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Sunday, 31 January 2016

Do New Recruits Bring Baggage? It Is a Matter of Culture Clash!

In the early days of my tenure as a Vistage peer group chairman, we had as a speaker the CEO of what he called a "London based corporate finance boutique". Despite this description he proved to be a very entertaining and insightful speaker.

His main message was that sale and/or acquisition of businesses is fraught with complications about which we mere mortals know little and having heard the stories from several of my members I can fully understand.

The fact is that buying and selling companies is a highly specialised activity and we who are more interested in the running of companies don't normally come into contact with the issues associated with the sale or purchase of a business.

The speaker made several very important points one of which was that it is inadvisable to deal with just one company in terms of a potential buyer and it is far more sensible to hold a beauty parade

This was born out by one of my members who sold his company and made sure that he had at least three interested parties to bid for it. In the end he was very successful.

A further point that the speaker mentioned was that while due diligence by accountants was normal for both parties, it is equally important perhaps even more so that the question of a culture match was explored and to seriously considered.

In his opinion at least 50% of all acquisitions fail and 25% of the balance were not very successful. On that basis he suggested that it was usually a clash of culture between the two parties that was the problem.

This is particularly appropriate when as large corporate is acquiring a small entrepreneurial business that has probably been run very successfully with one individual in charge. In that case a culture clash can be terminal.

In fact it can be so traumatic that in many years I have never experienced anybody selling a business and notionally staying in it to be there for more than about six months. The change in culture is just not to the taste of an entrepreneur.

This is not to say that some acquisitions are very successful.  Usually this is because there is a good match of cultures between the two businesses and indeed between the two leaders

In the normal run the sale or acquisition of a business is to say the least an unusual event but the recruitment of executives from outside the business is very frequently a normal experience.

Consider the potential issue of bringing in an executive from a large corporate into a small entrepreneurial business and vice versa for that matter.

In both cases the experience and manner of working is manifestly different from the other and unless both sides are willing to compromise there can be real problems.

Ideally each side should consider this new situation to be a learning experience and should be able to adapt their own working to develop a change that ought to be for the better.

I know of one case where a marketing executive was brought in from a large organisation into a smaller one and he quite frankly cause real issues in the business until after a while people realised that he was offering some great insights as they started to use them.

Culture clash can even be found between departments in a business.  For example the marketing department can operate in a totally different manner from operations and consequently interaction can be problematical.

The crux of the matter is that it is all down to the leader. In every case the leader has the responsibility of designing and driving a culture into the business and furthermore to ensure is that it isn’t just driven downwards by function but it needs to be across all aspects of the company.

The culture of the business or "the way that we do things around here" is the most important factor in the way in which the business is run. It is the most important function of the leader to get that right throughout the business so that success will follow.

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Sunday, 24 January 2016

Beginning to Feel Lonely? It Comes With the Job of Leader!

In the days when I used to lecture part time at a local Business School on management style I used to say that the higher we go through an organisation the fewer people there are to tell you that you are doing a great job and that demands emotional stamina.

I am becoming more and more certain that this potentially could be a problem for many leaders in business especially those who are recently appointed.

Some time ago I had a client who had recently been appointed Chief Executive of a large manufacturing business. He had been operations director and had been part of a very effective management team.

On his appointment he told his fellow directors that he would operate in much the same way as previously but he very soon found out to his dismay that they now looked upon him as being outside the team.

He operated an open door policy but they kept away unless he specifically asked them to come in to see him.  Accordingly he felt that he had no one to talk to and there was an increasing feeling of isolation.

Indeed only last week I was talking to a newly appointed CEO who told me that much to his surprise he was finding exactly the same feeling of isolation with no one to talk to. Certainly he could talk to professional advisers but it was not the same as having a trusted person with whom to discuss internal matters in the business.

I have heard on more than one occasion a CEO tell me that the only person he can talk to in the business is in fact “the issue” and that is one which needs to be solved.

It is a consistent problem and my comment about the higher you go the fewer people there are to talk to always applies.

There is no doubt that the peer group system typically that operated by Vistage is an excellent way to overcome this problem. It gives CEOs the opportunity to talk to people who really do understand their issues because almost certainly they will have experienced then themselves.

