Organisations to date are still grappling with the complexities of defining a common organisational purpose. This becomes even more complicated during a business acquisition or merger, especially when there are major differences in organisational values and behaviours. This is also evident when large multi-national companies enter less mature markets and quickly discover that local
organisations have their own unique way of doing business in that particular business environment. Sometimes what is deemed ‘unacceptable’ in some markets is quite ‘acceptable’ somewhere else. This is a constant challenge facing all types of organisations globally. Culture will ultimately define a company’s belief system and expectations for the future, and will invariably influence success or failure in a highly competitive global marketplace.
As a result of greater focus on ‘cultural fit’ and all things related, Private Equity firms are now investing considerable time and resources to better understand a target company’s organisational dynamics before concluding any deal. This could be a major factor in realising value from the deal down the line. A company that has a defined philosophy for doing business will more likely have a
better strategic vision, which in turn makes it more appealing to investors, internal and external talent pools and customers alike. An organisation’s culture could either make it or break it over the long term. Thus, in attempting to create a high performance organisation, it becomes vital for senior leadership to define the culture required for success, or in the case of M&A’s, creating a vision for the future that will aim to bring the best of both organisational cultures together to deliver maximum value for all stakeholders. It is at this point that a company’s senior leadership team have an opportunity to etch themselves in corporate history and create the environment for making the company highly successful. Senior executives need to grasp this opportunity by ensuring they live
the values of the organisation and become effective role models for the rest of the organisation to follow. Doing this effectively at the top of the hierarchy instils confidence and trust in the layers below and has a mesmerising effect on motivating the wider workforce.
It is never an easy task to create or change cultural identity however with the added pressure of globalisation, the race for good talent and ever changing technological advancement, global organisations cannot afford not to invest in creating distinct cultural identities. Companies around the world are investing heavily on optimising business performance. Process and technology change alone will not make a difference unless there has been a carefully thought out people change strategy which is aligned to the strategic vision of the organisation. Many transformation efforts fail due to poor people change planning. On some large programmes it is often evident that ‘lip-service’ is paid to the impact of change on people and in many cases prevents the successful adoption of new ways of working. People need to be engaged early, to instil the values of trust and integrity. Many organisations leave it too late and lose immense credibility internally as well as externally as information starts to leak everywhere. A company serious about reputation and brand attractiveness will have as part of its organisational DNA, clear values around trust, transparency and commitment to treating people with due care and not just paying ‘lip-service’ to employee consultation. In conclusion, all aspects of transformational change require clear linkage to the corporate strategy of the organisation. This is often neglected and in many cases leads to the failure of the change
initiative, wasting valuable time, resources and energy. It is therefore vital for companies to establish the right type of culture, be it for the purposes of expanding into new emerging markets, M&A’s or a brand new start up looking to establish a foothold in the open market. A well-defined organisational culture provides the starting point for all stakeholders to feel part of something unique. This only encourages greater differentiation between competing organisations and its influence over products, services, quality and the ability to attract specific talent pools.
Vellendra Sannasy is an Organisational Change Professional with extensive experience in leading strategic and operational business change. Vellendra has worked with global organisations in the UK, US, Asia and South Africa, with a great appreciation for cultural
diversity and different ways of working. He is also the Founder of StratChange Consulting, which is a niche consultancy, providing strategic and operational guidance to C Suite Executives and Senior Management teams undergoing complex organisational change.
Undoubtedly strategic change management has a major role in corporate transactions and restructurings. Many deals are either unsuccessful or do not deliver the full value expected when people and organisational change impacts are ignored or poorly planned for. This directly results in loss of revenue and delays in realising the value of the deal or restructuring initiative.
There is a big focus on ‘cultural fit’ and all things related and nowadays Private Equity firms are investing considerable time and resources to better understand a target company’s organisational dynamics before concluding any deal. This could be a major factor in realising value from the deal down the line. An organisation’s culture could either make it or break it over the long term. Thus it becomes vital for senior leadership to define the culture required for success, or in the case of M&A’s, creating a vision for the future that will aim to bring the best of both organisational cultures together to deliver maximum value for all stakeholders.
Collective behavioural patterns determine how work gets done in an organisation and that in turn relates directly to performance, motivation and the ability to cope with internal and external change. Ignoring these important factors is a major strategic risk for PE firms and can ultimately affect the realisation of value from any deal. Ignoring or poorly managing organisational change can easily result in:
- Poor employee engagement, motivation and ultimately performance;
- Serious resistance to change and low levels of morale across the organisation;
- Ambiguity around the organisation’s value system and beliefs, which lead to disillusionment amongst stakeholders;
- ‘Jumping ship’ and loss of key talent and senior leadership;
- Poor business transformation and change planning resulting in the slow execution of the transaction or restructuring initiative.
