Embracing Negotiations in Leadership How to Break Through Hesitation and Negotiate Your Best Solution
Negotiations are a crucial part of corporate strategy, but not (as some may think) merely for high-stake deals, such as mergers and acquisitions. In fact, leadership frequently requires negotiation on nearly a daily basis. And good leaders understand that negotiating is a skill that needs to be developed, just as with any other leadership attribute. Yet, many avoid it unnecessarily … and often, detrimentally. They tend to be more concerned about the objections and perceived conflict they believe negotiations brings about than with the feasible solutions they uncover. Some feel they lack the confidence to ask for what they want or need.
Underlying all of these concerns is age-old fear, and in particular, fear of failure or rejection. This is the fear that likes to stop us in our tracks, causing us to hesitate in the belief that we are safer that way. And, as we all know, the only way to grow and truly get what we want is to push that fear aside and get comfortable with being uncomfortable.
In addition to the uncertainty and fear that can arise in preparing for negotiations, the pandemic has also actually affected how we negotiate. Non-verbal communication and body language are important elements in connecting with others, especially during negotiations. However, with the increase in virtual negotiations, our view of the other person is restricted to computer screens or smartphones. Without the ability to fully see a person’s body and, more specifically, his or her subtle movements, it becomes more challenging to anticipate their acceptance or objections and proactively work toward solutions. But while their individual preferences and comfort levels may be more difficult to ascertain, they are not impossible if we remain mindful of them throughout the process.
Finding Opportunities to Negotiate
If you find yourself shying away from negotiations, it’s time to start thinking about why, and recognizing the numerous opportunities that surround you each day to do so. Like any skill, it takes practice and development. Utilizing average encounters will increase your confidence as you move into negotiations with higher stakes. Even asking for a discount on an item you are purchasing and asking your cell phone service provider for a better rate are, in fact, negotiations.
One could argue it’s not worth the effort or the time to engage in these activities, but that’s the fear talking again. Even if you don’t care about saving a few dollars at a store, the investment in building your negotiation skills and confidence is invaluable. Avoiding negotiations in these “not worth it” circumstances leads to avoiding them in other “very worth it” ones.
Going into any negotiation, you can also hone in on your skills by considering the following questions:
Is the situation fair?
Do I deserve a better outcome than the one I have been offered?
Am I feeling hesitant or confident?
How can I connect with the other person to come to a better resolution?
Tip 1: For in-person negotiations, pay close attention to the other person’s body language and try to anticipate and address objections before they ask them.
Tip 2: For virtual negotiations, take the pulse of the other person often. Repeat what they’ve said to ensure you are understanding correctly. Ask them if they have any questions throughout, and pay attention not only to their words, but to their tone.
How can I cultivate the relationship?
How can I close the deal?
Negotiating is really about making the conscious decision to do so, rather than avoiding it all together. Be mindful about recognizing and evaluating the potential for negotiations and that it may look a bit different today than it has in the past. But underlying it all is always relationships, confidence, and the mindset to put yourself in a position to strategically approach the deal. Ask for you what you want, be fair, work through the objections, and get better outcomes.
As with any skill, the more you practice – even with “low-stake” negotiations, the stronger your skills will become. If you need guidance, Barker Associates has experience working with CEOs on negotiation strategies and skills, particularly with finances, lending, and mergers and acquisitions. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Time management is one of the most useful, yet often most difficult, skills a CEO can master. There is arguably no other role in corporate America with more functions, time restrictions, pressure, and distractions. Add to that the transitions and contingencies associated with a global pandemic, and time management feels like more of a conundrum than a skill.
Through the past eighteen months, CEOs have had to learn the art of leading remotely, and found that doing so has its own unique time management issues. CEOs learned to use new communication tools, change meeting formats, and spend time inspiring teams from afar. Now, many are going back into the office for a new hybrid workforce model. In this next transition, CEOs shouldn’t forget all that they knew from pre-pandemic time management, but they should also incorporate what they’ve learned and what worked well with virtual time management.
Fundamentally, the issue is that while our virtual world saved businesses during a time when we could not head to the office, it also opened us up to, at a minimum, the perception of 24/7 availability. Historically, many CEOs struggled with boundaries and time management because they were trying to accomplish more than was physically possible in a 24-hour period. However, with virtual accessibility, the problem has been exacerbated. And now solutions for a hybrid model must be developed.
