Tag Archives: Employee

How Do You Retain Key Staff During a Merger or Sale? Five Suggestions

Situation: A company has either a merger with another company or sale of the company pending. While most direct staff will be retained, roughly half of the indirect staff may be at risk. The CEO’s objective is twofold: to retain key indirect talent before and during transition and to do right by those who have made strong contributions to the company. How do you retain key staff during a merger or sale?

Advice from the CEOs:

  • One member dealt with this a few years ago. The company set up a retention fund for important but potentially impacted employees in advance of the anticipated transaction. The longer the employee stayed with the company through the transition, the larger the payout for which they were eligible. In the case of no transaction, the funds were to be returned to the company.
  • An alternate version of the above option is to use insurance to fund a retention package for a group of key employees. This package may or may not be required depending upon the transition.
  • For potentially impacted employees, consider a retention package that rewards them for staying long enough to train the purchaser in their areas of expertise.
  • Look at outplacement services as part of the package for employees. Let employees know that this is part of the package if they are not retained post-transaction.
  • Seek outside consultant expertise to assist in the design and administration of a retention package. To compliment this look at your own network, and seek the advice of others who are well-versed with the technical aspects of employee transition.

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Is it Better to Sell or Downsize? Four Perspectives

Situation: A company is losing money and has been approached about a merger. The CEO’s ideal outcome would be to get cash on the table, integrate with the merger partner and continue business. The other alternative – downsizing – may hurt company morale. What are the best options available? Is it better to sell or downsize?

Advice from the CEOs:

  • The realities of mergers: 70% of mergers fail, and the merger process often leaves founders with a minority stake in the company. The experience of others with partners has been disappointing – it’s better to control your own destiny. Look at all alternatives before you jump into a merger. You founded the company and have brought it this far. The company will be a different company following a merger, and not the company that you founded or have led to date.
  • The message to your potential merger partner: Be a reluctant bride. “We are making improvements to return to profitability and I’ve joined a board of CEOs who are consulting me through the process.” If the partner sweetens the offer to keep the merger on the table, make sure that you get 51% of the merged company and retain control of your own fate.
  • Downsizing: Others have found the downsizing experience wrenching, but with more positive results than they expected. A 10% cut resulted in a 30% increase in productivity. Employees once thought to be critical were not missed post-layoff. The employees generally understood more about the situation than the CEO knew, and those remaining responded positively to a restructuring that allowed them to keep their jobs. Some companies used a layoff as an opportunity to cross-train employees and increase company flexibility.
  • Smoothing the layoff process: Communicate with the employees. Let them know the truth and share enough of the situation so that they understand. Challenge employees to come up with ways to save money or make processes more efficient and cost-effective. This can have a remarkable impact. Consider a cross-the-board salary reduction as a temporary alternative to layoffs. Position this as a layoff to restructure expenses – this keeps you on the right side of employment law. Obtain assistance from a personnel consultant who can help to handle the process effectively.
  • Smoothing the layoff process: Communicate with the employees. Let them know the truth and share enough of the situation so that they understand. Challenge employees to come up with ways to save money or make processes more efficient and cost-effective. This can have a remarkable impact. Consider a cross-the-board salary reduction as a temporary alternative to layoffs. Position this as a layoff to restructure expenses – this keeps you on the right side of employment law. Obtain assistance from a personnel consultant who can help to handle the process effectively.

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How Do You Improve Performance Reviews? Three Approaches

Situation: A CEO’s company sets objectives for employees; however these objectives frequently aren’t met. There are lots of excuses for not meeting objectives. Most frustrating, employees are eager to share good news, but hide bad news and performance issues. What have other CEOs done to prevent these problems? How do you improve performance reviews?
Advice from the CEOs:
• A service company instituted frequent measurement of performance against objectives. Top staff monitors key metrics in weekly meetings that last at most one hour. They use a problem solving approach to address obstacles and to correct performance. The CEO oversees the direction with staff making and instituting changes to correct low performance. The key is in the metrics. Metrics must measure meaningful performance and must be tied directly to company objectives.
• A light manufacturing company had a history of holding on to non-performing individuals for too long. The CEO addressed this by instituting objectives and eliminating non-performers. The result was reduced complacency and improved morale. Performing employees had been tired of taking up the slack for non-performers. Document non-performance and establish a solid case for eliminating the non-performing employee. Documentation is critical to avoiding wrongful termination suits.
• A general observation: if a company has objectives, but lacks either meaningful metrics to measure performance against objectives or a regular review process to assess performance against objectives, then the objectives are meaningless. The CEOs’ experience is that establishing meaningful SMART (Specific, Measurable, Appropriate, Realistic, Time-Bound) objectives and regularly assessing performance in a collaborative team atmosphere are the most important ingredients to an effective performance management system.

