Posts Tagged ‘Behaviours’

New Balls, Please

Wednesday, July 12th, 2017

Today’s Wimbledon: strawberries and cream. White tennis gear. Polite ticket queues. Live streaming. Rafa, Roger, Andy, Novak, Serena and co. The sliding roof.

Days of old: more strawberries and cream. Wooden rackets. Bjorn, Jimmy, BigMac, Pete, Andre, Rod, BillyJean, Monika, Martina, Steffi. Intermittent rain delays. Images that are indelibly linked in our minds to a time and place. Yet a (sporting) institution and participants that has successfully embraced reinvention.

When you look at your own personal and business reinvention, what are the strongest images in the minds of your key constituents (clients, investors, employees, business partners and so forth)? Does it say more about your “past” value, your “present” value or your “future” value? Perception is reality. What are you doing regularly to adjust others perception of you? (new interests, new relationships, new ideas, new surroundings, new images etc.) Is it bold enough for your current and future circumstances? (changes in technology, competition, market needs, client experience, and so forth)

Why wait for the umpire’s cry of “new balls, please”, when you can better control your own destiny?

© James Berkeley 2017.

 

The Uncomfortable PE Investor

Friday, May 19th, 2017

Whoever taught a young investor how to create great relationships? The thought dawned on me leaving a meeting with two forty-something European mid-market private equity investors. One was open, welcoming, used self-disclosure and possessed a mindset that actively encouraged reciprocal exchange of ideas, names and insights. The other, hid behind a corporate ethos of privacy, rarely showed interest in reciprocity and maintained a mindset that he knew everyone worth knowing. The former is a top performing fund manager running a $500M fund with over 6 closed deals in the public domain this past 18 months, the latter recently closed his first $200M fund with zero visible public success. If you were a limited partner or an entrepreneur, wouldn’t you have expected the exact opposite traits given the track record and profile?

Private equity is first and foremost a relationship business. Relationships based on trust and value. Developed by creating a seductive rapport (personal chemistry, powerful intellect, effective use of language) with entrepreneurs, limited partners and advisers. Manifest by converting that seductive rapport into deals closed, value created and profitable exits that create a “win-win” situation for the firm’s key constituents. Yet it seems a great many leaders in European private equity firms are totally complacent about their fund managers’ relationship building skills and behaviours, believing that financial acumen and capital alone will lure outstanding entrepreneurs with outstanding businesses. That is crap but hey, they’ll wait for 10 years to find the errors of their ways. In which time, the Fund Manager will have collected his monthly check, been promoted twice and sit smugly admiring his or her personal bank statement.

© James Berkeley 2017. All Rights Reserved.

 

RPM I: My Best Laid Plans Are Screwed

Friday, April 1st, 2016

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I recently talked about the organisational dynamics and consequences of Resilient Growth in the value creation process for large and small businesses.

Resilient Growth

Behind resilient organisations lies resilient people. People with the skills, expertise and behaviour at all levels to thrive not just survive on the firm’s profitable growth journey. To maintain and increase the profitable growth momentum in the organisation. Think of this as keeping the “rev” counter high.

Knowing “how” their behaviour accelerates or destroys profitable growth is important but maintaining the right mindset and knowing the right questions to ask is the difference between someone telling you what route to fly and actually co-piloting the plane with you. Huge!

Starting today in a new series, titled Resilient People & Momentum (“RPM”), here are my observations from over 450 clients around the world over the past 25 years in very common situations, where I have had a ringside seat.

Situational Overview: The New Market Entry Strategy Has Gone AWOL – your best laid plans aren’t working in the real world. The assumptions made about the market size, demand, relationships, marketing impact, acquisition costs, ease of delivery and available resources are miles off in reality. Executive management, investors and employees are fretting madly or indeed, clamouring for your blood. Cut and run, retire graciously or come out fighting?

Resilient People & Momentum Mindset: You are a prudent risk taker. You have a track record of past success honed by past wins and losses. You live for ambiguity. This is your time to shine. Failure is not about you personally. No one is firing at you. You have tremendous value and results to provide to others in future. You can work it out with others help given their support, time and resource.