While not everyone is on the same page about the continuation of remote work (a Reuters article noted what JPMorgan Chase & Co’s chief executive said about a hybrid model: “It doesn’t work for those who want to hustle. It doesn’t work for spontaneous idea generation. It doesn’t work for culture.”), many CEOs are accepting a hybrid model. Essential to this model though is appropriate time management, taking what was learned and applying it to this new reality.
Time Management Tips
At some point, we’ve all likely heard the time management tips for CEOs and other leaders to increase efficiency and productivity. But this time of transition begs the question—How many of those tips will remain the same in a hybrid model? Many of them will, with some added rigidity, but there will be a few nuances.
Delegate or shorten meetings. A report tracking CEO time management showed that 72% of a CEO’s average 62.5-hour work week was spent in meetings, leaving little time for self-development or for developing strategy. Limiting your presence in meetings, whether face-to-face or virtual, creates space and time to focus on what is necessary.
Set more rigid boundaries. Block that newfound time from attending fewer meetings and consistently use it for activities that require more high-level thinking, including strategic development. Fiercely protect that time as if you were meeting with your top revenue-producing client.
Delegate, delegate, delegate. While a crucial key to time management, delegation has been an issue for many CEOs long before the pandemic (and likely will be one long after). Too many CEOs spend too much time on operational functions, or even on micromanaging. Both everyday operational tasks and the management of those tasks must be delegated to others on your team. Remember, you hired them for a reason—trust that they can handle it.
Prioritize. Use the Pareto Principle (80/20 rule) when you prioritize your tasks and activities. For those unfamiliar with the Pareto Principle, it states that for most events, about 80% of the results comes from 20% of the effort. You can use this methodology to prioritize what brings about the highest ROI.
In your prioritization, keep in mind the importance of high-quality relationships and that some face-to-face interaction, not just with partners or clients, but with subordinates and team members, helps to develop those relationships.
Reduce participants in your meetings. With virtual meetings, we lost geographical restrictions. As a result, we became accustomed to inviting everyone to meetings, whether they were really needed or not. But doing so tends to lead to increased time in the meeting, and overall decreased efficiency. On the other hand, smaller groups allow for more participation and honesty, getting more accomplished in a shorter amount of time.
Only those needed for a particular strategy and/or on a specific team should be included in meetings.
The Benefits of Time Management for CEOs
Effectively managing your time management helps you prioritize better and avoid getting stuck in the distractions and details that plague CEOs all day long. You are less overwhelmed and have a clearer vision about what you truly need to do to move the needle. And ensuring you are spending your time on those high-level tasks is the best way to ensure productivity for the organization. Additionally, when you master your own time, can better determine where others are having difficulties with their own.
Ultimately, a new approach to time management is needed that is flexible enough to embrace a hybrid work model. Not everything will be the same or go back to “normal.” As always, we must evolve along with our circumstances. And we do that by taking what we’ve learned and working it into our new strategies. As CEOs, it’s imperative to be strategic about not only the direction of the organization, but also about the effective utilization of your time. Remember, if you don’t manage your time, your time will manage you.
Barker Associates has extensive experience in working with CEOs on time management and other leadership functions in the hybrid workforce model. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
The Real Costs of Deal Fatigue How Not Being Prepared for the Deal can Cost You the Deal
Deal fatigue is a common occurrence in the world of mergers and acquisitions. The parties involved get frustrated with the process and feel helpless that they can do anything to speed it up. Frankly, they’re fed up, and as negotiations or other processes necessary to close the deal seem to have no end in sight, one of both parties loses hope and wants to give up. For example, oftentimes, the timeframe between a Letter of Intent and the close of the deal takes too long and can result in one or more of the parties deciding they want out of the deal.
The High Costs of Deal Fatigue
The costs of deal fatigue are high and the complexities many. Not only has the company lost the proposed deal and any related funding, but there are many other associated costs of the deal falling apart, including:
Attorneys’ Fees. The funds used to pay attorneys and consultants have added up over the months (or even years) and can no longer be paid from the closing proceeds.
Impact on Operations. With the pending deal, the C-Suite has been distracted by answering due diligence questions and negotiations. And, as a result, they have not focused on the core day-to-day responsibilities of the company’s operations. This could impact many success metrics, such as ensuring customer satisfaction, building the proper pipeline of sales, managing personnel, and regularly reviewing financial data.
Personnel Problems. There is also the potential loss of personnel if they had learned of the pending transaction and decided to pursue another career opportunity. The costs of recruiting and onboarding are always high, but this has never been truer than in today’s environment, where the costs of losing personnel have skyrocketed.
