Integrating merged organisations
October 3, 2008
In today’s business environment, mergers and acquisitions take place frequently, and many UK workers will have experienced working for a company that merged with another at some point in their career. At the moment this is in the news a lot because of the massive financial problems a lot of banks are experiencing, leading to major buy-outs like the recent Lloyds TSB/HBOS agreement.
Mergers and acquisitions involve a lot of hard work in order to succeed, and one of the biggest things to consider is how the different organisational cultures will integrate, and how this will affect the people working for the new company. Working out how to make cultural integration as straightforward and successful as possible is an important factor in the planning process.
A recent survey by the global consultancy Mercer has found that not enough is done by organisations to identify and manage cultural integration issues during mergers, and that this leads to major financial losses as a result. This means that the economic viability of a merger or acquisition can be seriously reduced due the poor integration of employees, teams and management styles. Some organisations are now actually looking at this area as part of due diligence before the merger even takes place, to enable them to better assess the likely challenges and prepare for them, however this is quite rare. A small number of respondents to the survey had started to think about formalising the cultural integration process and carrying it out in a systematic way.
The survey was carried out on 119 organisations across the Americas and Europe, but these were very large organisations. I think it is likely that an even lower proportion of organisations going through mergers and acquisitions in the small-medium sector would consider cultural integration as something to focus on before, during and after the merge takes place. It’s something I have never seen happening in my experience.
Have you been involved in a merger and if so how did the cultures of the different organisations integrate? Did you experience any problems and how were these addressed?
Incentive scheme nightmares
September 30, 2008
Having recently been involved in introducing a variety of different bonus/commission/incentive schemes, I’ve experienced the difficulties organisations face in putting these sorts of schemes with the aim of encouraging increased productivity, commitment and results, whilst making the process equitable and inclusive for all staff.
The first issue I have faced is that, working for a heavily sales based business, all bonus and incentive schemes are based on money brought in – i.e. as a percentage of a ‘deal’. This is good because the bonus is based on a tangible measure – a number, but it does mean that a scheme brought in across a company will only benefit those who have the opportunity to earn, i.e. have contact with customers in order to increase orders or ‘up-sell’, which means more ‘back-office’ or production staff may have a big contribution to the ‘deal’, for example by making suggestions as to what could be offered, but will get no recognition and therefore no bonus. It soon becomes apparent that one incentive scheme size does not fit all.
So the next question is, do you just have an incentive or bonus scheme for those who have the opportunity to bring in the money on which they can be measured and paid, or do you develop alternative schemes for the ‘knowledge workers’, and if so, how do you measure outputs and what do you allocate as a payment? A percentage of a deal is transparent and straightforward, but what is an appropriate payment for increasing performance in an area that is apparently un-measurable? One answer is to avoid incentives altogether in these circumstances, make it clear that a flat basic is the remuneration for the job carried out, and find other non-financial ways to motivate and drive employees, all of which should take place in addition to an incentive scheme anyway.
An obvious issue arising from bonus/incentive schemes is the damage they can do to teamwork, with individualised schemes sometimes leading to underhand and unhelpful behaviour from staff who are looking to increase their wages, and will do so at the expense of other staff and often the customer. There may be arguments over who is due to be paid for a certain ‘deal’ when more than one person has been involved in making it happen, and this is something that just has to be handled case by case as it arises. Many companies allocate team bonuses to avoid these problems and encourage a stronger team ethic, but of course this will bring different issues when one member of staff perceives that another hasn’t pulled their weight in contributing to the team bonus.
These issues will never be eradicated completely, but with careful management problems can often be kept to a minimum. The main thing, as usual, is effective communication on a regular basis. This might seem very time consuming and often frustrating but it must be remembered that money is a very emotive subject and the last thing any manager wants is staff under-performing because of the way they feel about fairness within the team, especially when it might be something that can be sorted out very easily and quickly with a simple conversation. If a member of staff doesn’t think the scheme is fair, ask for an explanation why and a suggestion for how it could be made more equitable. Also, when introducing a scheme, make it clear that the way it works is not set in stone and can be changed if either employees or management don’t think it is fulfilling the purpose intended. Having struggled through quite a few really frustrating issues recently, I personally would advise any company to think really carefully before introducing an incentive scheme – is there not another way that you can increase productivity and performance without making it money-related?