Perhaps even more importantly they have no axe to grind and no hidden agenda in discussing other people’s issues round the table.  I have heard group members say that there is nothing quite so much fun as telling other people how to run their business.

The peer group is not for everybody. It demands openness and honesty and the ability to possess that level of humility that allows the individual to accept that they need advice. They find that that advice is available from a group of people who become close friends.

Perhaps the growth of Vistage in the UK to in excess of 1,000 members and worldwide to more than 20,000 is a testament to the effectiveness and value of the system.

Quite apart from the elimination of the feeling of isolation,  the peer group system offers senior executives the opportunity to continue to learn in a forum in which they feel comfortable.

There is something new to learn every day from other people and from new sources and that learning process should be consciously ongoing.

You can download my book "Leading to Success" from Amazon
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Sunday, 17 January 2016

Recruiting New Talent? Far Better To Grow Your Own!

I have always been an enthusiastic advocate for talent spotting in a business. It was brought to mind last week when I saw on TV, Jurgen Klopp, the manager of Liverpool Football Club talking about the January transfer window.

He made the point that even though he may spend £15 million on a new player in the end he was buying that player purely and simply on potential without certain knowledge of how he would fit into his team.

It was a matter of culture. Even though every precaution had been taken the only way to find out if he would fit in the team was to play him.

Rather wistfully he said "but that is football!"

Football it may be but that problem exists in business as well although thank Heaven the transfer fee system does not cloud our decision making when we hire a new candidate.

In their great management book, The Puritan Gift, Kenneth and Will Hopper make the point that even if we decide to parachute in an MBA it will take the shop floor 18 months to train them.

The fact is that there can be a major gap between the perceived potential of an individual and the actual performance.  This can apply both to existing members of staff and equally to somebody who has just been recruited.

This is why I am keen to promote the idea of formal talent spotting within a business. One of the most important functions of HR should be the formal search for potential talent in the business and then the construction of a fast track for their career.

Equally the search for talent in a business needs to be a Board function with a director being specifically responsible for finding and developing really good people

The problem will always be when we are recruiting that we actually buy sight unseen even if we go through a stringent recruitment process. Interviews are not the best way to uncover the true potential. It comes down to whether they have the right attitude.

I remember an instance where a member of my Vistage CEO peer group recruited an accountant for the business. All the signs were good during the interview and he told me that the candidate had excellent technical ability.

He was accordingly appointed and spent the first week of his working life in the business playing Solitaire on the computer. Technical ability he may have had but his attitude was totally unacceptable.

What then is the best way both to uncover potential in a member of staff and then to ensure that the subsequent performance matches the potential?

While it is very difficult to make promises to anyone about their career I feel that it is a good idea at least to make it clear to them that they have been spotted, they seem to have the potential and they are on a fast track career path.

After that it is entirely up to the individual to justify the faith that has been put in to him or her and to ensure that the performance matches the potential.

Fast track career planning is not merely a plan. It demands regular checking on performance, on personal growth and on how the individual actually contributes to the success of the business.

If we are to go through the process of offering a career to talented people then as leaders we must ensure that every aspect of their life in the business is monitored.

This is not to say that they are under examination all the time but rather making them aware that they are privileged and the business is anxious to ensure that they succeed.

All of that can work well with an individual already in the business. The recruiting of people from outside can be an entirely different matter.

This is why any interview process must endeavour to uncover attitude in the candidate rather than emphasising their technical ability and experience.

The cost of recruitment can be double the annual salary and it is essential that as far as possible the recruitment process must be successful.

A friend of mine was the HR Director of a global company employing some 120,000 worldwide. He told me that if they achieved 50% success rate this was viewed as being more than acceptable.

The costs involved must have been horrendous.

Anyone recruited from outside must have some baggage from their previous employment and once again it is a matter of culture. The question to ask is was the culture of their previous job consistent with our culture.

If there is a mismatch and that is relatively simple to discover, then great care needs to be taken in recruiting that individual.

In an ideal world it is far more preferable to promote from inside the business. Obviously this is not always feasible but it is most definitely desirable.

Better to grow your own talent than to hope that somebody else will do it for you.

You can download my book "Leading to Success" from Amazon
Visit the Vistage UK website
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