Lack of Preparedness and Its Effect on Deal Fatigue
The root cause of deal fatigue is a lack of preparedness. This can begin years prior to the idea of entering any transaction whatsoever. Decisions that are made, and processes put in place, that are not healthy for the day-to-day organization can impact the company’s ability to complete a transaction. The following are a few far too common examples:
Lack of organization of legal documents and contracts. Unfortunately, this is a huge issue that has gotten worse in the digital age. Years ago, businesses would have filing cabinets full of documents, along with administrative personnel who managed those documents. There was a clear-to-follow process to make sure all contracts were executed and fully completed prior to being added to the filing cabinets.
In contrast, contracts now reside in emails and other cloud-based storage systems. They may have signatures, or they may not. In fact, most of the due diligence processes I have gone through over the past eight years are held up because the “completed and executed” contracts are not readily available or the parties involved thought the documents were executed and find that they never were.
Financial statements are not up to date and do not reconcile to the billing and sales data. The ease of use of some modern cloud-based accounting systems combined with the fact that most personnel are not taking the necessary time to reconcile as often as they should lead up to outdated, unbalanced financial statements. Imagine going into a deal only to find that their representations are based on unfounded financial principles? This could not only cost you the deal, but your reputation, credibility, and integrity. There is simply no negotiating around outdated financials.
The best way to avoid deal fatigue is to be prepared in every aspect of your business and the deal itself. This will help each step move along faster and more efficiently, reducing the overall time of the transaction. If deal fatigue starts to creep in, remind everyone involved about the mutual advantages and the reasons the deal was struck in the first place. Keeping a clear vision of the big picture helps to avoid getting stuck on the smaller details.
Are you about to go into negotiations or already experiencing deal fatigue? Barker Associates can help keep the parties and the deal on track. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
We have collectively experienced unprecedented times. As CEOs and CFOs, we seem to be writing the playbook as we go. Over the past eighteen months, survival mode has become the norm rather than the exception, as we navigate the turbulent waters of each day. Yet, we all realize we can’t survive in survival mode for extended periods of time. In doing so, we are only looking at our immediate requirements and needs to get by, not our long-term goals and needs to thrive.
When we operate only in the day-to-day, as survival mode requires, we tend to overlook the basics when it comes to our businesses, and specifically, our financials. But truly getting back to basics is the only way to support the long-term strategic growth of the business. And when it comes to basics, you can’t get much more fundamental than a business plan and an annual budget.
Basics #1: The Business Plan
You may be thinking this is Business 101 and you’re beyond it, but you’d probably be surprised (or maybe you wouldn’t be) at the number of businesses that do not have any business plan whatsoever. A business plan is much more than something that has to be checked off your never-ending to-do list. It not only helps you create an effective strategy for growth, but also helps you determine your future financial needs, including the need for investors and/or lenders.
According to the SBA, the importance is clear. “A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your business. It’s a way to think through the key elements of your business.”
Additionally, if you plan on seeking funding, business plans play a crucial role. “Business plans can help you get funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.”
In thinking about the execution of a business plan, too many owners or leaders get stalled on the format itself. However, it’s important to remember there is no right or wrong way to develop a business plan. Regardless of how many pages or the font used, the most important takeaways are that it clearly lays out your product or service, identifies your target market, and details your strategy for reaching that market, including the financial needs and requirements on both a short- and long-term basis. While this past year has shown us that we cannot fathom every possible scenario that could impact our business, developing a robust plan is one way to prepare for as many contingencies as possible and help ensure the company’s success.
Basics #2: Annual Budget
While twelve months from now may feel like it may as well be twelve years from now, it is imperative to have a strong annual budget. The annual budget should also be able to be broken down into months for easier monitoring. At a minimum, your annual budget should include the following:
Balance Sheet, and
Cash Flow Statement.
Most businesses are familiar enough with income statements – they can clearly see the revenue coming in and the expenses going out. This is undoubtedly important, but it does not prepare you for your working capital needs. Essentially, you need to know how much you actually require to run your business. In order to truly understand those requirements, an accurate balance sheet and cash flow statement are needed. For example, if you have inventory on your balance sheet, you will need to project the use of cash to purchase that inventory. An income statement will not help you with that.
