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Many succession planning processes fail due to the human factor. Human resources are a significant factor that directly or indirectly influences corporate value; at the same time, the collective attitudes of employees and executives often contribute to the success or failure of the entire process.
As a leading strategic consulting firm for HR, we recommend a comprehensive assessment of HR-related processes, extending well beyond the actual aspects of labor law.
The 360-Degree View of HR Due Diligence
To conduct a comprehensive analysis of existing opportunities and risks, three perspectives should be examined: organizational structure, competency structure, and compensation structure. These three pillars enable a quantitative and qualitative assessment of the associated factors.
Overcoming Powerlessness – HR DD Makes HR, a Key Success Factor, ManageableImage: Handwerksmensch
In technical jargon, these processes are often grouped under the umbrella terms “HR due diligence (DD),” “cultural DD,” “communication DD,” or “psychological DD.”
What is crucial here is not only to create a data-driven metrics matrix but also to enable an assessment of the suitability and willingness to change among key performers—in this context, managers and employees.
A succession or transaction process is a change process par excellence, which, by its very nature, initially causes uncertainty—in a VUCA world that is already volatile, uncertain, complex, and ambiguous. The goal here is not only to identify which knowledge and performance leaders require special attention. Retention bonuses have limited effectiveness in an era where free time has become a precious commodity and people strive for self-fulfillment and meaning in their daily work. Employee retention and employee engagement are the buzzwords of our time, aimed at retaining knowledge within the company or transferring and multiplying it into new areas.
The human factor is a critical success factor—THE critical success factor par excellence. An employee’s willingness to change jobs and high turnover rate pose a risk—it’s not uncommon for an employee to leave on their own. In some cases, this can result in a total loss for a small business.
Active Participation in “New Work” as a Retention Strategy
There is often debate over when managers and employees should be involved in the course of a transaction. The range of possibilities here often extends from “involving them early on” to “presenting them with a fait accompli.” The golden rule in the new world of work is maximum transparency in the leadership process. An open corporate culture, shaped by authentic leaders, leads—at best—to an equally clearly structured communication culture. This goes hand in hand with a scalable communication system that integrates all change processes, and in particular, the occurrence of a transaction scenario.
The game-changer is integrating all stakeholders—leaders and employees alike—into the process in a structured, planned, and strategic manner. In this way, expectations and needs are addressed, concerns and challenges are identified, and an opportunity is actively created: to successfully retain the human factor. More importantly, the goal is to actively involve top performers in the change process and give them the space to make the unthinkable thinkable—acting as multipliers for employees who tend to be among the doubters and skeptics within the corporate culture.
Conclusion and Benefits of an HR Focus
A company’s employees are the drivers of a change process. The added value of an HR focus is clear: placing the human factor—along with all associated HR processes—at the center of the process ensures that opportunities and risks in the change process are quantifiable and transparent. The personal attitudes of the key players are evaluated as a soft factor within the context of corporate culture—a hidden component of considerable importance for the successful progress of the overall process.
Risks such as employee turnover and willingness to leave, loss of motivation accompanied by reduced performance, or increased sick leave rates become manageable and transparent. HR due diligence is a must-have in any transaction—to prevent the transaction from failing due to HR issues.
About the Author
Maren Ulbrich, Dipl. Oec., leads consulting projects for company-specific HR and change processes, primarily in skilled trades businesses, and drives innovation toward digital, self-learning, and adaptable organizations in the VUCA world. In this role, she serves as a consultant, facilitator, and mediator for business succession, as well as a coach, trainer, and keynote speaker on employee engagement and leadership development.