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How Do You Replace a Key Position? Four Points

Situation: The CEO is moving a key employee from head of engineering to a more customer development focus. To support this, she will have to bring in or promote another employee to fill the position of leader/supervisor/manager of the engineering group. The CEO seeks advice on the best way to approach finding a replacement for this key job. How do you replace a key position?
Advice from the CEOs:
• First, it is necessary to develop a timeline for finding and transitioning the replacement. Realistically, count on 6 months to find a replacement and transition the responsibilities to a new person.
• Keep in mind that anybody you find or promote will be different from the individual who currently occupies the position, and will not handle their new responsibilities the same way as the current individual. Their motivation and their approach to their new responsibilities will be different, at least at the outset, and they will not handle their responsibilities the same way that the current individual does.
• Seek an individual, either currently within the company or an outside hire with strengths that, over time, will add significant value to the organization. Prepare for this by brainstorming and developing a profile of the ideal candidate.
• If you have qualified candidates, the ideal person will come from within the organization. This has the added advantage of demonstrating to other employees that they, also, may become candidates for future positions to grow both their skills and income.

What are the Trade-offs of Becoming a Company Principal? Four Points

Situation: A senior employee is on a good growth track within her company. The CEO has stated that he believes that she has the potential to become a principal of the company in the future. What are the tradeoffs of becoming a company principal?
Advice from the CEOs:
• Becoming a principal involves both greater potential rewards than being an employee and greater potential risks. Create a chart with two columns. In one, list the potential rewards of having a stake in the company. In the other list the costs and potential liabilities. This will help to weigh the rewards against the liabilities.
• Areas to negotiate include voting rights, granting of options, understanding the perks of becoming a partner, and also the possibility of legal liability for any malfeasance that the company may commit.
• If you see liabilities that concern you talk to an attorney – your own, not the company’s – about how to address these liabilities in the terms of an employment contract as a principal.
• Evaluate the potential long term value of the ownership share being offered. Does the company have a buy-back policy for a principal’s ownership share and, if so, what are the terms?

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How Do You Forge an Effective Relationship with a Buyer? Five Points

Situation: A CEO’s Company was recently acquired. She is getting little, if any, guidance from the acquiring company in terms of leadership or management of her former company. What does the group recommend that she do? How do you forge an effective relationship with a buyer?
Advice from the CEOs:
• You’re Lucky: We all wish we had that problem. Many buyers interfere with the operations of the acquired company and make the transition very difficult. This leads to all sorts of problems including employee departures.
• Employee Feedback: Hold an employee meeting, gather their thoughts and concerns, forward those to senior management. This demonstrates a willingness to work with the buyer to forge the best relationship possible.
• Memo: Draft a memo with all of your thoughts, options, and recommendations, send it to the management of the acquiring company and you have satisfied your moral responsibility. No guilt.
• Consult: You may end up consulting to new management sent to you by the buyer to help them figure out how to evolve from practitioners/managers to full-time managers.
• Don’t Worry: The purchase was a good deal to you because you were able to negotiate a favorable deal for yourself and your managers. The future is more a concern for the purchaser than it is for you.

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How Do You Correct Inappropriate Behavior of a Productive Employee? Four Points

Situation: A CEO has a key manager who frequently uses inappropriate language and demonstrates lack of care towards co-workers. This individual is smart, has great drive, and does the work formerly handled by two employees. How do you correct inappropriate behavior of a productive employee?

Advice from the CEOs:

  • Create a firm company policy on swearing and the use of inappropriate or abusive language.
    • Each time any individual swears or uses inappropriate language, they must put $1 into a pot. Anybody can call anyone else for swearing and the one who’s caught has to pay. The money in the pot goes to buy pizza on Fridays.
    • This is a creative and even entertaining solution and should resolve the problem in a short time.
  • Sit down with this individual and go over their positives and value. Besides these, emphasize which behaviors are unacceptable.
    • Explain the legal implications and consequences for the individual and company. Provide goals and set objectives.
  • Send this individual alone or with a team to a Pryor Customer Relationship seminar, for example the seminar “How to Communicate with Tact and Professionalism”.
    • Let the instructor know in advance that you want to be sure that certain behaviors are covered during the seminar.
    • This may provide the individual the incentive to behave like an owner of the business.
  • Make it clear who’s in charge, and at whose discretion the individual remains with the company.

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How Do You Improve Morale and Performance in a Professional Services Company? Four Observations

Situation: The CEO of a professional service company says that his employees have been through a lot of stress over the last few years. He wants to improve company morale to boost performance and is interested in how others have done this. How do you improve morale and performance in a professional services company?