Nearly every decision you make today can impact your cash flow tomorrow. For example, I once worked with an organization that had double-digit growth each year and was very profitable. The company was getting ready to launch a second product and had offered extended payment terms to customers on their entire order if they added the new product to their order. This may have been an impactful customer service move; however, it was quite the opposite for generating the cash flow needed to pay the vendor. No one had projected the impact this decision would have to their balance sheet and cash flow, so they were unaware that the plan they had in place was going to essentially stop incoming cash. We had to react quickly and manage cash just to meet payroll and other immediate obligations. Simply, this stressful time could have been avoided entirely if the company planned appropriately with a balance sheet and cash flow statement.
While the responsibilities and priorities of a CEO or CFO may vary depending on the company, the need to get out of survival mode and back to business basics is the same for everyone. The common denominator of these basics is that they require you to look ahead and make forecasts on the future of your business – the very opposite of survival mode. Barker Associates has extensive experience in developing business plans and annual budgets that are appropriate for the specific business involved. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Leadership – The Importance of Leading Your Mental Health First
I love people. I always have. And I am sure I always will. That being said, once I became a leader of an organization, one of the most difficult things for me to grasp was that my team, made up of colleagues who previously would join me for lunch or socialize after work hours, no longer seemed to want to be with me outside of meetings or the office. I wondered what I had done wrong … until I remembered that my new title brought along more with it than met the eye, and that it can be lonely at the top.
I have grown tremendously throughout my career and, through the process, have come to understand myself better. Moving from a CFO of an organization to a consultant and business owner catapulted my self-development to a new level. I have learned more about my strengths and, even more importantly, my weaknesses. Sure, I enjoy learning more about people. I ask tons of questions, not to be intrusive, but to get to know the other person better. And yes, I am an open book, even “honest to a fault,” so I had to learn to grasp that just because another person is not an open book does not mean they don’t like me.
Through this self-discovery, I am now someone who can better understand not only my own perspectives, but empathetically, those of others. I understand how much “me taking care of me” is required to be the best leader for my own organization. And I appreciate it even more after going through COVID-19.
Leading Ourselves to Better Mental Health
Recently, I listed to a great podcast that brought these points home for me. As I listened, I could completely relate to how the guest, Nick, talked about how hard his parents were on him (as my parents were on me). While it bothered him (and me) greatly in our younger years, there is nothing but acceptance and appreciation now for the person they molded me to be. Nick also talked about the feelings of isolation brought about by COVID-19 and how exhilarating it was to have the first business dinner meeting post-COVID. He was right. I’ve had a few meetings that don’t require a camera and Zoom over the past few months, and always felt like a huge weight was lifted off my shoulders in doing so. After I listened to that podcast, I made sure to book more in-person business meetings, and it has already made a difference in how I feel.
Another area of change for me has to do with my physical health. Pre-COVID, I loved group exercise. When the gyms shut down, it was incredibly difficult for me to learn how to work out on my own and to get and stay motivated. But I didn’t stay in that space. Instead, I found several sources to help me, and now I have many options to deal with stress to ensure I exercise when I travel or even when I cannot make a scheduled exercise class.
You Don’t Have to Do it Alone
I have come across some amazing resources that have helped me maintain my mental health through life’s (and a pandemic’s) transitions. I do not receive affiliate income from any of the links I share here. I am sharing them with you in the hopes I can help make your path to self-discovery less bumpy than my own.
Calm App – This has become one of my go-to apps. And I love sleep stories. By far, my favorite is Wander with Mathew McConnaughy. I also have enjoyed the guided meditations that I can use throughout the day. The music is great with coffee in the morning and they also have a selection of music to play to help you concentrate while you work.
Jill Coleman (Instagram) – I love following Jill Coleman, a business coach for fitness professionals, on Instagram. I also listen to her podcast FITBIZU. She offers great advice about mindset around eating and exercising. Her fitness programs helped me make it through COVID-19 with an actual workout plan. She also offers business advice on her podcast, including how to run a sales call.
Katie Hammill (Instagram) – I follow Katie on Instagram, and work with her to review my weekly meal plans. She taught me that one of the most important aspects of a healthy lifestyle is a meal plan. We have implemented it in my household, helping to maintain calm in our daily lives. We always have a plan for dinner, rather than having a stressful conversation at 6 p.m. about what we are going to do. Another helpful hint to reduce stress around mealtime – make sure you have all the ingredients in the household when you make your meal plan!
Kathy’s Table – Kathy’s Table provides individually proportioned meals that are healthy and gluten free. We include these in our weekly plan at least two nights a week. After two minutes in the microwave, you have a healthy, and delicious, well-balanced meal. And, maybe even better yet, clean-up is fast and easy, which also eliminates daily stress.