I would love to hear from anyone who works with an incentive or performance related bonus scheme, especially if you have experienced any of the above problems (or any others) and managed to overcome them.
It’s the little things that keep people engaged
September 10, 2008
A while back I wrote about staff engagement, what it is and how HR Professionals can manage it within their organisations. Ways in which to measure engagement include consultation methods such as focus groups, committees, surveys and performance management systems, but I think people often forget what is actually important in keeping staff engaged in their jobs and the company, and focus on the large scale interventions whilst neglecting the day to day needs of employees.
Employees are people, and have basic needs and feelings in work just the same as they do at home. We spend a huge part of our lives at work, so it has more of an emotional impact on our lives than some of our out of work relationships. The small things at work can become very important in employees’ happiness and wellbeing. Some advice for managers on dealing with day to day engagement is:
- Try to see the impact of your decisions from a variety of perspectives. What might seem like a small decision to you, for example how the office is going to be set out, might have an impact on one of your staff members that you did not anticipate.
- TALK TO YOUR STAFF. In my experience, too many managers make the mistake, over and over again of assuming the desires of their staff, for example their career aspirations, then feel bewildered when their newly promoted employee takes a job elsewhere that better meets their expectations. So really, what I’m saying isn’t talk to your staff, but LISTEN TO THEM.
- Learn to read the signs. Employees can behave strangely sometimes, but it is rarely for no reason that they do so. HR professionals need to be experts in reading between the lines when speaking to staff, or watching them work, and managers need these skills even more because they are with the employees day in, day out. Some people are unable to be really open about how they’re feeling, especially to a superior, and so being able to read situations and tease the true picture out of an employee is crucial.
- If your staff can’t tell you when there’s something wrong they’re hardly going to be engaged with the organisation and their job, so be approachable. And I mean this in every sense: even someone who is a really nice manager and engages staff well will still manage to alienate people if they shut themselves in their office and look really busy all the time. So put yourself in an approachable position as well as working on your people skills.
- Reflect on the past lessons of engagement. If you lost staff or had a performance problem with someone and it turned out that they were not engaged, analyse why and then analyse if these issues could be repeating themselves with other employees. Self reflection, in my opinion, is the best skill a manager can have because it means you are constantly striving to improve yourself.
I’d be really interested to hear of other people who have experienced these day to day small engagement issues, let me know your thoughts on what is important in engaging employees. Or if you are an employee that feels engaged with your company, or doesn’t, let me know what aspects of your employee experience have the biggest effect on this.
Business meets the community
September 3, 2008
Organisations have an important impact on the communities they operate in, with the provision of employment opportunities, activities for residents or the provision of supplies. Many companies go beyond these basic links to the local community by organising or participating in specific schemes as part of their corporate social responsibility (CSR) strategy. CSR has become a more prevalent aspect of corporate management in recent years, and is now seen to be an important part of organisational strategy. The CIPD says that CSR:
“can be seen as a form of strategic management, encouraging the organisation to scan the horizon and think laterally about how its relationships will contribute long-term to its bottom line in a constantly changing world”
CSR also has an effect on company reputation and employee engagement, with many employees now actively seeking organisations which they feel conducts their business ethically and responsibly. Examples of CSR include local community projects, environmental policies, schemes involving charitable donations or fair trade or ethical purchasing.
One current example of a very topical CSR related scheme is in Birmingham, where companies are being encouraged to employ young people who are involved in local gangs, through apprenticeships. It is hoped that this scheme will contribute towards tackling the much publicised problem with gun and knife crime relating to gang culture in the city, by offering an ‘exit route’ to the young people who have been sucked into a life of crime. The scheme will initially be piloted with six young people between the ages of 16 and 25, with plans to extend this if it proves successful.
