Tag Archives: Management

Executing a Corporate Transition

January 24, 2020 By in Management, Corporate Turnaround, Corporate Transformation Tags: , ,
This entry is part 4 of 4 in the series Corporate Transformation

In this fourth article in a series on corporate transformation focused on my experience in the GCC I look at how to execute a corporate transition. In the first article of the series I described how I use a SWOT matrix to define four different corporate states and the relevant strategy for each state. This article focuses on strong firms in stressed markets. Such firms need to transition their product and service offerings to meet the new challenges of the market. This is the simplest form of corporate transformation as the company is starting with a strong management team and the market challenges are known. At this point an organizational diagnostic has been performed and an internal team has been assembled. In terms of strategy, the triage in terms of removing executives is probably unnecessary. What’s left is executing an adaptive strategic plan.

Don’t just give a man a fish

The conventional approach to change management is hiring consultants to map out the current state of the company, the market direction, the future state of the company and to provide the transition plan. Although a solution is provided the client is left to figure out how to execute the change plan on their own. This like giving a man instructions on how to fish. If you’re a fisherman, you know that this doesn’t work.

A relatively more recent approach is to hire the likes of Alvarez & Marsal or AlixPartners who provide an interim management team to lead the change management project. This solves the issue of how the change plan is executed. But the client still hasn’t learned how to fish, they have simply paid someone to fish on their behalf.

My approach of leading a team assembled from the client’s employees allows for not only knowledge transfer but also direct experience and practical skills transfer. This difference in philosophy means that my goal is to build change management capability into the company and allow the company to then effectively manage the change on their own. This is an important difference to simply managing a single change process.

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Strategic Planning in Transformations and Turnarounds

January 22, 2020 By in Strategy, Leadership, Corporate Turnaround, Corporate Transformation Tags: , ,
This entry is part 3 of 4 in the series Corporate Transformation

This is the third in a series of articles on corporate transformation, focused on my experience in the GCC. In the first article I developed a framework to define the current state of a company: leader, obsolete, stressed, and distressed. Identifying the current state then allows me to select a strategy type to develop: innovate, transform, transition, and turnaround. In the second article I introduced the first phase of strategic planing, which is the organizational diagnostic. This  first phase determines which of the four states the company is currently in. In this third article I describe the main phase of strategic planning that I use.

Organizational triage

The organizational diagnostic will usually result in identifying some quick wins that will have a material impact on the business. When a company calls in external executive management to manage change there are usually two main reasons:

  1. The existing executive management is competent in its job and just needs support planning and executing change while they continue to run the business; and/or
  2. The existing management cannot or will not effect change.

Which scenario is present will come out during the organizational diagnostic phase. If the second scenario is present it is critical to resolve the issue immediately. This leads to two immediate tactical changes necessary for the development and execution of a transformation / turnaround strategy.

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Profit without Value

April 1, 2019 By in Analysis Tags: , ,

The debate of value creation versus value extraction is an important one when markets are developing and is a crucial driver of share prices. The danger, however, is that the impact on share prices is opposite to the impact on the value of the company. The result can be business destruction to the benefit of a single stakeholder.

What do we mean by value creation versus value extraction?

Value creation is developing the ability to keep producing value, e.g. building a productive asset.

Value extraction is monetizing, or liquidating, value, e.g. selling a productive asset.

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Your idea of success is completely wrong

August 22, 2017 By in Management, Analysis Tags: , ,

There is this idea that success is 100% correct decision making. For some people, they understand this to be 90% or even 80% correct decision making. This idea is completely wrong. A success rate of 56%, implying 44% incorrect decisions, is a great result. Here’s why.

Let’s simplify things. Assume that you are the chief executive of a company and that each decision you make has, on average, an equal impact on the company performance. Let’s say that if you make a good decision you increase profit by USD 1 million and if you make a bad decision you decrease profit by USD 1 million.

What does this mean in terms of the company performance? Continue reading →

Your guide to handling ethical management issues

July 31, 2017 By in Corporate Governance, Management Tags: , ,

You have spent a lot of time honing your business ethics, governance and compliance skills, but time and again you find yourself in difficult situations and realise nobody taught you what to do.

If I just described you, then this article is for you.

Most of what is taught is with regards to how to act if we initiate an action and, possibly, how to react when a client initiates an action. What I have not seen taught is how to react if your manager initiates an action. In this case there are broadly two scenarios: First, it is a legal and ethical instruction; or second, it is an illegal or unethical instruction. In the first case the employee’s proscribed reaction is straightforward – execute. In the second case it is to not execute the instruction. But is that as simple as saying “no”? Of course not.

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Lack of Transparency in Senior Dubai Executive Departures

July 12, 2017 By in Management, HR Tags: ,

Last week saw the unexplained resignation of two senior executives, the chief executive of Jumeirah Group and the chief investment officer of EmiratesNBD.

There are several pertinent facets to these announcements. First, both seemed to be abrupt as there was no permanent successor named in the reports. Second, both left after a relatively short tenure, with both executives having had taken on their roles in January 2016.

