Warning: This blog entry reveals a bit of cynicism.
I would like to believe that the boards of major corporations actually understand the value of a diverse workforce, including at the executive level. Varied experience and viewpoints can provide perspective and insights to generate exciting strategies or solve complex challenges.
If the leadership of General Motors and IBM truly valued diversity, would Mary Barra and Ginni Rometty be their first female CEOs? Really?
These women are bright, accomplished, highly skilled, and deserve to be CEOs.
But, look at the timing.
Barra became CEO as General Motors while dealing with the largest vehicle recall ever (29 million so far, according to FORTUNE magazine). They declared bankruptcy and needed a government bailout not that long ago. And the intractable “GM culture” poses a significant challenge for any CEO.
Rometty is CEO of IBM as revenue has been declining (-5% to $99.8 Billion in 2013) and the media keeps asking “Can IBM Ever be COOL Again?”
What is the logic? When a fairly homogenous group of corporate leaders find themselves in a terrible situation, do they think Well, maybe it’s time to give a minority or a female executive a “chance.” Why not? If the executive fails to pull the corporation out of the mess, some bigoted people would have their biases confirmed. After all, they weren’t expecting success anyway. And if/when the female (or minority) executive succeeds despite the huge odds against her, she probably won’t be compensated higher for that incredible accomplishment. She could also become so tired after pulling a huge corporation into the future, she may just retire.
And then, who will the rescued corporation bring in as her successor? Usually, the corporations revert back to homogeneity. Look at the composition of corporate boards!
This reminds me of observations my late husband had about governmental entities with which he worked. Leaders of states, counties or municipalities would repeatedly find themselves in “messes.’ Then they would scratch their heads and say, “You know what?! We need to bring in a community planner.” If they had actually understood and valued planning, wouldn’t the professional planner have been brought in long ago? And the “big mess” would have been prevented.
Be honest with yourself. Look at the composition of your executive team and your board. And look at the timing of when you “give a woman or a minority a chance.” Are you really setting people up to fail or serve as scapegoats for problems that resulted from homogeneity? (Similar people with similar thinking using similar approaches)
A recent pre acquisition due diligence process raised a fascinating question for the leaders of both entities.
Like most due diligence processes, the leaders of each business began with valuation formulas and a series of questions. If the industry multiplier for acquisitions is currently averaging between 5 and 6, would 5.5 X net profit be an affordable purchase price? If so, will the seller accept payment over time to reduce strain on the buyer’s cash? Could a lower purchase price be acceptable to the seller if more cash is involved up front? What percentage of the seller’s existing customers should the buyer realistically expect to retain and at what revenue/customer? What’s the value of the seller’s equipment, inventory and vehicles? How should the seller’s sales pipeline be valued? Which prospective customers might hesitate if a new owner is involved? Would there be additional costs associated with any differences in geographic areas or target markets/customers? Which employees are most important? Should anyone be paid a bonus to stay and give the buyer a chance? What additional costs should be anticipated due to employee turnover? Could the possibility of an acquisition simply invite employees to leave and start their own competing business?
We slowed them both down and asked that they consider if and how the goal of profitable business growth would be served by an acquisition? The answers and values related to the questions listed above are impacted by whether the purchase being considered will eliminate a competitor, increase the buyer’s production/capacity or add complementary products/services to the buyer’s offering.
In this situation, the services provided by the seller’s business require more experience and training. The acquisition would add a desired complementary service to the buyer’s offering. The people-related questions became the major variable in these pre-acquisition valuations. The fact that the seller’s business has a collaborative culture and the buyer’s corporate culture is more autocratic became the most important variable. The employee and customer retention and the projected growth and profitability of the combined entities could be higher IF the buyer is invested in learning how to be a more collaborative leader. They might have to leave the businesses completely separate (even when/if the ownership changes) if the buyer has no intention of changing. And if the collaborative leader (the seller) values keeping a team of people together, a sale may not be possible at any price.
It’s been our experience that the purchase price and long term ROI is adversely impacted when an autocratic buyer is involved. Would acquiring a collaborative business raise, lower or have no impact on the purchase price for you? What could you do to be more collaborative and be more ready to acquire businesses at more affordable prices and increased ROI?
Remember it? Directed by Robert Redford, the movie was based on Steven Pressfield’s 1995 book with the same name. The actors include luminaries Jack Lemmon, Will Smith, Charlize Theron and Matt Damon. This was Lemmon’s final movie which makes it even more important to many people.
In 1931 (during the depths of the Great Depression), the City of Savannah, GA sponsors an exhibition golf tournament with great golfers Bobby Jones, Walter Hagan and the town’s golf prodigy and hero, Rannulph Junuh.
As he caddies, wise Bagger Vance (played by Will Smith) provides sage advice to help Junuh recapture his “authentic swing.” They talked very little about the fairway, sand traps or greens. They talked about post-traumatic stress, the meaning of life, guilt, regret, a broken heart, giving up, accepting responsibility and hiding. You know…light conversation (lol).
As many golfers of today can tell you, finding one’s authentic swing in golf is not just a matter of repetition. Golf is a mental game as much as it is a physical one. When a golfer’s muscles are tight from being angry at work, his/her slice or hook returns on the golf course. When a golfer’s optimism or confidence is compromised, the short game on the green becomes another nightmare. An executive’s capacity to make great strategic decisions is another version of one’s authentic swing.
Presidents of privately held mid-sized companies often don’t have time to play golf or have another similar outlet that offers feedback on whether the president is still centered. It is impossible to maintain your authentic swing when you aren’t centered. Often the all-important feedback comes in the form of poor business results. The president’s loss of his/her authentic swing is taken out on the business.
Sometimes executives just keep showing up when he/she knows he/she is “just not right with the world”. Continuing to show up is important, but just going through the motions can solidify bad decisions (a hook or a slice). Finding what keeps you centered is worth the effort. An executive coach could be your Bagger Vance.
The nomination forms for those lists often require information about the company’s participation and donations to the surrounding community (civic responsibility), data about financial stability and profitability, evidence of providing fair compensation and reasonable benefits to employees, details about career advancement opportunities and statistics about employee turnover. Also, the nomination forms also include questions about the all-important “happiness” factor.
Being an accountant has not been viewed as a glamorous career, so it is interesting to see CPA firms included on the lists of “best places to work.” Go ahead…Google Withum Smith + Brown, PC. You’ll see information about a regional accounting firm that has been included on the lists of “best places to work” for several years. They also appear on several lists of “fastest growing” companies.
The readers of NJBIZ frequently see WS+B display advertisements that feature a photograph of their Managing Partner Bill Hagaman. A tall thin man, he played basketball and still coaches. I know Bill. He is also a good person.
Go to YouTube, and you will find videos of WS+B’s annual flash mob to celebrate each New Year. If you can’t imagine conservative accountants dancing to modern music, watch their videos. Who wouldn’t want to work where the managing partner dances?
Generation X, Y and Millennial employees crave challenge, inclusion and more frequent celebration of little successes.
Does your company need to take a hint from an accounting firm about how to attract and retain top talent…by being more fun?