Our mental health is impacted by much of our daily lives, especially with all that we have been through in the past fifteen months. And as leaders, we must also recognize our own impact on the mental health of our employees, who are looking to us to lead with more confidence and less stress. We must rid ourselves of the thought process that if we work harder and longer, without any care for ourselves, we will be more effective leaders. In fact, the opposite is true. Without taking care of ourselves, we will eventually burn out, leaving our team without a leader at all.
Leadership requires accountability not only of your subordinates, but of yourself. When you are overwhelmed with so many day-to-day responsibilities you may put self-care on the back burner. If you need a leadership coach to help you with this important aspect, and you are serious about the accountability to do so, click here to schedule a 30-minute consultation at a rate of $100. We will work out the right coaching plan for you, and I will apply the $100 toward the package.
Cybersecurity – It’s Not Just a “Big Business” Problem
Cybersecurity is a word we’ve all become entirely too familiar with. It seems that we can’t turn on the news without hearing about another story of a company being hacked, its information stolen, and, in certain instances, its data being held for ransom. And despite what some continue to think, this is not just a “big company problem.” It affects small and mid-sized businesses just as much, if not more. In fact, according to the Verizon 2019 Data Breach Investigations Report, 43% of cyberattacks target small businesses.
There’s a reason for this targeting. Small businesses tend to have more exposure, without the protections in place to help minimize the risks of a cyberattack. Not only are they more prone to attacks, for small business with limited resources, an attack can prove to be fatal. Sadly, 60% of small businesses that experience a cybersecurity attack are out of business within six months. The reason? Too often, they don’t have a viable backup system or plan, so when they lose their data, it’s gone for good.
According to a U.S. Small Business Administration survey, 88% of small business owners believe their business is vulnerable to a cyberattack. With the increase in remote workers without infrastructure for cybersecurity or employee training on increased risks due to the pandemic, this high percentage is not surprising.
Other Costly Statistics in the World of Cybersecurity
The most common way attackers infiltrate your system in through email. We’ve all seen them. They look like legitimate emails at first glance, but then there is something that catches your eye – the email address may be off, it may be asking you to click on a link, or it has an attachment that doesn’t seem right.
Whether it’s through an email or through ads or pop-ups on the web, when you click on that document, link, or ad, the virus that was embedded launches a program on your computer that will start locking files. If you’re connected to a network (which many of us are), the virus then travels to the server and infects files there and on other connected computers. Once it starts, it cannot be reversed, and you may not even be aware it is happening. Often times, the attacker will wait, lurking in the background, to collect as much valuable information as possible.
What You Can Do to Protect Yourself
Despite the news stories and all the warnings, many small businesses are not prepared for a cyberattack. While we can never eliminate the threat completely, there are actions we can take as part of an overall strategy to minimize the risk:
Ensure your computers and servers have a strong firewall
Keep all hardware and software up to date
Install all updates and patches
Use stronger passwords and change them frequently
Use Multi-Factor Authentication (MFA)
Do not allow users to download unsupported or free software
Back up all critical data and systems regularly
Have a backup plan in place
Invest in Cybersecurity insurance
Educate your employees
Raising awareness among employees is one of the most important steps you can take. Continuously inform them about what the latest threats are, remind them about updates, and remind them not to open emails if they don’t know who the email is from. Use real-life scenarios and samples of phishing emails to help them understand the threats.
With these tools and systems in place, you not only minimize your risks, but if you are attacked, you will be able to get your company back up and running much faster than if you didn’t.
As they say, the world is changing, and, as always, we need to change right along with it. The key, as with much in business, is being prepared, understanding your own particular vulnerabilities, and taking proactive steps to help ensure your safety and the safety of your business.
Barker Associates has extensive experience in helping companies navigate through all the complexities of running a successful business, including utilizing resources to help keep it safe. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
We talk a lot about leadership and how strong leadership is required for success in any organization. Strong leaders guide the company and the team along the mission-paved path, leading to the alluring vision of what the company will be one day. Strong leaders are confident enough to help grow skills in others without being intimidated. They can also manage various personalities and determine the strongest course of actions. But what happens when there is poor leadership? Is it just a matter of not liking the boss, or are there more dire consequences?
Think back to a time when you worked for a manager who didn’t know how to manage, was irritable, gave no direction, had unrealistic expectations, etc. You probably dreaded going to work every day. Maybe you even quit your job – a job you actually liked – because you just couldn’t stand working for this person one more day. You may have gotten out of a bad situation, but what effect did your leaving have on the company you worked for?
