When it comes to people issues in a carve-out, leaders usually
think first about what we call the deal perimeter--
basically, who stays and who goes.
That seems straightforward, but it often involves pretty complex
considerations in areas such as shared functions and back office
support, particularly as we take into account any of the buyer's
specific needs and requests.
That's why it's so important to reach internal alignment quickly
on a clear strategy for the deal perimeter, especially since
those decisions often have a material impact on our stranded
cost considerations and any potential future cost structure
decisions.
While executing the deal perimeter, it's important to
recognize also that every country has its own unique rules
on issues that can impact the workforce.
It's vital to have a thorough understanding of these rules
since they can have a pretty material impact on the deal's
timelines and structure.
Beyond the deal perimeter, there are several other key issues to
consider in a carve-out, for example talent retention.
When it comes to talent retention, companies typically
lean into monetary rewards, but the reality is there are several
non-monetary elements that also play a pretty important role in
our ability to retain and keep key talent.
For instance, one way we can drive retention is how we
communicate about the deal, doing it in a way that provides
clarity on the vision and minimizes any uncertainty.
Leaders can also reduce uncertainty and prevent
distractions by proactively making some organizational
design and operating model decisions for the future state
as soon as possible instead of waiting 'til after the deal is
complete, so we can communicate that to the employees.
Another way for companies to improve retention and minimize
attrition is to give high potential talent a seat at the
table or even a leadership role, showing them the value that they
can bring.
Of course you can't talk about talent without talking about how
we communicate to our employees during a carve-out deal,
particularly in the early days when you actually can't share a
lot of information.
Early on, pull in who you need to, leverage NDAs.
But also it's important to have a clear strategy for those who
are under the tent on how to manage questions they might get
and have a rapid response ready if any potential leaks occur. As
the deal progresses, particularly in the period
between sign and close, it's
safe to assume it's better to have too much communication than
too little.And even when you can't communicate specifics, you
can manage expectations by letting people know when they
can expect to hear more.
Communication alone?
Not enough.
This is a material effort for the company and a rigorous
change management program is important.
Make sure that you have a structure in place for people to
provide feedback, to ask questions, and most importantly,
invest time in preparing your leaders.
They need to be equipped to address the questions that
employees are likely to raise.
Giving your leaders guidance on what to expect can ensure that
they also feel supported.
It helps maintain consistent messaging on the carve-out
throughout the organization.
From what we see, the most successful carve-outs involve
organizations that treat people and culture issues with the same
rigor and attention as other aspects of the transition.
Remember, taking good care of your employees has a fundamental
impact on how they will feel about this transaction long
after you reach day one.