The scheme is aimed not at the ‘hardened criminals’ at the centre of gangs in the city, but to those on the edges, in the hope that this will reduce the chances of those individuals being drawn into a life of crime. Councillor Alan Rudge from Birmingham city council said:
“Every business in the city and every person in the city will benefit from it. Community cohesion is about all people living in harmony together.”
This sounds like a promising scheme, and one which looks to tackle the gun and knife crime issue from a different angle than that of the police force. However I can imagine lots of businesses being very reluctant to take part in this scheme and it will need to be well supported by the local authority for it to be a success. The individuals involved will need a lot of support and encouragement to complete the apprenticeships and move away from their former lives.
What do you think of this scheme? Is CSR an important part of your organisational strategy and what do you do if it is?
M&S Redundancy package to be reduced
August 27, 2008
Looks like we can expect some redundancies at retail giant M&S in the next few months or couple of years. The company is currently consulting with staff representatives on the redundancy package, in order to reduce the payouts available to its workers. Currently redundant workers over 41 are entitled to 3.75 weeks’ pay for every year of service, but the company proposes to reduce this to 3 weeks, and hopes to do so by 1st September. Staff aged between 22 and 40 would see their entitlement reduce from 2.5 weeks per year of service to 2 weeks. This came out when a staff memo was ‘leaked’ to the times newspaper, and there are now fears that job cuts are soon to follow, despite M&S insisting that this is not the case.
According to employee representatives, the memo has apparently led to ‘an unprecedented level of feedback, concern and anger’, especially with the fact that last month Steven Esom, the ‘Food Director’ was given a £500,000 payout to leave the business because he was ‘not delivering’. However, even with the proposed changes, the chain will still have a redundancy package that is double the statutory entitlement and it will still compare favourably with most other high street chains. I’m sure this is little comfort to those long standing employees who now feel that their job is at risk, and their potential payout could be reduced by thousands of pounds.
One thing’s for sure – M&S are going to take a big hit to their reputation if they change their redundancy package and subsequently start making large scale redundancies within a short period of time, after promising that this exercise was simply to ‘update’ the policy in line with industry standards.
What do you think of this latest story?
New helpline to tackle bad employment practice
August 22, 2008
The government has announced that a new helpline is to be introduced through which employers and employees can report illegal and bad practice by companies. This is part of new measures to protect workers’ rights and identify employers who mistreat their employers. Another part of the measures will be an awareness raising campaign.
This is a good idea in my opinion. It’s good to see the government introducing new ideas to protect workers that don’t involve more complicated legislation that sometimes has perfectly fair employers feeling as though they are jumping through hoops, and doesn’t necessarily protect employers since it can be quite difficult to make a claim to a tribunal.
BP drops flexible working arrangement
August 20, 2008
A few weeks back I was discussing the issue of awarding salary increases and bonuses in the stretching economic conditions, and suggested using flexible working arrangements as a less costly alternative to these options when times are tough. Well now it seems that this is not necessarily the case. An employment expert has warned that the next area to be affected by the ‘credit crunch’ may be flexible working arrangements, as BP has announced that its current 9 day fortnight arrangement is to be scrapped to improve efficiency. At the moment workers at many of BP’s offices can have every other Friday off as long as they work the required number of hours every week, but this excellent benefit is soon to be lost. I can only imagine how annoyed the workers will feel at losing this arrangement, I would be livid!
I don’t really understand why changing this working arrangement will save money, as long as the same amount of hours are worked each week. In personnel today Julie Quinn, the employment expert that commented on this issue explained that:
“Many organisations have headcount statistics which do not support part-time working or job sharing. Someone working three days out of five is not three fifths of a full headcount. The benefits costs are often the same, for example healthcare cover, therefore more part-timers or atypical arrangements directly feed into greater headcount at a time when many employers are looking to reduce headcount and save costs.”
However I don’t see how this affects the people working 9 day fortnights. Surely they are still full time workers and therefore headcount costs are the same? If someone can explain BP’s financial reason for changing this arrangement then I’d love to hear from you.
