Posted by Bill Dann

First, my apologies for the long absence. Took a bit of time off to acquire a new knee. But, I am back on it now.

Recently, I have been observing the impact of a change of ownership upon an organization. The impacts are profound and warrant discussion.

Predictable effects of ownership change

BXP135677As most of you know, we are devotees of William Bridges model re. “managing transitions”. He makes the case that managing the human side of change needs deliberate planning and execution just as does managing the physical aspect of the change. Rarely is this done well, hence the high failure rate of change efforts.

Well, a change in ownership is significant and brings into play all the impacts that Bridges warns of during the “neutral zone”, i.e. the period in which how life will be under the new order is unknown. Low productivity, high sick leave, high turnover are some of the predictable impacts.

Strategies to lessen the effects

These effects are minimized by two strategies: communicate and listen. The thirst of employees for information to gain certainty about the future is insatiable during this period. It is the unknown that brings about the negative effects cited above. Communication fills in the gaps in the unknown.

Strategy two: Listen. Listening is critical because employees will contribute lots of ideas on how to ease the transition, improve performance etc. if given the opportunity. This is a time for management to humble itself, understanding that it doesn’t even know all the questions, let alone the answers.

Overlooked impacts on culture

The secret sauce in any organization is its corporate culture, i.e. what it feels like to work there. Depending upon the culture of the company undergoing ownership change and the culture of the new owner, the shift from one to the other can either be motivating or deflating. Some dynamics of culture to consider here:

  • Dominant leadership style: top down vs. bottom up, highly directive vs. supportive
  • Control: bureaucratic vs. dispersed/self-control
  • Planning: top down vs. participative
  • Systems: build for tight control vs. self-direction and innovation
  • Purpose: making money vs. serving a greater good
  • Regard for Employees: expendable vs. invaluable
  • Human Factors: use employees vs. invest
  • Teamwork: high level of cooperation vs. siloed
  • Ownership: a few at the top or outside the organization vs. employee owned
  • Credit for Work/Rewards: infinite variety here

Employees have a keen eye for these factors and will quickly assess whether the new organization is where they want to be. If not, a high rate of turnover will ensue quickly.

What to do?

The adage in starting a business is to define at the beginning the “exit strategy”. Likely the exit is a change in ownership either to a new organization or a set of stockholders. That’s how you reap the reward of the years of toiling long into the night and on the weekends to build a business. Well and good.

But, if you treasure what you have built and those who helped you build it, pay attention to the culture of the new owners. Develop a checklist of what characteristics of your organization are precious to you. In evaluating and negotiating the deal, pay attention to protect that which is precious. If you don’t, you may indeed be able to have your money and run, but you may have heartache along with it as you watch what you have built go into a tailspin.

If you are interested in improving the culture in your organization or addressing shifts in culture accompanying a change in ownership or leadership, drop me an email. We have been focusing more heavily on culture as a key ingredient for a successful organization, and would be happy to share with you what we have learned.