Human Capital at the heart of company transformations
In the style of Jean Gabin who explained that a good film is first of all a good story, then a good story and finally, a good story, a financial investor could claim that the success of a private equity transaction is first about good management, then good management and, above all, good management. Human capital really is a key element in LBO transactions, perhaps even more when addressing SMEs.
In a world characterised by accelerated change and increasing competition, the ability of investment funds to support management teams at crucial moments in their companies’ lives is becoming a major issue: founder succession, internationalisation, integration of an acquisition, digitalisation etc. are both human and managerial challenges to be addressed by the company but also the fund, bearing in mind the potential impacts on the valuation of its investment.
To deal with this issue in our spring edition, we invited two experts in corporate human capital: Martial Papineau, Partner at Dirigeants & Investisseurs [D&I], which specialises in providing operational support to companies in exceptional situations, and Barnaby Noble, Partner at Russell Reynolds [RR], a firm of experts in c[D&I]orporate leadership issues, particularly in t[RR]he context of LBOs. Happy reading! The Sparring Capital team
Good reading!
The Sparring Capital Team
Interview of Martial Papineau and Barnaby Noble
Martial Papineau, Dirigeants & Investisseurs
Barnaby Noble, Russel Reynolds
Martial Papineau (Dirigeants & Investisseurs)
Mr Papineau, you regularly work side by side with the management teams of companies that find themselves in exceptional situations. Dirigeants & Investisseurs is celebrating its 30th anniversary and has carried out more than 650 assignments of this type.
In your experience, what are the key conditions for the successful implementation of a support project?
-[D&I] [D&I] – The first condition for success has to do with formally defining the plan, the issues, the stakeholders and their scope of action and the target schedule. This might seem obvious but, in general, corporate management is devoted, first and foremost, to setting targets. By doing this, the management far too often finds itself ignoring the means required to properly implement the plan as well as the inevitable impact that this will have on the company’s day-to-day operations.
Another thing to pay attention to: involving middle management and, more generally, the stakeholders most affected by the project. Individual and joint adoption of the action plan is the pre-requisite for success since personal commitment is synonymous with having clear objectives and taking on challenges, viewing monitoring and control in a positive light, engaging in more natural internal communication, etc.
Martial Papineau underlines the importance of identifying the stakeholders that play a key role in the success of the development plan and ensuring that these stakeholders are aligned with the plan. What tools has Russell Reynolds developed to help management teams operate at their most effective?
[RR]In an increasingly complex world, one in which the decision-making processes are speeding up, the ability of a management team – either as a whole or at a personal level – to manage problems that are sometimes unclear and contradictory is a deciding factor. The success of individuals and teams is determined by all their personality traits, i.e. comfort zones, “derailment” factors and values.
Our approach consists of measuring the leadership span of each leadership profile, that is to say a person’s ability to incorporate seemingly contradictory behaviours into their management style. For example, executives who are particularly effective in the field of strategic direction know how to be both disruptive and pragmatic at the same time, sometimes even in the same meeting. They will push their teams to dream big and overcome all obstacles while at the same time assuring them that their ideas can be implemented.
What’s most interesting is when the tool is used by several executives in the same team because this allows managerial synergies to develop. This is a tool that is particularly well-suited to projects aimed at improving the effectiveness of the management team. It is also a very powerful tool in the context of mergers or company integration when it comes to identifying the team’s collective and individual conditions for success.
How are these tools used?
[RR] – They’re designed to help executives succeed. A lot of companies have a tendency to satisfy themselves with reading a report on the leadership potential of a team or individual. But in reality, the real interest and the real usefulness of these tools lie in the discussions and decisions that come about as a result of them in terms of targeted, measurable development actions, which are inextricably linked to the success of the business plan.
How does that play out in real terms?
[RR] – For the participants, the online part of the test takes around 45 minutes. It is then followed by a two-hour interview with our specialists. The last step is a feedback stage that can span one or more sessions with each participant, lasting an hour or two each. Roughly speaking, a project of this nature will typically take place over three to four weeks for a management team of 10 people, depending on team members’ schedules. The results are summed up in the form of a collective report and individual reports.