Dealing with HIV in the workplace
August 11, 2008
I’ve just read about a man that worked as a control room officer for the Greater Manchester Fire Service who is claiming disability discrimination against his former employer for the way he was treated when he was diagnosed with the HIV virus two years ago. Michael Ashton claims that he was threatened with disciplinary action due to taking too much time off work in the few months after he was diagnosed. Ashton has also stated that work related stress, caused by his employer’s treatment of him, caused his immune system to be even weaker than it would be normally, even with the virus. He feels that he has been treated unfairly by the Fire Service, and was offered no support in a time when he needed it most.
This is a very sensitive issue. Whilst the treatment of HIV has developed so much that it is now possible for people with the virus to remain well for a long time, and are therefore able to stay in work, I can understand why many people hide their condition from their employers for as long as possible, especially when reading about cases like this one. There is a lot of prejudice against people with HIV, much of which is probably due to a lack of understanding about the virus, and fear of the risks associated with it. HIV is covered under the Disability Discrimination Act, and people with the virus are now covered under this legislation from the day they are diagnosed, which is just one reason for employers to devote some time to removing the stigma attached to HIV in their organisations. Some large organisations have policies specifically stating that discrimination will not be tolerated in relation to any employee’s HIV status, although for many smaller organisations this may be too specific. Aids campaigners have said that if HIV isn’t specified within discrimination policies, people won’t know whether they are covered. This could also be true for other chronic diseases, so perhaps it would be a good idea to list the types of diseases that are covered under the discrimination policy to make this clear for everyone. I would normally say that the way an organisation or management team behaves towards its workforce is the best indicator of its approach to equal opportunities and anti-discrimination. However it’s a big risk for an employee with HIV to tell an employer if they’re not quite sure what kind of reaction they will receive, so a sentence within a policy or handbook at least gives an indication of the employer’s intent to manage this issue effectively when needed.
There needs to be an open dialogue about this issue, as many problems can arise with an employee who is hiding their HIV status, but having to take time off to receive treatment, or may be off sick more often than other employees. As with any longer term illness or disability, an employer who is willing to discuss the implications with their employee and offer support and flexibility where needed will ultimately find a better performing and happier employee in the long term.
Has anyone had experience of dealing with this employment issue? What were the implication and how did you manage them?
Succession planning (2)
August 8, 2008
Yesterday I was discussing the definition of succession planning and the fact that traditional models of this practice are no longer relevant in today’s business environment. So how can succession planning be effectively implemented within the constraints facing companies today?
As I said yesterday, identifying the roles that the company will need to fill in the future may be difficult due to the rapid changes that take place, in some industries more than others. Where I work the current management team looks completely different now than it did only a year ago, because the needs of the industry have changed, and because innovative thinking within the company has led to whole new departments that have required management structures being implemented. Therefore I think that in succession planning activities, it will be more relevant and useful to identify the likely skills and competencies of future leaders rather than specific jobs that will need to be carried out. Many companies use competency frameworks for their selection and performance management processes, and these can be developed to be used in succession planning. Information from performance management activities can be used to identify potential, or for a more in depth way of identifying talent, development centres provide a way to measure individuals and encourage them to contribute to/manage their own development.
Skills and competencies of potential leaders may be quite different to the skills and competencies they need in their current role. It is common to promote people into leadership roles within a team because they are exceptional at the role that they will in future be managing, but this does not necessarily lead to success. Many excellent leaders are in fact better at facilitating others’ success in a particular practice than actually doing it themselves. Skills such as motivating others, coordinating workloads, listening and coaching are more important than operational skills – there’s no point being great at something if you can’t get your staff to do it effectively as well. Moving into a leadership or management role can be challenging as it’s quite hard to stop ‘doing’ when you should be ‘managing’. Effective succession planning needs to allow the time and space for future leaders to practice ‘letting go’ and coordinating activities instead of doing them all themselves.
