Transition

Dear Loyal Readers:

I am writing to let you know that, after 12 years as an executive search consultant, I am heading in a different career direction. I will leave Odgers Berndtson by the end of March 2016. I will pursue opportunities in talent acquisition, training and development. 

 

I enjoyed working with you as a search client.

Life During Activist Investors

What Kind of Employees Must You Have so your Company Survives Split Up? 

The Dow Chemical and DuPont merger is the most recent of many announced corporate split ups in 2015 including Ashland Chemical, Air Products, Alcoa, GE, Hewlett-Packard and SPX. Sometimes the spins-offs are driven by activist investors, others are planned to forestall activist intervention. The Dow-DuPont merger and three-way split-up will take at least 2 – 3 years to pull off. The split-ups and spin offs mean a lot of disruption, multiple rounds of lay-offs and pressure for quick performance at the new entity. In the meantime, how do these companies stay focused on their customers and continue to grow their business?

Life During Activist Investors

I asked senior executives at some of these new companies how they keep the customer “Wow!” factor in the middle of so much distraction and uncertainty. These senior leaders identified the organizational priorities and employee skills needed to survive in the new environment and to deliver to customers at the same level as before. 

Outward looking: As a spin-off goes from being part of, for example, a $6 billion company to being a stand-alone $2 billion company, it may risk diminished brand recognition and market presence. It could lose access to money, talent, international sales networks. An employee who is outward looking,  who knows how to find resources outside the company, for instance, to build an international distribution network, will be extremely valuable. 

How can you stay focused and WOW
your customers? 

The CEO will also have to focus outwardly to maintain customer and owner/shareholder relationships. Having a strong CFO during the transition period is crucial to establish long term corporate financial credibility and build new ties to Wall Street. 

Everyone will be a trainer now: With fewer employees doing more, everyone will need to chip in. Technology, customer service, marketing and leadership skills are examples of areas where all employees will benefit from getting a training retread.

Strong operations: A benefit of getting smaller is that companies are more nimble, less layered. Employees may enjoy this but things may slip between the cracks. Bigger companies have the luxury of redundancy of process to ensure quality and delivery. Smaller companies need strong operating performers at the top to make sure that quality and performance prevail and that customer problem solving remains a top priority.

Digitally aware: Companies often look to cut costs in payroll, IT and other shared services areas. These days, digital tools can be substituted in areas like skills and skills gap assessment. Companies can use social media to communicate with employees as a way to support “Town Hall” meetings and to reinforce training. Advanced technology can also help plan manpower resources required for expansion and growth. 

Effective in small teams:  To carry out the split ups, companies such as Ashland and Valvoline have created small transition teams in functional areas. There is an overall perception that large corporate departments are less and less effective. Small teams with laser-like focus are better at spawning innovation, marketing breakthroughs and holding people accountable. 

For example, when it announced its merger with Dow, DuPont also announced that it is breaking up its Central Research & Development unit in Wilmington. In its place it created a much smaller successor "Science and Innovation" unit to which it assigned only 10% of its research PhD chemists. The company will reassign up to 1/3 of its research chemists to business units around the company and will lay off at half of them. (source: Philly.com).

In this new “small team” world, employees with those strong team player skills will be most valuable. 

Compensation Benchmarking: CEOs at Private Equity Owned Portfolio Companies

The most attractive part of the compensation packages for CEO's at private-equity owned portfolio companies is the equity kicker they receive when the company is sold. This can range from a 5% to 15% share of the company. Providing the company is sold for more than acquisition cost, CEOs can make out like bandits. Annual base and bonus may be less that at non-PE owned companies.

Forrester/Odgers Berndtson Market Research Results: Most companies remain unprepared for digital transformation

CEOs entering 2016 convinced they can succeed by doubling down on what worked in the past may be reading from the wrong playbook.

According to the recently released Forrester/Odgers Berndtson study, "The State of Digital Business 2015," most companies remain unprepared for digital transformation" -- an absolute must for growth. Yet executives representing the diverse sectors examined in the study expect the majority of their sales to be digital by 2020. How will they get there?

If your transformation plan to capture a share of an expanding digital sales pie is not well underway, and you feel behind the eight ball, that may be for good reason - digital transformation leading to adopting a meaningful new business model or new technology can take years. And it demands operating along a new set of best practices.

Read more of this penetrating analysis of our research by Amy Radin in The Huffington Post here: "What is your 2016 Playbook for Growth?"

Thank you to all of you who participated in the research survey. If you would like a copy please send me an email and I will send you the summary.

Chinese Executives Briefed on US Human Resources Management

"Global Human Resources Management" was the topic on November 5 when I spoke at the China Executives Club in Chicago. The purpose of this panel was to help Chinese business leaders manage human resources issues at their investee companies in the United States. Joining me on the panel were Tracy Xu, Area Vice President, Arthur J. Gallagher Risk Management Services, (moderator), Faith Wan, Global Talent Process Lead at Mars, Inc., and Katie Lau, Area Senior Vice President for Gallagher Benefit Services. Discussion topics ranged from management style differences to retention strategies to employee benefits design. The topic attracted keen interest. Chinese executives from as far away as Duluth, Minnesota and Detroit, Michigan attended. J P Morgan sponsored the event in a sky-high meeting hall with fabulous Chicago views. 

On right: Faith Wan from Mars, Inc. 

Katie Lau from Gallagher Benefit Services

Executive networking. Tracy Xu of Arthur J. Gallagher Risk Management on the right.

Chemical Industry Leaders Enjoy Glam Evening in New York

On Tuesday 27 October, I was the guest of Brenntag Specialties Inc. at the annual New York Chemists’ Club Dinner. Andrew Liveris, Chairman and Chief Executive Officer of The Dow Chemical Company was presented with the 2015 ICIS Kavaler award, sponsored by The Chemists' Club and in association with The Valence Group, in recognition for outstanding and newsworthy achievement. The award was presented at a black-tie dinner ceremony with approximately 300 attendees at the New York Public Library.

With Andrew Liveris, Chairman and CEO, Dow Chemical

From left to right: Ed Warner Cook, Trustee, Chemists’ Club; Peggy Fidler; Anthony Gerace, Vice President of Mergers and Acquisitions, Brenntag AG; Stefanie Stewart, Marketing Manager, Brenntag Specialties Inc.; Bill Fidler, Board Member, Brenntag AG

Left: Chad Kessler, Business Head, Chemtura,
Right: Jeff Kenton, Executive Vice President, Brenntag Specialties

Guests at dinner at the New York Public Library

Thrival Panel Advises Women on Compensation Negotiation

Panel members left to right: Rebecca Harris, Director, Center for Women’s Entrepreneurship, Chatham University; Justine Kasznica, Attorney, Saul Ewing LLC; Mary Kohler, Senior HR Consultant, Nova Chemicals, Alexandra, Rich Maloy (moderator), Manager Catalyst North America at Softlayer.

I spoke on a panel called “Mind the Gap, the Art of Negotiating and Knowing Your Value” at the Thrill Mill start up accelerator on Friday 25 September in Pittsburgh. This panel was organized as part of Thrival Pittsburgh. A week-long celebration of music and innovation, Thrival is now in its fifth year. Each day's programs were inspired by a specific theme and took place in a different neighborhood around the city. More than 25 live music performances performed at Thrival's two-day outdoor concert held in Hazelwood on 10 converted acres of industrial brownfield along the Monongahela River. I went on Friday night after the panel. Here was the scene: