M&A Transition: How to Institute Accountability - dummies

M&A Transition: How to Institute Accountability

By Bill Snow

A new owner often has a challenge with increasing the accountability of the acquired staff after an M&A deal is completed. Many companies face a large shock when they go from being owned by a single owner to being part of a larger company or PE firm with increased and more-exacting standards.

Focus on the customer

Remember where your money comes from: your customers. As amazing as it sounds, employees can get so busy with the minutiae of their daily tasks that they can take their eyes off the reason why they have a job: the customer!

As a new owner, you may find you need to install a renewed focus on customer service and sales. Tying employees’ compensation to increased sales (or customer retention) may be necessary for a company to make sure it doesn’t lose sight of the most important part of the business.

A simple test for an executive or owner is to ask employees to explain what the company does. Far too often, employees don’t have a strong sense of the company’s core business. All employees need to know and understand that what they do and how they interact with clients directly impacts the buying decision of a customer.

Introduce cost-benefit analysis

The flip side to revenue is expense. The difference between revenue and expense is profit, and profit is the only reason businesses exist.

New owners commonly find that the former owner rarely said “no” to the staff. Every idea employees had — good, bad, or indifferent — got a shot. As the new owner, you need to communicate that the company can’t afford to take a risk on every single idea because the company needs to remain mindful of costs.

Instead, inform employees that the company is willing to take some chances and will reward employees when the chances pay off. But if that chance-taking results in a failed product or bad marketing program, the cost of that failure may come at the loss of a promotion, raise, annual bonus, or (if the failure is egregious enough) even someone’s job.

Communicate rules and responsibility

Part of the process of refining the operations of a company is to make sure the employees know exactly what is expected of them. Clearly communicating new rules, expectations, and goals and (preferably) tying clear rewards to achievement helps improve morale and goes a long way toward establishing the legitimacy of your authority.

Most employees will adjust to a manager who is strict as long as that person is also fair and impartial and holds all employees to the same high standards.

Recognize hard work earns the right to play

The balance between the goals of a business and a rewarding personal life is important if the managers of the business want to achieve goals. Expecting employees to log long hours and sacrifice only works if you also encourage those employees to take some time for themselves.

Count on employees to take vacations and take full advantage of paid holidays, especially if you’re demanding changes from the employees. Kick them out of the office and tell them to go home.

Delegate responsibility and authority

Instituting accountability means delegating authority and responsibility and then, ideally, getting out of the way. Don’t be afraid of other people’s ideas. Delegating responsibility only is a recipe for disaster. If you want results, make sure people have the authority to get the job done. If you’re going to hold people accountable, you must give them the leeway to execute their plan.