Submitted by jzconners on
The company I am working for is acquiring a another company in our industry. As of the acquisition I will be the General Manager of the acquired company. I know the Manager Tools method says no changes for the first 90 days, but I was wondering if there are exceptions to this rule. For instance,this acquired company is VERY top heavy. To the point of excess. Looking at their financials they are making little, if any, money with their current payroll situation. Is this a situation that warrants demotions/reductions? If not, please help me understand why this would be a bad idea.I certainly do not want to come off like a tyrant or basically drop the boss hammer to exert my authority. I just cant see running the company break even for three months.
Any advice would be appreciated. Thanks guys.
You can't anticipate what
You can't anticipate what negative impacts might come from demoting people, cutting pay, or outright firing them right after taking over? You'll be yelling "Abandon ship." And that's just part of it.
I would imagine if all you do is look at the books then start cutting without adequate research you're going to make... maybe not wrong, but suboptimal choices. Running at breakeven for a while as you research and learn just why they have the structure they do, who is truly earning their keep and who isn't, is far from the worst thing in the world. Maybe 90 days is excessive in the situation, maybe it's not enough. But I'd question the judgment of anyone who wanted to make big changes... less so within the organizations procedures as with the livelihoods of people, but still even then... without spending any real time "in it" to figure out where they TRULY need to be made.
IANAM, but that's my take.
Totally agree. I may need to
Totally agree. I may need to clarify. This decision would not be a day one demotion/reduction. I was thinking about 30 days to assess the situation personally.
Since you think the problem
Since you think the problem is that it's top heavy and you'd innately have exposure to the top more than the bottom in handling this anyway that might be enough time to figure things out. Not sure how big they are. Only you really have information to venture an educated guess at how long it will take. Just keep the human equation in mind and it should turn out fine though. And be open to being wrong in your assessment. That top heavy structure might not be the root cause of the problems, it could be a symptom or coping mechanism that keeps something else in check. The something else might be a harder problem to deal with if you tear up the cage.
Consider consulting help
The stakes seem high. I hope you have more resources to leverage than this forum!
Budget permitting, you may want to consider finding a management consultant to help you assess the situation objectively. There's an organization based in Burke, VA I could recommend. I'm not sure of their bandwidth but you can reach them at 571-336-6211.
Slow is fast!
There's an old military saying that "time spent in reconnaissance is rarely wasted". You're coming into a whole new organisation, you need time to get the lay of the land before you can hope to make the right decisions. To complicate matters further, you're planning on firing people, which is going to require every ounce of relationship power you can muster in order to be done without doing more damage than good.
I'm a person who always wants everything done NOW NOW NOW NOW NOW. To slow myself down and take the time to do it right, I ask "will letting this problem linger for a (week|month|90 days) kill the company or cause irrepairable harm?" If the answer is "no", then I let it go for that length of time. If the answer is "yes", I ask myself again with a shorter time interval. Eventually (OK, a second or two) I either get to a 'no' answer, or I'm down to five seconds and the problem needs to be fixed NOW NOW NOW NOW NOW. I think the same analysis in your situation will show that you can take more time to analyse the situation. If "they are making little, if any money", then waiting until you've got some useful answers before pulling the trigger isn't going to kill the company. If you were losing money, and only had 90 days before the company was bankrupt, that'd be different -- then you'd have to do something before 90 days (whether that be get more money or reduce costs).
But you're not in that situation. The only real pressures on you should be your desire to achieve results, and any political pressure you're getting to make changes. Managing your own desires should be straightforward. Dealing with political pressures is harder, but if you've got a good reputation and relationships, then explaining that you want to achieve lasting change, and be sure you're doing the right things before you do them, is going to help. Laying out a timetable will help, too -- showing that you're not just fussing, but you're using this block of time to gather data, analyse and investigate, and on date X you'll be presenting a plan for reform that will achieve X goal (a gross profit margin of 20%, or whatever).
Make sure your goal is business-focused, and doesn't beg the question. Saying that in 90 days you'll produce a plan that will reduce payroll by 20% is pre-supposing that you'll need to fire people. Perhaps the key to profitability in this company is instead charging customers more, or that you can sell a pile more services without any increase at all in costs, because people are just woefully underutilised at the moment. You don't want to ignore those possibilities before you have data that suggests that they aren't feasible.
I'm going to buck the
I'm going to buck the trend here. People in the acquired company are expecting things to change. If you wait too long to implement change, the folks in the acquired company will move past the "expecting things to change" back to the status quo. When you then try to implement changes, you will be faced with a more difficult task. There may also be favorable accounting treatments for making changes sooner (part of the acquisition cost) versus later.
Check out the book Five Frogs on a Log. For years, Cisco used this as their "acquisition manual". Good luck and let us know how it goes!
For 90% of the people, 90% of the time
Remember that Manager Tools advice isn't supposed to be absolute for every person in every situation. For the large majority of cases the advice is sound, but your situation sounds like an outlier. I don't think there's a "you're about to run an acquired company" cast giving detailed advice. :)
Make sure the acquired company understands that evaluations and changes are coming, then do your evaluations and make your changes. The "fit in, fit in, fit in, don't make changes" advice is there to give you time to make your evaluations and draw up your plans.
Don't swing the ax too hard too soon. Make sure you make the right changes, so you don't have to re-change things after.
Houston, Texas, USA