Vital to countering these strategic risks is the effective visioning, planning and execution of business change. The process requires effective management of corporate messaging, people and cultural / behavioural change. It is most critical for the workforce to be aligned to the strategic objectives of the organisation and customer needs. Organisations that focus time and resources on doing this effectively have ultimately had higher levels of transaction success in the past.
In conclusion, the key areas that require the most attention during the transaction lifecycle (from a business change perspective), are:
- Identifying the behaviour sets that will lead to a successful integration or restructuring exercise;
- Determining the strategic drivers that will help to reinforce these behaviours in the future and implementing them successfully during the transition phase;
- Understanding the organisational cultural differences and similarities and working with key parties to ensure these factors do not hinder the transaction process. Understanding this clearly will enable the creation of a shared / common vision for success;
- Ensuring the change management strategy is being tracked and resulting issues being dealt with promptly via a well-defined change agent network.
Having structured change management plans in place will provide the levels of confidence in dealing with organisational change successfully and lead to a more successful transaction for investors in the medium to long term. It will provide the basis for realising deal value more quickly!
Vellendra Sannasy is an Organisational Change Professional with extensive experience in leading strategic and operational business change. Vellendra has worked with global organisations in the UK, US, Asia and South Africa, with a great appreciation for cultural diversity and different ways of working. He is also the Founder of StratChange Consulting, which is a niche consultancy, providing strategic and operational guidance to C Suite Executives and Senior Management teams undergoing complex organisational change.
Interesting talking to a number of contractors recently – some preferring to be referred to as Change Managers as opposed to Project Managers and vice versa – when I pushed back and asked why the need to define, I had a mixed response:
“As a Project Manager I deliver change”
“I am a Change Manager but I deliver as a project”
I wonder if being branded one or the other has a psychological effect of the individual. Back in the day when budgets were less frugal and organisations saw the value of a fully enhanced team, it was not uncommon to see a Project Manager Working alongside a Change Manager – this is still apparent in larger organisations but less so across the board. And I wonder if Change Managers partially feel compelled to sell their service as all encompassing (they can deliver a project as well as the change element) to be included in the running for more PM positions and likewise a Project Manager feels the need to sell their additional skill-set as change management aware in order to deliver as smoothly as possible. I delivered new products into manufacturing across EU/SA/USA and often found that without the sympathetic element of change management I would indeed find workstream leads to be challenging at the best of times. By simply spending time to explain the benefits of prioritising my projects and listening to any concerns, hopefully dispelling any anxiety rather than the company prescribed “Head Office said do it, so DO IT” approach which tended to get peoples backs up – unsurprisingly! It is this experience that lead me on to embrace change management within my practice – as such I feel I have taken on both the roles of PM and CM. Could I split the two now, good question, I am not sure they should be. Do I believe a dedicated Change Manager should be part of the project team? Depends on the size and complexity of the project really, if you have the budget and a great deal of “users” affected by the implementation then it is a good idea.
Some things to consider when delivering change:
- Be open – sometimes it isn’t always possible to be completely open from the outset as the changes may be sensitive and not in the public domain. But it is important to make sure you are as open as you can be from the start. Explain that changes are afoot, what this means to the individual, and generally prepare people.
- Listen – hard when all you may be hearing is peoples woes about additional work, fear of job losses, attitudes such as “we’ve done it this way for xx years, if it’s not broken then don’t fix it”, but everyone deserves to air their views and will it make for a happier recipient environment if they all feel they have had some input.
- Put yourself in their shoes – take a look at the changes from the user’s perspective – try to explain the benefits in a manner which is understandable and actually means something to the individual.
- Structure – put together a strong communication plan, as you would for key stakeholders, think about the users and those directly affected by the change. Regular meetings and updates – even regular posting on the intranet so everyone feels like they are being kept up to speed.
- Bribes – don’t be afraid to bring cakes to the meetings, many a successful meeting has been satisfactorily managed through a little nurture!
I mentioned “individual” above, this is where a lot fall short when delivering change, try not to think of a group make people feel like they have been heard individually. It makes a huge difference when you can have your say and your questions answered; open door policy for all – you won’t be as inundated as you think and some may have very valid points for consideration.