment of the favoured business model as happened with Walt Disney when it attempted to expand in Paris and had to be bailed out by the Kuwait Investment Fund

Regulations, particularly in North America where Sarbanes Oxley lays down particular requirements that must be fulfilled during the due diligence process. The regulations are harsh and demanding ,tending to elongate the acquisition process to the point where better heeled and nimbler competitors can engage in spoiling action or snatch the prize from under the buyer’s nose

50% of competitors to a given business did not exist before 2 years ago (Source: McKinsey’s) thus the rationale for an acquisition or merger may make perfect sense at the start but may not further into the process

Valuations are based on historical information which ignores trends in the economy ,tipping points, fluidity of demographics, fast following and competitor emulation , AI, OI etc. 

They fail to deal with matters such as brand toxicity caused by philandering or misbehaving directors or with salesforces seemingly performing well today but in reality on the move because a Sales Director or key people are about to jump ship or set up on their own.

Data is growing exponentially especially with 5G, so directors and key employees who are fit for purpose today may not be in the “Brave New World” created by the merger or acquisition.

Consequentially, the M & A either has to be phased to allow for better people to come in or restructuring and repositioning has to start before the intended M & A is in place, in order to be in “condition” and “fit for purpose” well in advance

A company may have divisions or elements best carved out or outsourced but without preparation they will not be in a saleable or outsourceable condition. Without that preparation and associated costs , the Merger or Acquisition will contain unrealisable value.

 

HOW TRANSACTION FOCUS CAN HELP

 

Transaction Focus is assembling technologies and teams of non-financial due diligence specialists who can pre-view or “look inside the engine” of an acquisition target . We call this TRUE DILIGENCE

www.truedil.com

We are looking to new ways of future proofing corporate investments, so that acquirers realise profitable, sustained ROI .

Transaction Focus has adopted a similar approach with Direct and Indirect Sales (including DDD-Distributor Due Diligence) for 15 years.

 

 

John Gelmini is an innovator who has conducted NFDD ((Non-Financial Due Diligence) for over 30 years, initially for GE Capital. He is Associate Partner at Transaction Focus and co-founder of TRUEDIL

https://www.transactionfocus.com/non-financial-due-diligence.htm

www.truedil.com

 

 

 

 

 

TRUEDIL

https://www.truedil.com 

 

#TRUEDIL1

TRUE DIL is short for True Diligence and can also be pronounced “True Deal”. In Urdu, it means “from the heart”.

In short, our True Diligence programme is a “future looking” open networking and discussion forum , designed to help optimise the success of mergers , acquisitions and partnerships, so that all stakeholders gain and prosper in the longer term.

With 78% of mergers and acquisitions failing in the long term, traditional legal and financial Due Diligence alone is no longer enough; True Diligence complements and enhances traditional legal and financial due diligence, so that investors make sounder investments with stronger growth and returns.

We are assembling NFDD (Non-Financial Due Diligence) specialists from all continents to deliver True Diligence. These will include AI / OI, IOT ,Cyber, forensics, insurance,  team and culture integration experts, sales optimisation & test marketing, Reputation and other sector specialists. Their role is to provide innovative in depth analysis and new thinking and a clearer view of the acquisition or investment target

Our first #TRUEDIL 1 London Forum hit the mark www.truedil.com

A brief introduction by Charles Smee, followed by a clear endorsement address by David Cooper of Aon M&A and Transaction Solutions; Aon’s strapline “Securing investments, Enhancing Returns” explained  what True Diligence is all about.

Aon, AiM, Aperio Intelligence, British Chambers of Commerce, Cisco, Google, Midaxo, TPS, Unilever and Wizard Solutions are already endorsement partners of our TRUEDIL Discussion Forum.

NFDD or True Diligence has existed for a great many years; there is nothing new. The TRUEDIL Forum is highlighting the importance of sharing new approaches.

VCs , Private Equity and Corporate M&A lawyers might only use one specialist area of True Diligence. Our team may be able to help them source the “perfect fit” provider in Russia or Argentina or elsewhere.

