Platt Perspective on Business and Technology

What do C level officers do? 13: executive team expansion, consolidation and right-sizing 2

Posted in career development, HR and personnel, job search, job search and career development by Timothy Platt on December 31, 2014

This is my 13th posting to a series on what C level officers of a business or organization do, that specifically emerge as job requirements for the senior leadership of an organization (see Guide to Effective Job Search and Career Development – 3, postings 376 and following for Parts 1-12.)

I began a more formal and organized discussion of senior executive team right-sizing in Part 12 of this series, and the issues of having the right positions represented on that team and with the right people in them. And my focus there was on executive team expansion.

To round out that aspect of this larger discussion, I stress that the overall goal there is not simply to have the right chairs at the executive team table, but also the right people in them. So when I raised the possibility of bringing the Director of Human Resources into the overall executive level strategic process I did so on the basis of need, where Personnel processes and practices would significantly impact on overall business effectiveness and competitiveness. But I note here that simply advancing a manager who is most comfortable simply managing paperwork, into the executive suite cannot and will not work. So if the executive leadership of a business starts seeing enough operational and strategic disconnects developing from a failure to bring Personnel processes and strategy in line with the overall business, and as a source of insight as well as a recipient of it, they might very well need to find a new, more strategically aware and capable HR leader too.

The point I raise there is actually crucial to understanding, and planning, and executing through the issues that come up when facing the other two basic contexts in which an executive team might need right-sizing change too:

• Executive team contraction, or
• Reallocation of priorities where the headcount of C level team members might not change, but where essential titles and areas of responsibility covered by them and directly included in this team might shift.

My goal for this posting, at least to start, is to consider and discuss executive team contractions, and I begin that with two common types of business development where that can become necessary:

• Business mergers, where two once separate and independent organizations both bring complete executive teams to the now combined table, and where they at least begin that process as more equal partners in this combining, and
• Large-scale business acquisitions, where one acquiring business (call it Company A) holds a larger voice in determining who stays on the executive team and who is moved down on the table of organization – but where at least some of the executive team from that acquisition (Company B) would have to be kept on as senior executives too.

I begin this discussion with what might at least nominally be seen as the simpler and more straightforward scenario: a merger of equals. And I begin that by posing what might be a first step question for resolving this, immediately followed by a second bullet point that would both inform and complicate any answer to it.

• From a more meritocratic and business efficiency perspective, if you have two prospective CXO’s – two candidates who have held a given type of C level position, one from each of two merging companies, which one would be more qualified for moving forward in this new larger, combined enterprise?
• And what that question means and what would qualify as a valid answer to it, depends entirely on what you mean by those two loosely defined and easily misunderstood words in it: “more qualified.”

Making an executive team consolidation work in a merger depends on coming to an agreement as to meaning there, or at least as to what acceptable points of compromise would mean for it.

• This can mean thinking through potential friction points such as arise when divergent business systems, or corporate cultures have to combine and reconcile and asking who would be best able to manage that for the various lines of the combined table of organization and both by experience, and by personality and communications skills and style. Here, I write of meeting immediate and here-and-now needs.
• Or this can mean picking the pre-merger CXO for a given line on the new and larger table of organization, for experience working in the type of business that this merger is intended to create from this combining, and for its new organization size, for its geographic distribution of offices and facilities, or for whatever other criteria that might seem at least up-front to be the most longer-term crucial.
• Or of course, who stays on as senior executives and in what chairs can be more quota-based and even involve what amounts to horse trading of a “my side of this merger gets to pick this executive officer so yours gets to pick that one.” I am going to discuss a specific case in point of that scenario in an upcoming series installment where I will examine the executive positions of President and Chief Executive Officer, which while often held by the same person, can be split into separate positions. And as one type of situation where that can happen, this type of executive responsibility and title split can happen as a result of a merger and in a variety of ways.

I raise three possibilities here as to how the C level officers of a merger might be selected but note that these are only some of the reasons for which these selection decisions might be made. And even when the answers as to the how and why of this are clear (e.g. company A’s CXO for some functional area is going to stay on as the post-merger senior executive for that), this still leaves the question of what happens to their pre-merger Company B CXO. If they stay on at this now combined business, what happens to them?

I have seen these executives moved into a variety of new types of positions, here assuming they stay on at all. I have for example, seen situations where a younger and less experienced executive with real promise was kept on to be groomed to take over from a more experienced Company A counterpart and particularly when those more mature executives would be kept on as the CXO for their wide ranging experience in place, but where they are approaching retirement and both by age and inclination.

• The important point here, and both for who is kept on as that post-merger CXO and for their counterpart who does not, is that this process needs to be fair, and at least as importantly that it needs to appear to be fair as well.

I have at least overtly been discussing board consolidations here, and to round out that part of this overall discussion, the primary difference here between a merger of business equals and a large acquisition of one business by another, is that the members of the combining executive teams have more equal voice and pull in the former – but that for some positions, the acquired business can have a lot of say too, and particularly where a member of their executive team staying on as a new combined company CXO is crucial if that combined business is to retain the value that entering into the acquisition was intended to bring in.

I have also, and of necessity also at least begun to delve into some of the issues that come up when an executive team needs to be rebalanced too – evolved and changed to meet new and emerging needs and demands. I will discuss that set of issues more directly and fully in my next series installment. Meanwhile, you can find this and related postings at my Guide to Effective Job Search and Career Development – 3 and at the first directory page and second, continuation page to this Guide. I also include this posting in Page 2 of my Human Resources and Personnel directory and also see its Page 1 for related material.

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