Research shows that 40% of a company's ROI stems from the strength of its senior management team.
An often underestimated success factor for acquisitions and mergers of companies (M&A) is the measurement of top management's potential to succeed under new ownership with new strategic goals. Just because a sales director or CEO has been successful up to now does not automatically mean that he or she will be successful in the future. New products, new technology, new markets, new organizational structure, new organizational culture and size of
the organization will be able to demand a new communication style and the learning of new behaviour. Just as important is the interaction between the management team, and whether they complement each other so that all important roles and necessary focus will be taken care of in a good way.
Research done at Cornell and Berkeley Universities shows that the combination of a strong CEO and an effective top management team accounts for as much as 40% of a company's ROI. Then it is worth spending extra time and energy on ensuring that you have the right team composition to achieve the company's strategies and goals.
How to measure strengths and risks for the management team?
During change and restructuring processes, we help you understand the most important requirements for change that are required in relation to human resources.
We considerthe management team's personal suitability and capacity, collaboration potential and effectiveness. We help you identify strengths and risks with the current team and recommend changes and development in the team that are needed to achieve the company's goals.
Management Due Diligence is recommended to be carried out in senior management teams in connection with acquisitions, mergers and other change processes. In the case of acquisitions and mergers (M&A), we collaborate with two other companies to ensure that both strategy, finance and the human factors are taken care of. HiPOTENTIAL's role in this process is related to assessment of the management team with assessment and observation.
We evaluate both how the individual members of the team themselves can contribute to achieving the organisation's strategic goals, as well as giving recommendations on the most effective composition of the team and how the team members can complement each other in the best possible way and to achieve a good interaction between them.
This type of assessment can also be very useful in relation to organizational changes where there are several people suitable for the positions in the top management team.
"Whose culture will the new organization adopt, and what organizational structure should be adopted?" Harvard Business Review, april 2007
Human Due Diligence to ensure that the organizational culture supports the company's vision and strategic objectives
An important question that is often forgotten in M&A processes is which culture and structure should the new organization choose? Should you just let it "go away by itself" and hope that things will work out? It usually turns out not to be smart. Organizational cultures that are very different are the biggest reason why M&A processes go badly.
We believe it is wrong to only view the management team against the company's strategy and goals for the future. Measuring the culture (the unwritten values and attitudes) in both organizations is very important if you are going to get the people in the organization to go in the direction you want. It is therefore essential to carry out an evaluation of the organizational cultures and match them with the path one wishes for the future, as well as the values of the management team. If you have several top management candidates, you should consider which of these best matches the culture you believe the organization needs to achieve its strategic goals.
Read more here about how to measure and work with organizational culture and values.