Attending the Vistage Speakers Reception at Ashdown Park this week, reminded me of the many tips and ideas which we take away from our speak...
Possibly the most complicated part of doing business is dealing with people simply because each one is unique and generally speaking, we d...
There seems to have been a proliferation of rather high flown new titles in business for people who are doing jobs which have been done fo...
Sunday, 28 December 2014
In my early days as a Vistage peer group chairman, we had as a speaker a blunt Yorkshire man who was the CEO of what he referred to as a “corporate finance boutique” in the City of London.
His topic fairly obviously, was buying and selling companies and he had a plethora of little saying that I recall to this day like “never deal with one suitor, have a beauty parade and choose the one you feel you can trust” and “make sure that you have a bottom limit price and below that be prepared to walk away”.
He had another that I still use even though I learned it some years ago. I am unsure as to whether it is a statistic or a rule of thumb but whichever it is, it still resonates today.
He said that “50% of all acquisitions fail and 25% are not successful” and that is a daunting thought for anyone currently in the sale or acquisition of a company.
Perhaps it is a truism but it does say that we have to take great care in buying or selling a company. The original offer, for example, can be chipped away during the negotiation phase until the “walk away” point is reached.
Over the years several of my Vistage owner/manager members have decided to retire and cash in the asset and they have had to go through the dreaded procedure of due diligence. If the acquiring company is listed then the process can be even more demanding.
A recent example, which resulted in the owner aborting the negotiations at a late stage, consisted on at least 500 questions some of which took more than two days to answer.
In his case he was well covered with a very effective Managing Director who continued to run the day to day operations while the owner had to take some three months out in order to complete the due diligence process.
Cost that into any deal!
The question is: if the due diligence process is so comprehensive how is it that 75% of all deals either fail or at best are unsuccessful?
If we look at the questions asked by the acquiring company they virtually all relate to the financial strength of the business, its processes and procedures, and to some extent to its people and markets.
Seldom does it ask questions about the culture of the business and to what extent there is a gap between the two.
More often than not there will also be a gap between the way that the vendor company is run and the acquiring company simply because the corporate mind cannot conceive of a business without an overwhelming array of processes and procedures behind which anyone can take cover.
I have yet to see anyone allow an earn-out to run its course because owners have found the new owners so difficult to live with that they are prepared to lose out rather than stay on in misery.
This is not to say don’t do it. Remember that 25% of all acquisitions are successful and yours might just be one of those.
It all depends on the deal, whether there is a culture gap and whether it can be closed sufficiently to allow the vendor to continue to run the business with as much autonomy as possible. If he/she is to stay on then it should be without the strings of an earn-out.
I well remember one of my members in the throes of the negotiations told me that the acquiring company wanted him to stay on for at least two years and saying rather bitterly “They want adopt my baby but they want me to stay on to wipe its bottom”. The deal did not go through.
There is a vast amount of emotion to get through in these circumstances. Be sure that emotion does not get in the way of a deal that you can and indeed want to live with for the future.
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Sunday, 21 December 2014
In every relationship there comes a time when something comes out of left field and we have neither anticipated it or can even understand what it is all about.
At the risk of doing a Rumsfeld (the known and unknown), it all comes down to the very similar predictable and unpredictable.
In most instances in business we are pretty well aware of how people are likely to react and if we have any sense we will think about it and even test run an issue before launch time.
The problem is, of course, that the hopefully predictable often morphs into the very unpredictable and then we have to handle a situation that we just didn’t anticipate.
It comes down to the difference between an ice cube and a hurricane, not so much in their similarities but rather in the way that we can anticipate a result.
For example, if we put an ice cube on to hot coals the result will be exactly as we predict; the ice cube will melt.
On the other hand while we are well aware that a hurricane may arise and we can track its path with some accuracy, we know with equal accuracy when it is likely to reach landfall but we cannot really predict where it will cross the coast.
There are so many variables in the existence of a hurricane that the very movement over the coast can change the direction and ferocity of the storm and that is something that we can’t predict.
However if an ice cube goes on the fire there is only one variable and that is the length of time that it takes to melt.
Sadly there are many more variables in the lives of people and that can make reaction to a situation more likely to be unpredictable rather than predictable.
A member of my Vistage Chief Executive’s peer group recently had this experience when a senior member of the management team blew up at a suggestion of change and totally refused to accept or even discuss it.
It was even more odd because all the others in the team accepted the change almost without discussion and agreed that it would be better for them and for the business.
All of this is a rather convoluted route to the acceptance or otherwise of change and it is one of the great predictables that something unpredictable will happen when we try to impose change in a situation.
All logic and good sense flies out of the window. Battle lines are drawn and positions harden. That dreadful cry of “it’s a matter of principle” is heard on the land.
The fact is that the imposition of change can bring sensible people to a state of frothing fury when a little sensible discussion in a calm environment should put the whole thing happily to rest.
When logic becomes convoluted however we can often finish up in entrenched positions. The question is, do we go into negotiation mode and try to pacify the disbeliever or do we point out that the majority has accepted the change and we are going ahead irrespective of one person’s non-acceptance?
It is a very difficult path to tread. It will often devolve on the value of the individual to the business, the possible reaction of the majority and the overall need for the change to be made in the first place.
The final unpredictable is how the individual will react when told that the change is going through and what is the likely outcome for the business.
The problem is that very few people act like ice cubes. Hurricane reaction is much more likely and it is up to the leader to try to anticipate what might happen and make provision for any and possibly the worst-case scenario.
It is the time for the leader to take hold of the situation and make decisions, painful or otherwise, that will allow the business to develop and grow irrespective of some who react badly.
