Part 3: The Human Equation – More than an M&A Afterthought
In our third and final installment of our in-depth interview with Greg Netland, we touch on a favorite topic for both Greg and RIX – the power of people. Greg discusses the importance of framing any successful staffing exit within the context of its impact on people. Treating people properly is not just the decent thing to do, it’s also absolutely critical to the success of a deal. In an industry where the barrier to entry is low but turnover is high, a firm’s greatest and primary asset is its people. Therefore, keeping people happy and treating them well cannot be an afterthought. Indeed, dignity and trust must be a key element of your M&A strategy.
RIX: One thing of which you are a passionate proponent is how to treat people during and after a transaction. That often seems to be an afterthought in M&A. Of course, the numbers are important, but it’s the human beings that will make or break the success of a deal. Let’s talk about the human impact of considering an M&A deal.
Greg Netland: Sounds good to me! Of all the time people spend on deals, and it’s a lot of time, they never seem to spend enough time on the people. When you make a deal, so much of what happens depends on building trust. When you work together with people in a company you’re acquiring, my experience has been that it takes at least six months to build trust, Often, leaders make deals and they come in, both guns blazing, thinking everybody is going to love the acquirer and it’s going to be great. They don’t take the time to actually build trust with the key people in the acquired company, which is the key to gaining acceptance to change.
When it comes to building trust, in addition to taking some time, you have to go in with a philosophy, and you have to be explicit with your plans. Is that philosophy keeping the best person for the job? Is that philosophy to confront the reality of synergies, the need to let people in redundant roles go? Are you open to a name change or is that already decided? Regardless of the issue, you need to be up-front about what you intend to do and over what time frame. For the people you want to keep, sit down with them, and have that discussion. For those you can’t keep long-term, spend the time to be open and honest and have those hard conversations where you know somebody won’t have a place at the table. Putting some kind of retention deal to incentivize employees to help you through the transition can then help ensure continuity. If you do all of those things, you can help mitigate the issue of people abandoning ship.
RIX: Changing gears a bit, is there any sort of technology in play right now, and we hear about a lot of them, that you think could actually be transformative to staffing that would have an impact on the M&A trajectory?
GN: It’s a great question, and although there are certainly a lot of innovative technologies being deployed in our industry, I am not sure there is anything today that is going to completely disrupt the industry in a negative way (like the electric bulb did to Gas lights or Uber did to taxis). What I do believe is that there are a lot of innovating technologies that are going to enhance and support the industry as it continues to meet the demands and needs of our customers and consultants. 2 great examples of this are Job Boards and MSP/VMS. When job boards came onto the scene, we thought that was the end of staffing as we knew it. What actually happened is the Job Boards became a powerful and efficient recruiting tool for the industry. Same thing with MSP programs and VMS technology which now have become powerful tools to help manage and control contingent labor spend while providing incredible data and analytics to our largest clients. There are so many cool things happening on the technology front with Mobile Apps and technology enhancing tools like Peoplenet and Fyre. Ultimately, I believe these enhancing technologies will continue to have a positive impact on M&A trajectory and on valuations in our industry.
RIX: Is there anything you’re seeing out there as far as a market trend, that is deeply worrying to you in terms of how the staffing industry globally is evolving, which will have an impact on M&A because it will impact the attractiveness to buyers and sellers?
GN: No. In fact, I remain wildly optimistic about the positive trends for our industry. On top of demographic trends and the projected growth of the skills gap, or industry continues to evolve and grow in positive ways. There is innovation and new technology coming in, There are new ideas and strong growth in Total Workforce Management, and there is a huge opportunity to use data and analytics to enhance our businesses and services. There’s also a lot of attention from corporate America on hiring, training, and retention all of which is going to continue to drive the staffing industry forward.
RIX: So it all comes down to people?
GN: Well, it is always about the combination of people, process, and technology, but in staffing, as of today, it is still about the people.
RIX: We talked about the human impact as far as understanding how to retain talent to make a deal go through effectively, without resultant impact on valuations. But what’s the actual impact on employees? You’ve seen how employees ingest acquisition news firsthand.
GN: After 18 transactions, I feel like I have seen the full gambit of reactions! There are some people who, even though they say they’re good with change, can’t get their arms around it, and they just can’t buy into the new situation. I see other people who jump at it. They look at it as an opportunity. And then everywhere in between. There are so many variables at play during an acquisition and it is especially tough on the people who are getting bought. Add in lack of trust, fear, and uncertainty and you can see why people can get nervous. With that in mind, my best advice for people who are getting acquired is when possible, give it time (6 months) and make sure you’re asking questions. You might be hearing from your friends or others saying, “We got bought and it was horrible.” That can happen, but I have seen countless deals that were wildly successful and have seen countless individuals thrive and grow in the new combined entity. You’re going to hear people tell you about their experiences, but what you need to do is take your time, take all the information in, make your own decisions and write your own story.