How to Vet Leaders for Crisis and Change Management Skills

Terry Gallagher contributed the following article to Manufacturing Business Technology.

To stay competitive in today’s market, industrial and manufacturing companies must constantly respond to rapid change. Change comes in many forms — the positive changes associated with emerging technology, new product developments and company growth — and the more disruptive changes resulting from recalls, accidents or failed product roll-outs. Regardless of the nature of the change at hand, when an organization is looking for a new leader, he or she should be carefully vetted for crisis and change management skills.

I help companies in the industrial and manufacturing industry recruit leaders, and in nearly 90 percent of the searches I conduct the client specifically asks for change management skills. A number of market conditions have combined to make change management and crisis management even more critical than they were a few years ago. As our economy becomes more global, industrial and manufacturing companies aren’t just up against regional or national competitors — they’re competing with companies worldwide. The increasingly competitive market means that companies must relentlessly pursue methods for producing superior products at a better cost. Companies are continuously searching for ways to automate, streamline, innovate and attract customers who are savvier and more educated about their choices than ever before.

Internally, companies are dealing with the impending retirement of baby boomers and a widening manufacturing skills gap, which, according to a 2015 study by Deloitte, could result in 2 million unfilled jobs over the next several decades.

Needless to say, companies need strong leaders with a proven track record of change management in order to propel business growth and retain and recruit top talent. To ensure that prospective executives have the required skills, companies should consider applying the following best practices:

Ask the Right Questions During the Interview.
An open-ended question, like “Can you tell me about your change management skills?” will not provide the insight decision makers need to properly evaluate the candidate. Instead, ask a more pointed, metric-based question. For example: “What is the most significant change management situation that you have led, why was it important to the organization and what were the results in terms of revenue cost saves and enhanced customer service?” These questions leave no space for vague answers of ambiguity. If the candidate can’t fully provide a response, he or she likely does not have the necessary change management skills.

Confirm That the Candidate’s Broader Skill Set Aligns With an Ability to Manage Change.
Managing change or navigating a company through a crisis involves a suite of skills that will come into play long after the initial communication of the situation. The ideal candidate should have experience in new product development, changing product mix, and overall project management skills. The candidate should also be able to effectively hire and retain new talent. For example, if a company is entering a new market or introducing a new product, the new leader will naturally need to hire new talent for the R&D and sales team.

Consider Looking Outside of Your Specific Sector.
When a company is in a transition period, considering a candidate from another sector can seem risky. Bringing in an “outsider” can fuel uncertainty among employees, board members, and shareholders. However, a leader with a different perspective and experience in another industry may be exactly what is required. I recently worked with a company (a major producer of consumer goods in the Northeast) that had a product suite consisting of both low-tech and high-tech products and processes. The company wanted to move away from the low-tech (and low-profit, low-margin) work and focus on their high-tech products. In order to do so, they needed a new leader — one with creativity and experience working with a highly engineered products R&D Department. This type of candidate simply could not be found in their sector. Instead, we brought in a new executive from s a highly engineered custom product manufacturer in the high technology industry, with the right experience and change management skills, and the company is now in the process of changing their product mix.

Frank Davidson Joins Peerless Industrial Group as Director of Operations

We are pleased to announce that Frank Davidson has joined Peerless Industrial Group as of January 4, 2016 as Director of Operations. The successful candidate was identified in 9 days and the search was completed in 73 days. The search was conducted by Terry Gallagher, President of Battalia Winston.

Peerless Industrial Group is a $115 million subsidiary of Kito Corporation, which is the largest producer of chain and wire rope hoists in the world with $600 million in global revenues. As Director of Operations, Mr. Davidson reports directly to the President and oversees a staff of 352 employees.

Mr. Davidson has 23 years of progressively responsible global operational leadership success within Aerospace, Semiconductor, and Industrial Capital Equipment manufacturing environments. He has had responsibility for business administration, financial planning, customer service, global supply chain, and logistics management. Most recently, Mr. Davidson was Senior Operations Director at Despatch Industries, a $42 million global leader in high performance industrial ovens and other thermal products, responsible for integrating post-acquisition cultural changes to achieve increased profitability through LEAN production initiatives, sourcing initiatives and 3rd party integration.

Prior to that, Mr. Davidson was VP North America Operations for a $110 million capital equipment manufacturing division of Illinois Tool Works where he established two Regional Centers of Excellence and improved operating income by 12% in 18 months.

Mr. Davidson earned a Masters degree in Organizational Management from the University of Phoenix and an undergraduate degree in Operations Management at Troy State University. He graduated Magna Cum Laude for both degrees.

Mark Livingston, CPA Joins Harrington Hoists

Battalia Winston is pleased to announce that Mark Livingstong, CPA has joined Harrington Hoists as of January 4, 2016. Terry Gallagher completed the search.

Harrington Hoists, Inc., a $250 million subsidiary of Kito Group Company, which is the largest producer of chain and wire rope hoists in the world with $600 million in revenues is located in Manheim, PA and Corona, CA.