That will need another and probably big decision by the leader.
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Sunday, 14 December 2014
In just about every employee survey that I have seen there is always a substantial proportion of respondents claiming that communication needs to improve.
Very frustrating for those leaders who understand the need for good communications and have put systems in place to make sure that the people know what is going on.
The problem is that the definition of communications can vary wildly from one to another and frequently according to their level in the hierarchy.
Communication is a two way process; telling people is not communication and hearing without listening is also fruitless.
It is useful to ask yourself as a leader:
· In what way do the people think that communication could be improved?
· What is my definition if communications in this business?
· In what direction does communication flow?
· What methods do we use?
· How effective are they?
· Do we prefer verbal over written?
· Do you know what the people would prefer?
· How good a listener are you?
There is a strong case for setting up some form of system to investigate with representation from all levels in the business.
The fact is that most communication in a business is intermittent, frequently only "top-down", is selective in terms of the information and of the people receiving it and is generally more opaque than transparent.
All of this leads to frustration and the enthusiastic generation of rumours, which is always counter-productive.
Another serious issue involves top down communication being filtered through layers of management until it has been totally rewritten.
Perhaps the worst case of downward filtering that I have encountered is the large manufacturing business that used the trade union structure to pass information through to the workforce. The result was predictable with a negative slant being put on to virtually every issue.
Admittedly this occurred many years ago but the massage is still clear and appropriate.
In their great book, The Puritan Gift, Ken and Will Hopper make the point very forcibly that until there is as much upwards communication as downwards there will always be a communication gap.
The key therefore is to engender and encourage upwards communication in order to close the gap. Here we are coming into the "unknown unknown" paradox because in many cases the shop floor knows more about what is going on than does the management.
Again this leads inevitably to unclear and often pointless messages transmitted in both directions.
What, therefore, is the answer?
It certainly shouldn't include a flurry of messages, a multiplicity of media and a constant downwards insistence that "we committee but they don't listen".
At the heart of the issue is mutual trust and sometimes the lack of it. The culture that is developed and driven into the business by the leader must emphasise honesty and transparency at all time and in all communication.
In addition the vexed question if the whistle blower must be clarified and accepted by the management.
If some sees a wrong being committed and discloses the fact to the management then they should be congratulated rather than have sanctions imposed.
Equally there is little point in assembling everyone to give them information about company performance and then couching it in detail that only an accountant could understand.
Messages need to be relevant to the listener and if they are not, expect your people to say they understand and then to find them in little groups saying "What was all that about?"
Accordingly we need to accept and encourage communication in both directions in a culture of no-blame, to praise honesty, clarity and transparency, and to demonstrate all of these factors by taking visible action.
Above all, when passing a message (in either direction) employ the old method of "Tell them what you going to tell them, then tell them, then tell them what you have just told them".
A little judicious repetition of the message never did any harm.
Download my book "Leading to Success" from Amazon Kindle
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Sunday, 7 December 2014
It’s time for a little homespun philosophy. There is a joke that has been circulating of late on the web:
“If we are put on the earth to help others, what are the others put here for?”
Very amusing I have no doubt, but at the risk of being considered irretrievably anal, perhaps there is a grain of truth there.
If we, that is all of us, are put here to help others the implication is that we alternate between being a helper and being helped.
That is one way to look at it but we could also say that some of us are natural helpers and some of us are naturally helped or are even helpless.
There is growth in the help market these days; community work, volunteering in all its forms, sports clubs, committees, food banks, they all contribute to the helping environment.
Cynics tend to decry these people as do-gooders and what is wrong with that description? Is it not better to do good to someone or something than to do nothing and metaphorically walk on the other side of the street?
It is remarkable that when dreadful things happen some people do just that and don’t want to be involved while others immediately risk life and limb to help.
So perhaps some of us are natural helpers whenever the occasion arises and sometimes when it doesn’t.
The traditional shape of business is that of a triangle with the apex pointing upwards.
At the top resides the leader whose word is law and is handed down to the rough peasantry to do the mater’s bidding.
Theoretically there are layers of management throughout the business but in the end, the direction is handed down from on high and is not for discussion, only for implementation.
There are still many businesses that operate under this format even though it has long been discredited as an authoritarian regime that takes away all initiative from the people.
Ideally, the triangular business model is still appropriate but in this case with the apex pointing downwards.
The top line is the people in the business who interface with the markets and the customers or clients.
At the bottom therefore is the leader whose simple approach is that of support for the whole organisation and the people in it.
The leader’s question should always be:
“What help to you need from me to enable you to do your job even better?
I heard on the radio yesterday a wonderful person who had helped to evolve a set of workable and acceptable rules for an organisation and when asked how he was intending to implement these rules, he said:
“I am just Santa’s little helper. The people will implement them and I will contribute if I’m asked”
Another adage I saw recently said;
“Great leaders appoint great people and then get out of their way” the implication being that they are there to help rather than interfere.
Add to that an overall layer of kindness; of wanting to show the people that they are valued, that they are considered to be competent, that their contribution is essential to the success of the enterprise and that the organisation is not one person but all of us.
The more that the people are offered unencumbered help, the more likely they are to offer it it to others who may also need it, either on a occasional basis but sadly sometimes permanently.
There are some strata of society that will always need to be helped and, thank heaven, there are many people who are happy to take on this responsibility.
It is not a matter for government; it is a matter for those inherently kind and understanding people who are prepared to offer the help to those in real need.
May they go in peace and be enabled to do their work without cynicism or rancour. They are the real team of Santa’s Little Helpers.
You can download my book "Leading to Success" from Amazon Kindle
Visit the Vistage UK Website