Mergers and acquisitions
A few of our cover companies were involved in mergers and acquisitions in the last few years, and one sold itself to new ownership. It’s always met with mixed reviews.
“You always get a mixed reaction,” says Phil Rykhoek of Denbury Resources. “Some people love it — the ones that are more aggressive and wanting to grow and get excited by the change. Those people love it, but a lot of employees don’t adapt to change as well, and those are the ones that will resist it.”
One of the keys to successful mergers and acquisitions is communication
“Communicate early and often,” says Jeff Markham of Merrill Lynch “You can almost overcommunicate. Make sure you’re sharing the vision, that it’s not just that there is a vision; there is a strategy behind this. When you’ve got uncertainty like that, people do want to be a part of something larger than themselves, and we’re all created that way, so they’re going to tie into that vision and strategy. Some of them will happen further down the line. Some of them will jump in there quickly. You over-communicate and begin to share capabilities and really point out the most important thing to both cultures and that is we’re a client-first organization.”
You have to communicate often, too.
“My rule of thumb if that you have to tell people 11 times before it sinks in, so we go back and check with people,” says Richard Holt of Bank of America. “Once I can hear my client managers kind of rolling [the changes] out with their broader team, then I know it’s starting to sink in.”
Sometimes it gets challenging, but that’s part of the process.
“You just have to persevere and just keep a level head and keep working the deal and not let it get emotional when problems come up,” says Tom Sanderson at Transplace, who led his company in finding new ownership. “You have to be prepared to walk away,” he says. “There were a couple of points where we said, ‘We can’t go on like this,’ and that has a way of getting people back to the table as well.”
Strategic planning
No business is going to succeed unless it maps out exactly where it’s going and how to get there.
“Next to the right people, strategic planning is one of the most important functions you can do,” says Steve Mansfield of Methodist Health.
He says one of the keys is to include a variety of people outside your company in the process.
“Have thought leaders from your industry come and talk to your leadership,” he says. “We tend to get myopic in our focus on our own organization and our own market, and we think that’s the way the world’s running, but, in fact, there may be trends occurring outside of your market that you need to take into account for your market.
… “You may not agree with all of them, and some may not work for your market or your company, but it’s helpful to expand our horizon of thinking at the beginning of a strategic planning process. Then you take it from broad to narrow and make it work for your organization and your service area or market.”
You also need to involve the right people from inside your organization, too.
“Whoever’s going to be tasked with the primary responsibility for delivering on your plan needs to be involved in your planning process so they feel ownership in that plan,” he says.
Nancy Brown of the American Heart Association created a think-tank group to help her in generating new ideas and planning. When utilizing a group to plan, you have to be strategic in your approach.
“It can be deadly to have a random discussion that takes you nowhere, so by having strategic discussion questions framed in advance, the discussion is more focused, and the feedback is as valuable as possible,” she says.
When you’re trying to narrow ideas down, it’s important everybody is on the same page.
“Upfront, before you start the selection, make sure that you have agreed upon the criteria that you will use to focus on ideas because if not, people then will lobby for their favorite idea,” she says. “If you have objective criteria upfront — say, must reach the maximum number of people possible or must generate the maximum number of revenue possible, or whatever the criteria area — and you work through a facilitated process to narrow down the list, the likelihood of success is better because people will not focus on their pet project but rather on the things that can truly make the biggest difference.”
Leading change
Change can be one of the most difficult tasks to accomplish in a business situation, but the past couple of years have meant change for almost every business. Some grew by leaps and bounds, and others had to cut back. But both scenarios have one common denominator: change.
Barry Davis led more difficult changes at Crosstex Energy. Those times call for solid leadership if you want the change to be effective.
“People want to see the confidence and see into the eyes of the guy at the top,” Davis says. “Are you demonstrating that you’re going to get through it, and do you have a plan? Are you committed or are you wavering in your commitment? There was never a wavering.”
A decade ago, Mark Cuban had to take a floundering Dallas Mavericks organization and turn it around. He was frank with his team on day one.
“I said, ‘Look, we’re speeding up, and either you’re on the train or off the train,’” he says. “’If you keep up, you stay on, if you don’t, we’ll still be friends, but you know, you’re going to fall off the train, and we’re going to figure out how to move forward without you.’”
To succeed in leading change, you have to be completely focused on what it is you want to do. The result? His organization won the NBA title last year.
“You have to go in and be very specific about what your goals are, what you’re willing to accept and what you won’t accept,” Cuban says.
Through it all, it’s important to stay upbeat because your people need that in order to buy in to change.
“People want leaders, need leaders, who are positive,” says Catherine Monson of Fastsigns. “You can be positive realistic. Positive doesn’t mean Polyanna and not seeing the reality, but your people need to believe that you see a way to get to the end result, and you have to portray that in a positive way.”
Leading in tough times
The downturn has been difficult for many businesses to continue navigating, but honesty has been the key in successfully doing that. Barry Davis had to let some employees go at Crosstex Energy.
“Be very clear and generous in the exit process, meaning the severance that you give people, the time you give them to find other jobs, to be generous in the support you give them in finding those other jobs,” Davis says. “Be quick and decisive in the process — these are things that need to be done in a short time frame and not drug out over a period of time. It needs to be as deep and as broad as you can think — don’t make multiple reductions. One time needs to get it done. Be generous, be supportive and do it in one time, and be very caring in the execution.”