The Real Costs of Poor Leadership
Most people don’t realize how much poor leadership costs an organization. There are the more obvious financial implications caused by poor leaders such as bad decision-making, higher expenses, and lower revenue from an operational standpoint, but what about the cost in terms of the staff? Bad leaders can cost companies millions of dollars a year by negatively impacting employee retention, customer satisfaction, and productivity. The health of the team can quickly deteriorate right alongside the financial statements.
Bad leadership comes in many forms, but having poor communication skills is one of the worst. When leaders don’t know how to communicate effectively, they can’t adequately direct employees. Consequently, employees don’t truly understand the mission and vision of the organization and have difficulty visualizing their own goals. Instead, they become methodical in their accomplishment of tasks, with no innovation or stake in the outcome. This can lead to unmet deadlines, a reduction in productivity, and unhappy customers, all ultimately leading to a toxic environment and high staff turnover.
Staff turnover is more than inconvenient; it is extremely costly to a company. With additional exit interviews, followed by interviewing, hiring, onboarding, and training new employees, constant turnover can directly affect the bottom line. Statistics show that 57% of staff leave a company because of their boss. That’s more than half of the staff. Further, each staff turnaround costs an average of $5,500. So, in an organization of 100 employees, that costs the company $550,000 in staff turnover alone.
At the end of the day, bad leadership causes damage that is difficult to repair. It incurs higher costs for a company and lower profits. But the good news is that being proactive can help eliminate these risks. Be aware of the following signs of poor leadership before an employee you value walks out the door:
disengagement by employees,
lack of cohesiveness among the team,
decrease in productivity, and
You might consider instituting employment surveys and manager reviews to help spot these signs faster. But remember nothing is a substitute for truly listening to your employees. And once you spot a problem, keep in mind that it is only half the battle – you also have to address it. And that may mean firing or reassigning a poor leader for the larger benefit of the whole team.
You can also prevent bad leaders from developing by investing in your future leaders. Provide meaningful opportunities to learn and improve leadership skills to even entry-level employees who show initiative and promise. A small investment at the outset can lead to improved staff retention, which leads to increased productivity, profits, and success. Remember the adage, “employees don’t leave companies, they leave managers.” Keep your employees around longer by developing managers they actually want to work for.
Barker Associates has extensive experience in leadership issues and their overall effect on the team. We can assist in determining effective solutions that will help your team stay engaged and onboard. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Acquisition Integration – After the Ink Dries The “3 Ps” of Integration
Last week, we talked about defining your corporate strategy, and that oftentimes, those strategies include acquisitions of other entities for your company to grow to the next level. Whether it’s to streamline operations, introduce new products or services, or both, many companies define their corporate development strategy within the parameters of an acquisition.
There has been a shift in our global economy. And in that shift, acquisitions have become the norm, not the exception. Yet, according to Harvard Business Review, historically, 80% of companies that have been involved in an acquisition fall victim of the plethora of moving parts essential to the process and ultimately fail. Combining not only two companies, but two sets of stakeholders is fraught with potential landmines.
This week, we take the acquisition strategy a step further. The inevitable questions surface after the ink dries on the legal documents … How do we increase the chances of success? What exactly happens now that we’ve acquired another business? The due diligence is complete, the documents are signed, the lawyers have left – so, what’s next?
Acquisition integration is the process of combining the systems, process, operations, and personnel of the acquired company into your own by maximizing synergies and efficiencies. Logistically, the integration itself should be focused on what I like to call the “3 Ps” of Integration – Personnel, Plan, Practices.
Acquisition Integration – Personnel Issues
Appoint an Integration Manager and Team. The integration manager should have seniority and experience with your company, and be able to hold the team members accountable. The integration will be his or her full-time responsibility for as long as the process takes. The team should be made up of those with expertise in the various areas of integration, including information technology, operations, finance, and marketing.
Communicate the Good … and the Bad. Meet with those you plan on bringing onto the new team from the acquired company as soon as possible. Without some reassurances that they are staying, they will soon look elsewhere for career opportunities and may consider offers from competitors. For those who will not be moving forward, let them know quickly. This is for your own benefit, as much as their own. Indecision will lead to rumors, which inevitably paves the path to a lack of morale – no way to start a new venture.
Focus on Cultural Integration. Decide how much of the acquired company’s culture you are bringing into your own. Will they mesh? Are their conflicting values? What are the priorities on each side? Culture will have a huge impact on the new relationships going forward.
