Creating business resilience: people and change
By Dan French, restructuring partner, Gateley.
Since the global financial crisis of 2007/8, historically low interest rates have meant that, for several years now, companies have enjoyed the ready availability of liquidity from a wide range of sources. Heavy competition amongst finance providers and equity investors has kept the cost of borrowing down, whilst increasing access to finance. This has led to reduced rates of business failure and insolvency but at the price of lower growth.
This is not a situation that will continue indefinitely. Consumer confidence is dwindling, insolvency appointments appear to be increasing and the threat of interest rate rises looms on the horizon. Businesses are now having to face up to issues that previously they could afford to postpone or ignore in a climate of freely available and affordable credit, such as low productivity and under-investment. These challenges will often be more operational than financial, as businesses seek to adapt to changing trading conditions. In any operational restructuring, however, it is critical to ensure that the culture of the business is preserved.
A significant challenge in any restructuring, whether financial or operational, is to ensure that the right people are bought in to deliver the restructuring and to take the business forward from the new platform that the restructuring creates. Businesses are built on people and often it will be the existing management and staff who are best placed to carry a business forward.
This is at the core of the work done by members of the Institute for Turnaround (IfT), who work alongside management teams to deliver improved operations and results. At our Restructuring Conference in Birmingham this week, Gateley Plc is partnering with the IfT to showcase the perspectives of its members on the current market, the challenges faced by businesses and how these can be addressed.
In addition, we will be joined at our Birmingham Conference by the newest member of the Gateley Group, Kiddy & Partners. Our Kiddy team specialise in assessment, talent management and leadership development, and have experience of assessing management teams’ capability against changing business needs, then supporting organisations to develop the critical leadership capability to take their business forwards. Kiddy help leadership teams to achieve rapid alignment around a new business strategy, and to create the critical mindset and skillset shifts needed to accelerate performance.
Kiddy’s recent research in the Private Equity sector identified how, if not managed proactively, human capital can be a handbrake on value creation. Kiddy’s head of research and chartered psychologist, Dr Zara Whysall, commented: “61% of senior PE specialists in our research highlighted that they find it difficult to be decisive when it comes to making decisions around leadership performance, with 43% revealing they have often made poor people decisions and appointed or retained a leader who was not right for the role.”
Ineffective leadership practices cost companies millions each year by negatively impacting organisational performance and productivity. So don’t hope that management teams will perform; ensure that they do, by assessing their capability and intervening immediately to plug any development gaps. Also, provide transition coaching (particularly for new CEOs) and top team effectiveness interventions to accelerate the process, aligning everyone towards the new strategy.
‘Restructuring Conference 2018: Creating business resilience in an ever-complex world’ will take place from 8am-2pm on Thursday, 18th October 2018 at The REP (Birmingham Repertory Theatre), Birmingham. The cost for a place at the conference is £85 +VAT per person, which includes lunch. CPD points will also be available. Book tickets here.