Resilient People & Momentum Questions: Your first and most important assessment is with yourself 

  1. Is there a visible outcome (result and value) that is good for my key constituents?
  2. Is there an alternative allowing for speed and the quality of the outcome that I can immediately call on or develop (good news: unless the car has crashed there is always an option)?
  3. What are the attendant benefits and risks (after preventative and contingent actions are put in place)?
  4. What is the best course of action for all parties (accepting that you are looking for a compromise that preserves everyone’s critical and highly prized issues but dispenses with the moderate and low-level stuff)?

Liked this? Daily bursts of resilience advice to follow on this blog. Please come and read, share your experiences and comment. If you prefer, a quick confidential “free” debrief, write to me at james@elliceconsulting.com

© James Berkeley 2015. All Rights Reserved.

Producing and Rewarding Loyalty

Monday, November 2nd, 2015

I am always fascinated by the differences between “producing” and “rewarding” loyalty.

In a great many financial services businesses, particularly in post merger integration or when members of a leadership team walk out, there is a huge confusion between the two. You cannot motivate an individual to stay. Motivation comes from within the individual.

He or she makes a determination that their self-interest is best served by being loyal to their direct report and the firm’s strategic direction. In return for their contribution to the firm’s future health and well-being, the employee has expectations (pay, incentives, affiliation, career development and so on) that must be met or exceeded.

This is not Alcatraz. Legal “lock up” remedies that demand “compliance” are largely ineffectual.  Equally, peer pressure,  for example, midway through the sale process, “we are best served by sticking together”, only works where there is hard evidence or strong anecdotal information to support it (peer pressure).

To understand how you produce loyalty, turn the question upside down, “what would most likely cause the individual to walk away?” Write down a list of 10 probable reasons. Highlight the five most probable reasons. Delete the other four most probable reasons and work on the top reason. Once addressed, move on to addressing the next most probable reason.

Ask yourself, “what alternative exists or we could quickly create to meet this objective?” and then, “How easy is this to implement?” (timing, approval, flexibility)

Of course, your accuracy and probability of success is dramatically enhanced by having this conversation with each individual in-person on neutral territory.

If you think that by hiding from having the conversation you are safer, you are deluding yourself. Silence is not golden, it is merely a retreat into a higher risk and more obscure position.

The default position for many owners of newly acquired businesses or businesses responding to a mass departure of executives is to throw money at it. A belief that a one time retention bonus alone will “secure” the businesses prized assets (people, clients, intellectual property and so on). I am sorry that is crap. You are dealing with human behaviours.

Financial incentives in the form of carrots need to be frequent to impact human behaviour. One off payments do very little to engender loyalty other than to negatively impact the firm’s expense growth and cash resources. You are making disillusioned key employees richer but not more committed to the firm’s future.

Indeed, retention bonuses in isolation are often counter effective. People believe what they see happening not what they hear or read in the organisation.

You immediately create the “have’s” and the “have not’s” in the acquired or ongoing business (divisive behaviour). The “have not’s” lose trust and respect for the “have’s” (a belief, often correct, that their loyalty has been bought). You are encouraging leaders to protect THEIR nest egg (short-term thinking) ahead of furthering your interests (future growth and expansion).

Money alone is rarely the reason someone leaves a financial services business with the exception possibly of a heavily commission-orientated trader, broker or relationship manager. In 75% of cases I observe it is about the relationship with their direct boss. Therein lies the biggest clue to producing loyalty, develop great bosses who engender high levels of trust and respect from their subordinates (an honest-to-god belief that they will do the right thing for their subordinates).

In the acquiring company, make it a risk management priority in the due diligence phase to go through middle managers’ past performance in making smart people decisions and managing crises. Does the business have middle managers who command high, moderate or low levels of respect from key subordinates? Find the “glue” (answers) and you will be on the fast track to making smart decisions about securing the firm’s prized assets.

© James Berkeley 2015. All Rights Reserved.