Acquisition Integration – Plan Issues
Develop and Follow a Conversion Plan. The conversion plan should incorporate all of the changes that need to be effectuated, as discovered during due diligence pre-acquisition. Additionally, understand who is responsible for each task and goal, along with applicable due dates. The manager and team must be held accountable to the conversion plan.
Modify the Plan as Needed. Through the integration process, additional opportunities may be discovered. Modify the plan accordingly to adjust for these opportunities, including the required resources, and communicate any changes to the team.
Use Metrics Consistently to Measure the Plan’s Success. Measure everything you are doing as it relates to the integration. Compare actual results to those anticipated, including timelines.
Acquisition Integration – Practices Issues
Identify Best Practices. Determine if the acquired company had practices that worked well and could enhance your own operational practices. If they bring value, develop ways to incorporate them into your own. Then, as always, communicate these Best Practices to the rest of the team.
Evaluate Practice Similarities and Differences. What services, products, and operations are the same? Which ones are different? Are there overlapping vendor practices or relationships? Which parts of the accounting and marketing are complementary? Which are contradictory?
Provide and Receive Feedback. Ask yourself the following: What went well with the integration? What didn’t? What are the expectations moving forward? Provide this feedback to the team. Additionally, accept any feedback provided to you and use it for improvements going forward.
Focusing on the “3 Ps” in acquisition integration is crucial for the long-term success of your business post-acquisition. Barker Associates has extensive experience helping companies with acquisition integrations. If you need assistance with yours, or have any other questions, we can help. Please click here to schedule a 30-minute consultation at a rate of $100.
Defining Your Corporate Development Strategy How to Navigate from Where You Are to Where You Want to Go
Typically, when you get into your car, you have a destination. You’re going somewhere and you know how to get there (or you have your smartphone or navigation to help you along the way). You don’t get into the car and sit there wondering absentmindedly about what you should do next (put the key in the ignition, put the car into gear) or where you should go (a quick trip to the store, a commute to work, or a longer road trip to a vacation destination). Rather, you know what your next steps are to take you where you want to go.
We’ve used this analogy before in our financial literacy series, but it holds true here just as much. Running a company is very similar to driving a car. You need to know the steps you need to take to get started, where you are going, and of course, how you will get there. Without them, much like as a driver, you will soon find yourself lost. And, with a company, you not only have to worry about yourself getting lost, but all of those others (staff, clients, vendors, partners) following close behind. It’s important to navigate and lead them along the right path, or, as I like to call it, your corporate development strategy.
What is a Corporate Development Strategy?
A corporate development strategy is best described as an actionable plan for your company. There are different strategies (or routes) you can take—Stability Strategy, Expansion Strategy, or Growth Strategy, to name just a few. And while they all will take you in different directions depending on the goals you have for your company, they all have the exact same foundation—understanding your financials, both current and future projections. Without a clear understanding of your revenue, expenses, and other financial data, it would be difficult to define your strategy based on where you want to drive the company in the future.
As you begin to define your own corporate development strategy, it’s important to put aside some common debates and confusion. Corporate strategy is not corporate finance (although it will always incorporate finance). Corporate strategy is also not business strategy. Like the distinction with finance, they are close, but distinctions abound. Business strategy deals specifically with how you are going to achieve your goals. Corporate strategy is more all-encompassing—it includes not merely your annual goals, but a clear overall strategy on where the company is going with well-researched answers to questions, such as:
Where do you want your business to be in terms of revenue in ten years (not three or five, as most business project)?
Note: This should be realistic, but not conservative.
What will it take each year to get there?
Who is in the competitive landscape?
How will you compete?
What are barriers to where you want to go?
Should you introduce new products/services? Should you remove any products/services?
If so, when?
If so, should you acquire another company with experience in that space?
Are their potential partners or suppliers in which you can outsource some of your operations?
How do you optimize productivity and profitability?
Do you need new technology?
Should you acquire a company with expertise in that technology?
Dig Deeper than a SWOT Analysis
This list in not all-inclusive, but should give you an idea of the scope of the due diligence required. Small companies often will think about some or all of these questions during an annual review (if they have one – let’s hope they do) where they dust off their white board and do a typical SWOT analysis. But a true corporate development strategy will dive much deeper than a four-section chart detailing the somewhat generic strengths, weaknesses, opportunities, and threats of a small business. To grow beyond a small business, there needs to be much more than the contents of four cubes on a whiteboard.