He says you have to also plan out that separation process and not just go at it blindly.
“First of all, focus on the person,” he says. “It is a relationship, so you have to focus on the person. Second, be very diligent in the planning process because the execution is critical at the time, in the moment. You have to have a great plan. Then, thirdly, be real. Be a human, be transparent and be loving. That’s a word we don’t use often in business, but I think everything really comes back to that and to love the other people just like they are family.”
Catherine Monson deals with franchisees as CEO of Fastsigns. With so many people all over the country, she had to be honest with her team.
“Given an information vacuum, people will always assume the worst,” she says. “If we don’t share what’s going on, our employees are listening to the news, they’re watching the headlines, they’re picking up a newspaper, they’re talking to their friends who have been, perhaps, laid off, and in the vacuum of honest information and direct information, they’ll just assume the worst.”
Four Tips: Leadership
“You have to be brutally honest with yourself,” he says. “You can lie to yourself. You have to know what you’re good at and what you’re bad at. You can’t all of a sudden be a homerun hitter. You can’t be a dunker if you can’t dunk, right? It’s that simple. …You better figure out what you’re good at and be great at it.”
Mark Cuban, Dallas Mavericks owner and HDNet chairman, president and CEO; March
“The day you think you’re the best as you can be is a bad day for any organization because that’s the beginning of a downfall,” she says. “There’s always ways that things can be improved or reinvented, so setting that culturally as the expectation that we can always improve, we always want to do better, there’s always new and better and different ways to improve the work that we’re doing – that creates an environment where people are willing to be open about what works and what doesn’t work.”
Nancy Brown, CEO, American Heart Association; June
“A strong board is tremendously important,” he says. “You can’t underestimate that. Some CEOs like to get a board that’s sort of their cronies that will rubber stamp what they want to do and is sort of a yes, man, yes, woman type of approach, and pat them on the back and congratulate them for doing a good job. … It’s far more helpful to have a board that you can bounce ideas off of and will challenge your thinking about things,” he says. “You don’t want a board that thinks they know your business better than you know it as CEO. They can’t know your business as well as you do as CEO — you don’t want them to tell you how to run your company, but you do want them to challenge the way you’re thinking about your business and get you to think creatively and question the way you’re doing things.”
Tom Sanderson, president and CEO, Transplace; August
“You do as much research as you can and then you make a decision. Part of leadership is being willing to make a decision without having all the answers because you never can have all the answers. If you have to wait until you have all the answers, you’re just going to have analysis paralysis. Part of it is taking educated risks.”
Catherine Monson, CEO, Fastsigns International Inc.; January
Three Tips: Building a team
“You have to have the right people that care and are proactive and ask questions that go beyond what is just expected. By talking to them [in the interview], you can really feel that they would be the right person. If they ask good questions in the interview process, they’re probably going to be a questioning kind of person to begin with.”
Camille Cheney Fournier, owner and CEO, SWS Re-Distribution Co. Inc.; February
“If someone I’m with treats the wait staff in a way that’s not reflective of appropriate, respectful appreciation, I’m done. That’s all I need to see. That’s how they’re going to treat other parts of the enterprise. Maybe not their direct reports, but that’s how they’ll treat other team members.
“One of my personal theories is that no one will ever lead anyone else better than how they lead themselves, so I look to see how they’re leading their self. … If they’re doing things with vigor outside of their career, that’s a real positive. If they take personal responsibility for their physical health, that’s a real positive.”
Carlos Sepulveda, president and CEO, Interstate Batteries; October
“Initially, our ability to hire the best quality people was somewhat low because that was linked to the old quality image. Until we really started building momentum in the company and changing the image and reputation in the industry, it was difficult to hire the very best people.”
Jim Nixon, Varel International, December
Three Tips: Communication
“Good leadership is being able to explain how you’re going to kick your competition’s ass and being able to explain to everybody how they’re going to participate in doing that,” he says. “Otherwise, what are you doing there?”
Mark Cuban, Dallas Mavericks owner and HDNet chairman, president and CEO; March
“Unless you educate employees about the financial structure of your company, they assume that 98 percent of revenue flows down to the bottom and is profit,” Monson says. “It’s important to educate them about what are the cost of goods — what’s our overhead, what does it cost to turn on the lights here.”
Katherine Monson, CEO, Fastsigns International Inc.; January
“It’s one thing for everyone to state they have an open-door policy — so whenever you have an issue, come on in my office, and I’ll always be there to listen. In practice, there needs to be some more formal, regular, structure to bolster that, even if it’s a true statement that the organization’s leader has an open-door policy.”
Ken Menges, partner in charge, Dallas office, Akin Gump; September
What’s the best advice you’ve ever received?
“My father ran a butcher shop, and he worked extremely hard to provide for the eight children he had. He told me, ‘Son, your role in life is to find the gold in everyone and polish it up.’ Basically what he was saying find the good in people and don’t waste your time trying to make them perfect — just make them as good as they can be at what they’re good at.”
-John Nixon, Varel International, December
“I’ve gotten a lot of good advice and I know I need a lot more, but the best I’ve ever received was from my father who told me a long time ago, there’s always a better way to say it. I think that advice came to me in junior high or high school. It has stuck with me because I can think of no truer words. When I think of other people occasionally who say something out of emotion or without forethought, I’m thinking, yep, there’s always a better way to say it.”
-Ken Menges, Akin Gump, September