Progression can no longer always be about promotion to more senior positions within a company, due to the changing shape of organisations as I discussed yesterday. However this doesn’t mean that individuals cannot grow and develop themselves, and this needs to be recognised, highlighted and rewarded where appropriate. Traditional succession planning might concentrate on management development, probably involving formal training courses and focussing the development in the one area where the individual would eventually end up. As we know, in the new business climate, leaders need to be aware of wider strategic issues and understand where their particular function contributes to the strategy. Therefore more appropriate succession planning activities may involve ‘lateral moves’ such as secondments to different parts of the business, different challenges such as new projects or initiatives, or simply more autonomy or responsibility within their role. A lot of candidates ask me about ‘progression opportunities’ within the organisation and I tend to explain that while the traditional routes to senior positions are not necessarily available for everyone who would wish this, there is a great deal of personal progression within the role, for example working with more complex projects or with higher profile clients. It is really important to make sure employees understand how they are progressing and measure this realistically instead of benchmarking against traditional career paths that are not completely realistic in the current business environment.
Succession planning, to me, is about managing expectations and understanding aspirations as much as it is about planning for the future of the business. It’s no good setting long term plans in motion that will make the organisation a huge success if the employees involved don’t see where they’re going or understand their place in the plan. The last thing you need is employees who are gaining all the good skills you’ll need in the future to leave because they didn’t see the potential in the career they had in the company.
What is succession planning?
August 7, 2008
With all the talk about ‘the war for talent’ and the lack of leadership and management skills in the UK labour force, there’s quite an emphasis within the HR community on succession planning at the moment. I’ve done a little bit of digging into what this exactly means as it’s a phrase that’s used a lot but the exact purpose and meaning isn’t always completely clear, and I think this is because career development as an idea has evolved and developed in recent decades. This is due to many things including the changing nature of business in a now global environment and the increase in women on the ‘career ladder’ instead of working up to the time when family commitments take over and then dropping out of the labour market.
The CIPD describes succession planning as ‘identifying future potential leaders to fill key positions’. Three key problems with this idea come immediately to mind:
- Firstly, with the rapid pace of change in today’s business environment, it’s sometimes impossible to predict what senior positions will be available in the future, so it’s difficult to identify potential and then nurture it.
- Secondly, the idea of a ‘career’ as a succession of jobs in the one company or even one industry is completely outdated. A few weeks ago I was talking about ‘career changers’ going into the teaching profession and there’s a lot more movement between different industries and jobs now than in the past. Now you hear about ‘protean careers’ – i.e. people having more than one different career in their lives, and ‘portfolio careers’ – i.e. the people who manage a number of different roles within the one career (consultancy and teaching together, for example). And these types of careers are now more of a life choice rather than a need. So with these ideas in mind, there are fewer employees willing to stay in a company for the long term awaiting a succession of promotions as there would have been a number of years ago.
- Thirdly, the structure of organisations has changed in many places, and we now see flatter, or sometimes ‘matrix’ structures where the opportunities for progression in the traditional sense are few and far between.
So succession planning has become more of a two-way relationship. As well as attempting to consider the business needs of the future, employers need to ensure they are meeting the career expectations of those they are intending to develop into the leaders of the future, at a quick enough pace, otherwise all their good work may be wasted when the employees go off to succeed a leader in another company. Another area to be aware of is the growing acceptance that employees have family lives, and will assert their rights to these lives more now than ever. So succession planning needs to be flexible to individuals’ needs for a work-life balance and a family-friendly career.
So, after thinking about the definition of succession planning, it seems that the practice is much more complicated than you would think, and there seems to be a lot than can go wrong. However it is an important practice to think about. Whilst the labour market looks set to grow due to increasing unemployment, this doesn’t mean that the employees left behind deserve less attention and development, nor that companies should start recruiting all their leaders from outside of the company just because there is more availability of candidates. However on the other hand, some companies tend to promote from within simply because an individual has been with the organisation a long time or has shown favourable traits such as commitment and loyalty, but if this is the case across the board there is a danger of ending up with a senior team that has not had enough developmental attention or that has been poorly selected for the positions.
Tomorrow I’ll look at how companies can carry out effective succession planning within the constraints and difficulties of today’s business environment.