A successful corporate development strategy may include diversification, where a company acquires or establishes a business other than that of its current product. It could also include horizontal integration, where there is a merger or acquisition of a new business, or a vertical integration, which includes the integrating of successive stages of various processes under single management.
Many, but not all, corporate development strategies focused on growth will include a merger or acquisition at some point. It’s often the best way to truly grow your business to the next level. But it always begins with a decision made as you define the right corporate development strategy for your business.
Putting the appropriate strategy together is crucial for the long-term success of your business. If you need assistance defining your business’s future, or corporate development strategy, or have any other questions, Barker Associates can help. Please click here to schedule a 30-minute consultation at a rate of $100.
True leaders know they are as only as strong as the team they build around them. To that end, hiring not only the most qualified, but also the most compatible C-Suite executives with whom to strategize and collaborate on the future of the company is invaluable.
Recruiting the right person at this level differs significantly from recruiting at other levels. He or she must possess the requisite qualifications and also the requisite experience to be enabled to make significant decisions quickly. Moreover, he or she must have the ability to handle incredible amounts of responsibilities, and function well, if not thrive, under pressure. This person’s presence will impact other employees, the company culture, and the company itself. And a bad hire at this level can lead to enormous disruptions, including damaging morale, decreasing productivity, and adversely affecting the company culture.
Finding the Best Talent Doesn’t Come without Challenges
Recruiting top-level employees presents its own unique set of challenges that aren’t generally encountered at other levels. These challenges should be kept in mind as the recruiting process begins. First, you will likely face competition. These employees are in demand, usually having the ability to choose where they want to work and name their terms.
Additionally, C-Suite employees in general are not actively looking for a new job. In most instances, they are already employed. However, individuals at this level are always looking for new opportunities, so don’t let their current employment stop you. The workforce is different today. Long gone are the days of people retiring from a company after thirty years of service. This person may be ready for a change in his or her career, and that change could be your offer.
Tips to Help Secure the Right C-Suite Fit
Set Goals. Ask yourself the following: What are you looking for? What is negotiable? What is not? What input have you received from your board of directors or even other employees? You should have the answers firmly decided upon before moving forward, and be clear about them during the interview process. It is equally as important to understand with clarity who you do not want to hire. What characteristics do they have? Transparency from the start is essential in this process.
Draft the Right Job Description. Don’t just resurrect an old job description or write what you “think” you need. Engage in due diligence to find out what your competitors are searching for, what candidates are putting out there (if anything), and then set benchmarks and make the description appealing based on the information you learn. This document should never merely be about a title and responsibilities. It should reflect the company’s culture and clearly demonstrate where this person will make the largest impact and how.
Realize Expectations. C-Suite candidates will have certain expectations, often resulting in increased costs. They may request their own office, own parking spot, and certain other benefits. Ask yourself what you are prepared for and can handle financially before you engage in discussions.
Vet carefully, but do not delay. It’s important to get to know this person – not just their qualifications and experience, but their values and who they are at their core. Utilize behavioral interview questions and emotional intelligence quizzes. Have frequent follow ups and thoroughly check references. However, all of this is said with a caveat. Remember this individual is likely in high-demand, and one of your competitors could move in and make them an offer if you delay too long.
Consider promoting someone from within. You should always consider moving someone up from within. Benefits of this decision include being good for overall morale, motivating employees, and increasing retention. Yet, while it is ideal to promote from within, you must ensure he or she is ready for the type of responsibility and demands the C-Suite brings with it.
Hiring at this level requires forward-thinking analysis. It calls for significant preparation far before any job description is drafted or interview occurs. For example, you want to ensure that you’ve created a culture that reflects the company’s mission, objectives, values, and long-term vision. Without proper alignment, you risk attracting the wrong type of candidate for your company.
Often, the first (if not, one of the first) C-Suite executives hired is the Chief Financial Officer. Generally speaking, the owner or CEO excels at strategy or operations, but does not possess the knowledge needed for financial decisions. He or she needs someone who thoroughly understands all financial aspects of the company and can then guide it the right direction. Outsourcing this function is another available option.
With the significant investment of time, money, effort, and energy the recruiting and onboarding of your new C-Suite employee will be, you want to ensure longevity with the right fit. Barker Associates has extensive experience working as an outsourced CFO and assisting companies in determining their needs for this position. If you would like to discuss these services, or if you have other specific areas of concern, please click here to schedule a 30-minute consultation at a rate of $100.