Rigorous NFDD can help ensure that M&As or JVs are not derailed or fail to live up to their full potential. Some advisors and companies can use #TRUEDIL as a price pre-negotiation tool to determine or verify the right price of a target company.

A few VCs have already used the #Transaction Focus “True Source” potential target generation service to search out potential acquisition targets.

Other companies have received NFDD True Diligence training from our teams in Dubai, Kuala Lumpur , London and Oman. These sessions were fully subscribed.

We believe that Corporate M&A law firms can enhance their client investment protection and in turn optimise their service and reputation by using our True Diligence services.

Too often, deals are pushed through too quickly with inadequate NFDD.

For example, without PEOPLE (the most valuable asset of any company) role clarification and integration pre and post acquisition, the team spirit can dissipate. Anxious or demotivated employees may leave because of rumours of a takeover. More critically, failed mergers and acquisitions cause lost income and lost jobs and disrupted livelihoods.

Far too frequently, perfectly sound companies with sustained profits over a number of years are broken up and divested as a result of ambitious M&A activity that is completed with inadequate True Diligence.

One of our key team motivators is to reduce ensure that the M&A Process is more integral with a 360 degree due diligence overview.

 

For more information, please call us on 0207 127 8070 or else email me on Charles@transactionfocus.com

Twitter: @Truedil1

 

Charles Smee, Founder of TRUEDIL and Transaction Focus

 

True Diligence : Assessing Reputation

Reputation is everywhere. Whether good, bad or indifferent, every business has a reputation and an initial glance doesn’t always reveal what lies beneath the surface.

It’s easy to form a view on a company’s reputation.  Do we know what they do ? Do we recognise their logo ?  Do we buy their products ?  Does their brand impact our communities or reach the people and issues we care about ?  How do they handle issues and who represents them ?

These elements give us an instinctive reaction to a brand but that can never be enough when it comes to understanding the genuine value and security of a company’s reputation, an essential consideration for any potential partnership, merger or acquisition.

Reputation is fragile, especially in the fast-moving world of social media combined with the transparency and insight we now have into the inner workings of a business.  One poor customer interaction or a misguided tweet has the potential to escalate nationally or internationally and can be hard to recover from.

Moving beyond First Impressions

To truly understand the strength and power of a reputation, we need to consider the multiple aspects that feed it, and that’s where True Diligence comes in.  Going beyond that initial instinct gives a realistic and honest picture of a company’s reputation, an essential measure if a partnership or collaboration is under consideration.

It’s essential to have a holistic approach. On the surface, the official perspective will undoubtedly convey high quality products or services –  but what’s going on behind the scenes ?  What is the volume of complaints or challenges and how are they handled?  Does customer service shine through as a beacon of excellence, with thoughtful, constructive solutions ?  Are employees willing and loyal ambassadors, sharing their honest perspective of a company they are proud to be part of ?  Does staff turnover reflect loyalty ?  How connected are leadership with customers and staff ?  How loyal are customers or can competitors easily lure them away ?  Does stakeholder and community engagement matter to this business ?  How does it happen and does it have an impact ?

Combine these factors with media and social media presence and you begin to get to the heart of a company’s reputation.

Fragility Versus Authenticity

Why does it matter?  First impressions do count, but only a deep assessment can uncover how a company reputation adds value to the business.  Growth targets succeed on the back of strong brands and reputations, and a deep insight into the resilience and multiple facets that drive this intangible asset is key to understanding the future strengths of a business.

Entering a partnership or acquiring a business without this understanding has the potential to devalue the acquisition – or to stall future growth so reputational due diligence should be an essential step in any such decision.

Contact us to find out how this key aspect of non-financial due diligence can inform your decision making.

Siobhán Lavelle, Cornelle Communications, Associate of Transaction Focus and True Diligence TM Ambassador.

http://www.transactionfocus.com/non-financial-due-diligence.htm