M&A Value Creation: Bench Strength Assessment Critical – so with the right talent assessment and selection process CPO’s can ensure that the right people with the right skills ﬁll carefully defined roles in the expanded organization.
Building a world class team bench
1. M&A Value Creation: Bench Strength Assessment Critical
M&A due diligence in procurement talent is a dangerours corner to cut
M&A Value Creation: Bench Strength Assessment Critical so CPO’s require practical methodologies to select the right people and build a strong bench to deliver value from the merger and beyond.
Selecting the new procurement team is one of the most important decisions CPO’s will face when combining two organizations resulting from a merger or acquisition. It is a decision with lasting and often underestimated implications. The team selected by the CPO will define the new procurement organization’s capabilities. Stakeholders, employees, and board members will watch carefully because your decision sets the tone for the integration, as well as procurements position in the new organization.
As the CPO of the new organization, your ultimate goal is to select the team who will create and drive value. Whether the bench comprises players from the legacy company, the acquired organization, or recruited externally, the new team must demonstrate leadership competencies and behaviors aligned with the business strategy, operating model, and desired culture of the new organization.
2. A Question of Merit
A key M&A objective is to acquire valuable procurement talent to strengthen the team bench
When positions don’t get filled on the candidates merit, the consequences of perpetuating such arbitrary stafﬁng decisions can be the ‘wrong people filling the wrong jobs’ for years to come following a deal.
CPO’s need to take care that their stafﬁng decisions clearly demonstrate:
- those selected for the role are accomplished in that role
- their skills and experiences are relevant to the organization’s future.
Poor selection processes often lead to poor stafﬁng decisions and placing the right people in the right roles is never easy. It takes time, discipline, and selection practices that are comprehensive, yet relatively straightforward to implement. At a minimum, it requires:
- Clarifying core competencies and skills: needed for particular jobs requires knowledge of which positions will change following the integration and how they will change. CPO’s must ensure job descriptions that adequately deﬁne each post. Determining the desired competencies, allows you to assess candidates against standard criteria that meet the organization’s future needs, rather than replicating current organizational structure or the candidates’ past performances or roles.
- Identifying skill gaps: Skill gaps should be identiﬁed and prioritized as soon as possible once the new organization design is available. Your team must be sufﬁciently skilled in adjusting to resulting systems and process changes.
- Aligning job levels: Properly aligning job levels between the two companies should begin as soon as possible after the close.
- Aligning the assessment and selection process to deal timing: A phased approach to team selection throughout the integration process:
- Leadership and top management positions are ﬁlled during the early stages leading up to Day One or shortly after that.
- Phasing the selection by job levels enables you to make simultaneously strategic selection decisions, build the team bench and organizational design.
- Providing needed job training: Training may be required to support core competencies when introducing new systems or processes regardless of whether the employee operates at a local or regional office, or at the corporate headquarters.
3. Knowledge Transfer & Retention
Take steps to ensure you identify the people and knowledge critical to immediate and longer-term business goals
Relying on the target’s management to identify employees critical to retain can have its problems. They don’t necessarily identify the knowledge transfer people needed. Instead, they pick the managers of the key people on their staff, but they may or may not be key to the integration effort. A carefully tailored knowledge based skills assessment can help.
Many companies typically only look one level down from the C-suite, but using talent analytics at each level of the organization, means the integration team will be prepared on Day 1 to make key staffing decisions immediately based on data, not politics.
3.1 Validity . Reliability . Flexibility . Equitable
Using a skills assessments with the validity and flexibility to incorporate the identified core competencies and systematically identify applied knowledge and skills gaps can help to assess candidates objectively by providing the desired reliability and equitability of outcomes.
Conducting a process that is fair and unbiased will satisfy legal counsel or HR on matters such as consistency in the selection process for all candidates and for favoritism to reduce the chances of litigation or other legal repercussions that could create negative publicity, internal turmoil, and legal costs.
4. Bench Strength Assessment Critical to M&A Value Creation
The integration of the two organizations is ultimately the real-world test of a successful merger or acquisition. For the combined company, it can mean the difference between ongoing financial success and failure. So the CPO must ensure Procurement play’s a prominent role in any integration team to ensure optimization of the procurement team bench during the merger or acquisition.
To ensure a good fit, the CPO must clarify and articulate the core competencies and skills required for key jobs.
A bench strength assessment will identify where knowledge lies and baseline maturity levels in critical competencies to steer a path towards the desired future state.
Furthermore, regular evaluation of employees will help the organization determine what drives engagement as well as help guide employees in career planning.
Call to action:
With the right talent assessment and selection tools, CPO’s can build a team bench capable of, delivering value from M&A, compete with the best and adapt to changing business needs by managing and refining the bench to provide long-term value for the organization.
Nuff said …