 Mr. Livingston has over 15 years of financial management experience including Big 4 public accounting background. For the first 10 years of his career, Mr. Livingston worked for E&Y and Harsco, a $3 billion global industry company.

Prior to accepting this Corporate Controller role, Mr. Livingston was the VP of Finance / Controller at Cooper-Booth Wholesale, a $500 million wholesale distributor, where he led a team of 7, engaged in collections, A/R, A/P, payroll, G/GL, accounting and reporting services. He also served as Finance Manager at Rentokil North America, a $500 million + pest control service company, for seven years, managing the annual budgets and the monthly forecasts for 200 branches and cost centers.

Mr. Livingston earned an MBA from Pennsylvania State University and an undergraduate degree in Accounting and Economics at Shippensburg University where he graduated Magna Cum Laude. He has an active C.P.A. license, is a Member of American Institute of Certified Public Accountants and a Certified Information Systems Auditor.

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Recruiting Top Talent to Small Cities

by Terry Gallagher, President, Battalia Winston

Private equity firms consider a number of factors when evaluating a company for acquisition, but many overlook a critical challenge: attracting executive-level talent to the company after acquisition.

If PE firms plan to use their portfolio companies as foundations for building bigger, more complex organizations (as is often the case), they’ll need a high-performing team of executives at the helm. Specifically, they’ll need executives with experience building the infrastructure necessary to scale the company’s growth and position the company for sale once it reaches its optimal value.

In many cases, building this type of A-team will require some replacements. During the “pruning period,” PE firms must evaluate the existing management team and determine whether or not they need to upgrade to a more qualified leadership team to achieve their growth goals.

But identifying and recruiting “upgraded” executives can be difficult, especially for companies that aren’t located in metropolitan areas. Recruiting talent to a small, lesser-known city can be difficult on its own, and an environment of uncertainty or instability after the acquisition exacerbates the issue.

I’ve worked with a number of organizations in this exact predicament: recently acquired companies in small towns like Ferndale, Washington or Palmyra, Pennsylvania that need to attract transformational leaders. It’s not impossible, but it does require a clear strategy.

PE firms planning on acquiring companies in smaller cities need to be prepared to handle recruiting challenges. Each company will, of course, have its own unique challenges, but there are several best practices I’ve developed that will set the stage for success:

  1. Determine Recruitment Challenges During Due DiligenceBegin by evaluating the company’s existing talent acquisition practices and talent pool. How were the existing executives recruited? Or did they come from within the company? What percentage of leaders and employees already lived in the city before they joined the company? Has the company had success recruiting from outside the town before? What is the average length of tenure – and is there any relationship between length of tenure and the employees’ point of origin (i.e. Can the company retain employees that it’s recruited from other cities?)? Does the company tend to retain executives (i.e. more experienced employees) but fail to retain newer or younger employees, or vice-versa?Exploring these questions will provide PE firms with a thorough understanding of potential recruiting challenges before they acquire the company, so that they can be fully prepared as soon as the deal is closed.
  2. Identify Talent Needs at the Executive LevelIf the acquisition will result in a merger of two companies, the PE firm will need to quickly evaluate the leadership of the merged companies, retaining the best employees and managing any downsizing in a manner that will minimize the impact on employee morale. More importantly, they’ll need to retain the talent that will not only run the company at the time of the merger, but that will be able to manage the business as it continues on its path of rapid growth. Experience working with mergers/acquisitions within the industry should be a high-priority need. Once gaps are identified, the PE firm will need to evaluate the best way to fill that position, keeping the recruitment challenges they’ve already uncovered in mind. Is an outside hire—potentially one from another city—the right choice, or is an inside hire a better option? Armed with an understanding of the company’s recruiting history, the PE firm should be able to make an educated decision here.
  3. Target the Right Candidates with the Right MessageRecruiting top talent to smaller cities is all about developing the right candidate profile and fully understanding the needs of the candidates in the pipeline. First, it’s important to understand that some candidates will simply not be interested in leaving a bustling metropolitan area for a small city; don’t waste too much time on those candidates. On the other hand, boomerangs—candidates who attended college or grew up in a small town and may want to return to one—are smart targets, as are candidates from mid-sized cities.It’s also important to fully understand any of the candidates’ personal circumstances and family needs that might affect their willingness to relocate—have their children gone off to college recently? Are they burned out from big city living? Do they want to be closer to family on the opposite coast? All of these factors can turn an unlikely candidate into a good fit.

    Once the right candidate profile is identified, the people in communication with the candidates—HR managers, recruiters, headhunters—must be educated on how to sell the value of the city. They should not only tout the value of the city (its attractions, history, high standard of living, etc.) but should also tailor their pitch to each candidate’s needs. For example, an empty-nester looking to leave Manhattan might be particularly interested in the light traffic and walkability of the town while a younger boomerang candidate might be interested in the lively town center or nightlife.

 

PE firms that are acquiring companies in small cities should be prepared for recruiting challenges. But despite the obstacles that come with attracting big-time execs to small-town life, a thoughtful strategy can lead to success.