Advice from the CEOs:

  • Manage Morale and Employee Feedback – In times of economic change and adjustment, it is important to have a good handle on what employees are thinking about their jobs and the company as a whole. The use of anonymous surveys administered via computer or a neutral 3rd party generally yields more objective and honest feedback than 1-on-1s with the CEO. They offer employees an opportunity to anonymously share their concerns, and to offer constructive feedback on how to boost company performance.
  • NOW is the time to act – whether the economy is positioned for a rebound or another dip. Employees have dealt with a lot over the last few years and may be starting to look at opportunities outside the company. Therefore, it is important, right now, to put programs in place to:
    • Retain high performing employees, and
    • Communicate to employees what the company is doing to position itself for growth so that they see a bright future for both the company and themselves as employees within the company.
  • Professional services are people-to-people businesses. Focus on relationship building to increase market presence. Recognize and reward employees for their efforts to build new relationships with clients. Use these as examples to inspire other employees.
  • Many more women have entered and become an important component of the workforce. Conduct group meetings to compare the experiences of male and female sales people in relationship selling situations. These will differ between purchase decision makers in different markets and situations where one gender vs. the other predominates. Sharing experiences offers the potential to learn from and to support each other as well as to improve performance. Ask employees how these meetings should be conducted and whether they prefer same or mixed gender meetings.

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How Do You Navigate Communication Style Differences? Four Points

Situation: A CEO seeks advice on how other CEOs work with employees who have significantly different styles of communication. He suspects that this is a source of conflict between employees and wants to reduce that conflict. How do you encourage employees to be more open and receptive to other employees? How do you navigate communication style differences?

Advice from the CEOs:

  • Conduct regular personnel reviews. In reviews work with the individual to develop personal growth plans in addition to professional development objectives.
    • It may be necessary to create enough stress in an interview situation to prompt the real personality to show.
    • Recognize that sometimes an employee who meets professional goals can still be a poor fit for the team. This can impact other, productive team members. Don’t be afraid to fire a bad hire.
  • How much can you expect to mold another person’s communication style?
    • There must be personal motivation to change – the impetus must come from within.
    • To prompt the conversation acknowledge that something isn’t working – or isn’t as effective as expected.
    • Communicate to the individual that the consequences of not changing are potentially worse than the effort to change.
  • Breed adaptive communication skills throughout the organization.
    • Use an assessment tool to start the conversation and align tasks.
    • In dealing with an individual who is confrontational, probe to determine what is motivating the individual’s question or position on an issue. Does the individual genuinely need additional information or are they using a wall of questions as a roadblock to moving on?
    • Work with the individual to organize their answers or input into a plan.
  • Communicate values and goals as they pertain to individual contribution and appreciate the impact of different departments’ actions on each other.
    • Be flexible – some people need more definition and reinforcement than others.
    • Understand that changes and transitions in the company’s focus can shift roles.
    • Review each individual’s role periodically to insure that it fits the company vision. This can increase the individual’s understanding of how they are contributing to moving the company forward.

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How Do You Foster Productive Communication Within Your Company? Six Suggestions

Situation: A CEO is concerned that communication between employees is often non-productive. Individuals can be abrasive in their comments. This leads to loss of productivity because the individual criticized feels hurt and distracted. It also results in the formation of “subgroups” which conflict with each other. How do you foster productive communication within your company?

Advice from the CEOs:

  • Encourage tolerance of and sensitivity toward individual styles.
    • Identify the particular style of each individual. Assessment tools are helpful.
    • Admit that different individuals have different styles and that this is OK. Have a conversation with them so they are aware of this.
    • Always allow an individual one “charm” that is uniquely theirs.
  • Identify the motivations that drive each individual within the company.
    • Communicate with each individual in a way that recognizes and aligns with their motivation.
  • Focus on constructive communication aimed at helping the individual to strengthen performance. Build a foundation of fact to reduce the risk that what is said will be taken personally or interpreted as critical. Become the model for how others can effectively communicate with each other.
  • Meet others half-way.
    • Outline, test and agree on basic assumptions to get the conversation rolling.
    • Weigh the pros and cons of each suggested alternative.
  • Use employee reviews and compensation decisions as motivators.
    • Explain the company’s marketplace and plans vs. market practices. Get the facts. Know what each job typically pays and market balances between salary and incentive compensation.
    • Align the rewards offered with each individual employee’s motivations.
    • If an employee is not a 5 (on a scale of 1 – 5), explain what they need to do to become a 5.
  • Keep the annual retreat alive when everyone returns to the office.
    • Generate follow-up plans as part of the retreat. Include measurable objectives, responsibilities, accountabilities and timelines.
    • Identify solutions, not just problems.
    • When asking for recommendations, acknowledge each suggestion. Be prepared to implement what is suggested – in whole or as part of a larger strategy.
    • Recognize that the environment is in constant flux and that the company must continually adjust to adapt to changes.

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