The Integrity News
"objective risk management news"
Vol. XV No. 4
July 6, 2006
June 26, 2006
"Private equity firms and investment banks
are realizing that given the high stakes
involved, they need to assess an organization's
people just as they do it's financials before
entering into a merger or acquisition."
"... it's the people that make a company successful."
"In the past you would expect venture capital and
private equity firms to do due diligence on the financial
end, but there wasn't a lot of focus on talent." "But
that is changing." Investors realize that they need to
"assess an organization's talent just as they do the
firm's financials." "Scandals have highlighted the
need for a greater focus on the talent."
"Ten years ago, less than 25% of organizations were
doing talent assessments before making an acquisition
or an investment." "Today that number is up to 75%."
A talent assessment that uncovers something of concern
will probably not stop the deal --- but it might redefine
how the deal is structured.
"Human Resources managers have to be able to speak
in financial terms and provide metrics so that their voice
is heard." It is not enough for an acquirer to merely
evaluate demographics and where the employees are
located, but HR is now expected to furnish data such
as productivity rates.
As an additional example, an acquirer would want to
look at the history of formal workplace complaints to
State and Federal agencies as an indicator of company
A common assessment mistake is to only look at the
top executives. However, that is a poor strategy.
Acquiring organizations and investors "should go down
at least four levels to make sure that they cover all of
the people who interact with clients."
Of course, acquirers and investors meet resistance to
talent assessment because the existing employees are
fearful that they will lose their jobs. However, good
employees are so difficult to find that the evaluators
need to point out that they are really trying to get the
right skills focused on the right positions. Yet it is
true that they are trying to find the skills that they
will need in the "new" organization.
These assessments are usually accomplished using
several modes of information gathering. Single and
group interviews are often supplemented with 360-
degree reviews, personality tests, and background
checks. Because we are experienced in all of these
areas, feel free to call
The Integrity Center, Inc.
at (972) 484-6140
to discuss merger, acquisition, or investment assessments.
Helping you with your Risk Management and HR Automation is what we do.