Managing The Change In Ownership
Reasons for buying a business vary enormously, but in many cases the skills, contacts and team spirit of the staff are among them.
Much of the business’s profitability is down to its employees – and this is particularly true for service industries such as property agents, hair salons or loan brokers. Often, client relationships are with the individual rather than with the brand or the firm.
Even in other sectors, it is important to remember that the business would probably not be worth the money you paid for it if the staff were not part of the package.
A business changing hands can be an enormous jolt to its employees. Many will, quite naturally, worry about their future with the firm, whether the company changes direction or not. In the most extreme cases, this can lead to mass resignations.
How to Manage a Change in Ownership
Change management is a skill that most leaders and managers will have to employ at some point in their careers – and business buyers will have to learn the basics almost immediately.
People react very differently to change; some thrive on it, while some prefer stability. The key during a transition is to ensure that everyone feels included in the new regime. As with most strategies in business, the key is managing expectations.
According to theory, most employees will be shocked or angry if they discover that a business they have worked hard for is being sold. Most will expect the worst, causing an immediate drop in morale.
An immediate goal will be to convince your team that, not only is the takeover not a disaster, it could actually lead to a brighter future.
Occupational Psychologist Will Shutz believes that people have three needs during a period of change – the need for control, the need for inclusion, and the need for openness.
Individual interviews and strategies for each of your employees can be an ideal way to satisfy all three needs. It will also help you recognise that not all your team will react to change in quite the same way.
A key to employee happiness is for them to feel that they have a number of options that they could pursue, be it in the short term or long term. You will be able to identify these after an interview.
A one-to-one session during which you present these options, perhaps together with some new objectives, can further help develop your personal relationship with your staff and their sense of being valued. It will also make it clear that their development is at the top of your priorities.
It is also an opportunity for the new owner to communicate his or her goals to the team – satisfying that need for openness, and also allaying any fears the individual might have.
What is Change Management and How Does it Work?
Professor Malcolm Higgs heads up the school of Leadership, Change and Human Resources at Henley Management College, UK, and has spent many years as a consultant in the private sector. He believes there are several other key steps that a business buyer should take.
“The first point is quick communication. If you are buying a business, you need to make it clear why you are buying it, what the vision is and where people will fit.
“People are bound to be unsure. The classic question will always be: what does this mean for me? You need to engage in a helpful way.”
This does not necessarily have to mean producing “mission” and “vision” statements – which can seem a little cheesy to the typical, rather cynical British workforce.
He adds that the skilful manager must quickly get to know his staff, clearly demonstrating that he or she is genuinely interested in their role, their future and their well-being.
“Team playing” might be a cliché in business, but it is important to make the employees feel like they are a “great crowd” and are at home in the workplace.
Other experts suggest implementing staff incentive schemes linked to their new objectives and perhaps introducing new perks along the way. This could be one way to convince employees that you are not about to ransack the firm.
Financial incentives can help, but Higgs adds: “Recent research shows that people look for a sense of purpose and meaning in their work and organisation. It’s not just about money. We need jobs that are challenging, stretching and give us a sense of community.”
Other “hygiene”- type factors are equally important, he adds – the quality of the office environment, for example.
Higgs believes that one route to ensuring your staff believe that you have their interests at heart is to instil a “degree of flexibility at work.”
He adds: “You need to recognise that individuals have different needs, and recognise their need for a work/life balance.”
Of course, retaining staff might not always be the immediate aim. If the business has been bought with a view to cutting costs, downsizing the workforce and bringing it back into profit, then remarkably, the basic concepts are still similar.
Higgs says: “You still need to make sure you communicate clearly and honestly about what is happening, making it clear that you will deal with people fairly. It’s not just about ethics – this will affect the others, the people you want to keep.
“They are much more likely to believe that you want to keep them and want to make the business a success.”