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2 www.finance-monthly.com Spotlight On... Anna Bond Gunning, Partner, RHR International, talks about the importance of management due diligence in mergers and acquisitions, and identifying underperforming teams or high achievers Anna Bond Gunning, RHR International SPOTLIGHT ON... Management Due Diligence UK How do you identify underperforming man- agement teams? We will typically assess and benchmark team performance against our proprietary Senior Team Effectiveness Survey. This assesses the performance and ‘health’ of the team through the lens of: Vision and Purpose, Roles and Responsibilities (i.e. what we refer to as, ‘agile design’ – right people, right roles and right focus), Disciplined Focus (i.e. focus on the right enterprise issues), Decision Making (i.e. efficient decision-making, balances speed with efficiency), Process (i.e. frequency and quality of meetings, communication), and Culture (i.e. team behaviours and norms). The Survey is benchmarked against top quartile performance companies across a number of key performance indicators. How do you identify high performing execu- tives? There is no one template that fosters successful leadership, owing to the complex nature of leading organisations, but we do look for certain things. High performing executives are usually defined by strong capability against the following four dimensions: Business Acumen (i.e. setting the direction) Critical Thinking (i.e. solving complex problems), Leading People (i.e. executing through others) and Insight (i.e. maximising impact). Also critical is their contextual adaptability. the two companies, potential synergies, opportunities and risks. In terms of creating a cohesive management team, we find one of the biggest barriers to achieving this is a lack of clarity and alignment around vision and purpose and then a lack of shared objectives. Without this there is no basis for trust and mutual accountability, and a team will never come together. The second typical challenge we see is the leader not being sufficiently aware of their impact on the executive team functioning and performance. We refer to this as, ‘the shadow of the CEO.’ And the third frequent challenge we see is executive teams not focused on the right issues, at the right level. What type of support do you provide to newly formed management teams? We support with new leader and team integration sessions, which are structured, facilitated workshops focused on the key areas of challenge specific to the team, as identified in the assessment process upfront. We use our proven process and methodology around executive and team integration, and also supplement this with individual coaching work. This is based on our research Beyond the First 90 Days and concentrates on working through five key success factors to achieve success: ensuring role clarity and alignment, establishing relationships and building trust, defining, understanding and building culture and norms, establishing and achieving early wins, and accelerated learning. Management due diligence is increasingly recognised as a critical part of a wider due diligence process for a merger or acquisition. Typically, what are you looking for when you assess management teams? Yes, we’re certainly being asked to do more and more of this work. Ultimately, we’re looking for the capacity of the team to deliver on the investment thesis. Within this, we assess individual and collective strengths, weaknesses and risks, as well as team dynamics and functioning. Do you follow a set process when assessing management capability? We do follow proven process and methodology. We start with gaining a clear understanding of the investment thesis and consequently, the leadership behaviours required to deliver to this. We then use a multi-method approach to assessing and benchmarking executives’ capabilities and potential. Our methodology includes psychometrics, a behaviourally-based interview, as well as a benchmarking of each individual’s track record and experience against what one might find in the marketplace for similar roles. The coming together of different company cultures can often prove a challenge for a newly merged entity, how do assess the potential challenges? What are the remedies available in order to produce a cohesive management team? What are the typical challenges? The first way to assess potential integration challenges is by understanding exactly how, and to what extent, the two companies need to come together. Clear strategy around this needs to be established at the outset, but is all too frequently implied. The second is to employ robust assessment process and methodology that picks up on cultural aspects of Tel: +44 (0) 207 799 5243 | Email: [email protected] About RHR International RHR International was founded in 1945 and is a privately held LLP. The firm specialised in the assessment and development of executives at the senior most levels in organisations. Today, RHR specialises across four core service areas: Individual Executive Assessment (for hire, promotion and development, management due diligence), Executive Development, CEO Succession and Senior Team Effectiveness.