In the case of Jumeirah there are a number of relevant organisational changes: the chairman joined from the parent, Dubai Holding, in March and who in turn appointed Dubai Holding’s chief executive to “run the [Jumeirah Group] business together” with an interim chief executive from within the group. When a chief executive leaves three months after a new chairman is appointed to the parent, there may or may not be an issue. When the chief executive of a parent is sent in to co-run a subsidiary business the implications are not usually positive. Add everything together and one might consider the scenario that the board had lost confidence in the chief executive.

The matter with EmiratesNBD’s chief investment officer CIO has less going on around it but the short tenure with no prior succession planning does not augur well.

Here is my fear: are the decision-makers in these cases clear on whether the issue is with the executive or if it is simply an unavoidable consequence of our challenging economic times? If it is the latter then boards and CEOs could create unnecessary employee turnover and lose the very people who have information to help the company.

It is difficult to ascertain if this is going on as there is not enough information. This lack of transparency is unfortunate in the case of EmiratesNBD, a publicly listed company that is the second largest bank in the country and regulated by both the UAE Central Bank and the Dubai Financial Market. As Jumeirah is private there is a lower bar in terms of transparency, but if Dubai’s sovereign wealth fund the Investment Corporation of Dubai (ICD) can adopt global best practice for corporate governance and publish audited financials then I don’t see why other private entities could not adopt the same philosophy. As an aside, ICD is also the majority owner of Emirates NBD, the bank could learn from its largest investor.

This article was originally published in The National.

Compensation Foundations: Long Term Incentive Plans

June 13, 2017 By in HR Tags: ,
Compensation Foundations: Long Term Incentive Plans
This entry is part 4 of 4 in the series Compensation Foundations

This week’s column is the third in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East.

In our previous articles we spoke about salary – what you give people to show up every day, and incentives – what you pay them to do their job well. In today’s column we’ll cover Long-Term Incentive Plans (LTIPs) – what you pay people to do their job well over the mid to long term. Continue reading →

Souq’s success reveals the kind of CEOs we need

April 25, 2017 By in Management, Leadership Tags: ,

Souq.com, a private entrepreneurial company, sold for more than Dh2 billion this year while in the same period at least two large listed companies, one with a sovereign wealth fund backing it, required Dh500 million to Dh1.5bn in new capital.

Understanding the difference between why an entrepreneurial company was so successful in a period when organisations previously perceived as successful now need huge amounts of capital injections and/or lay-offs is key to understanding the future of our economy.

I have been on both sides of the equation – an executive at Union National Bank, Shuaa and Credit Suisse Saudi Arabia as well as an independent investor and entrepreneur. Importantly, these are not two separate parts of my life, I have crossed back and forth several times.

I have spoken numerous times on how our social culture, which is non-confrontational, is unfortunately transferred to our business culture, leading to a large number of “yes” men.

Here is why this is not optimal. CBS News has an article that describes the institutionalised management environment that I have seen. The article uses as its basis a study by researchers from Northwestern University’s Kellogg School of Management and the University of Michigan, Set up for a Fall: The Insidious Effects of Flattery and Opinion Conformity toward Corporate Leaders, in Administrative Science Quarterly.

The study finds that chief executives “who have acquired positions of relatively high social status in the corporate elite tend to be attractive targets of flattery and opinion conformity from colleagues”, which can harm the company increasing the “CEOs’ overconfidence in their strategic judgment and leadership capability”, which results in a reduction in “the likelihood that CEOs will initiate needed strategic change in response to poor firm performance.” Importantly, the study found that this leads to a long-term continuation of the company’s bad performance.

The former British prime minister Tony Blair says it more succinctly: “The art of leadership is saying no, not saying yes. It is very easy to say yes.”

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Compensation Foundations: Designing an Effective Incentive Plan

February 21, 2017 By in HR Tags: ,
Compensation Foundations: Designing an Effective Incentive Plan
This entry is part 3 of 4 in the series Compensation Foundations

This week’s column is the second in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East. In the first article we discussed job identification, job grading and linking it to pay.

While people are paid salaries to do their job, incentives encourage them to do their job well. Nothing is more emotive in people management than communicating incentive numbers – people can be upset, happy or (as is often the case) neutral.

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Compensation Foundations: Grading and Job Evaluation

January 24, 2017 By in HR Tags: , 1 Comment
Compensation Foundations: Grading and Job Evaluation
This entry is part 2 of 4 in the series Compensation Foundations

This week’s column is the first in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East, a position that he has held for the past year, and Asia-Pacific and Middle East and Africa regional head of McLagan (a division of Aon Hewitt focusing on financial services). Aon Hewitt is one of the world’s pre-eminent human resources consulting companies and I have worked with it in the past to help me unravel one of the toughest issues that I have faced in building and managing various businesses: how to think about compensation when recruiting and promoting or awarding raises and bonuses.

This area of business haunts many managers, starting with how much to offer when recruiting. The widespread approach of simply asking for a salary receipt from the candidate’s employer is simply an admission that the hiring company has little idea on how to think about pay. The extension of this ad hoc approach to raises can lead to unfair pay differentials that are not based on merit, which harms morale and the company.

In short, the more opaque or uncertain a decision-making process is, especially with regards to human capital, the greater the damage to the company, most notably via low morale and difficulty in hiring and retaining top talent. The answer is a transparent, well-defined approach.

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