Billabong chief Launa Inman has had plenty of experience dealing with takeovers.
The surfwear company she’s led since May has received two offers from private equity in the past year.
They both came as Inman tried to turn around Billabong’s tumbling sales and share price.
The new chief has had to navigate the takeover bids, as well as continue to lead the company’s turnaround. The bids were both eventually withdrawn.
At a business lunch held by The Australian in Melbourne yesterday, Inman said she couldn’t let herself forget her business during the negotiation.
We take a look at the steps Inman outlined to managing staff through the period.
Inman said she made briefing her team a key priority during the period.
“I said to the teams: ‘I will keep you briefed as much as possible, even if it’s to tell you that I can’t tell you anything, but I really will endeavour to do that’.”
Communicating with staff in such situations is important, but very difficult, says Jennifer Frahm of Conversations of Change, while not commenting directly on Inman’s approach.
Of course, there are legal and commercial limits to what you can tell staff in listed companies if you don’t also plan to promptly inform the market.
But there’s another issue, common to all businesses undergoing such change: your staff can begin to believe your influence is limited.
“If there are potentially new owners coming into the company, there’s nothing you can offer in terms of knowing what they will do,” Frahm says. “You run the risk of offering false hope if you communicate too widely or carelessly.”
But you shouldn’t clam up and say nothing at all, she cautions.
“You should communicate frankly. Say there is a bid process under way and say what stage it’s at, bearing in mind that if your company is big or significant enough, everything you say will be reported on elsewhere.
“To not comment on what your staff will hear elsewhere is careless, and shows a lack of respect for your employees,” Frahm says.
Once a sale is under way, communication can become even harder. In most situations, both companies will have to vet any internal communications, which can result in long delays.
Companies have to make sure their staff hear things internally first, says Bridget Beattie, the managing director of Right Management. Commenting on the broad strategy, rather than Inman herself, Beattie says: “They should be able to know what’s coming from the company, what’s true, and what’s not. It’s much better to know what’s going on from those running the organisation.
“In this day and age, thinking that people won’t know or won’t find out is silly. People find stuff out, either online or otherwise. It doesn’t mean everything they hear is true, but it’s better to have the actual story even if what they can be told is limited.”
Beattie says that where possible, front-line managers should have a bit of what she calls “information superiority”.
“Give them a briefing ahead of time, with a little bit more information, so they can respond to questions. Give them a proper information pack if possible.”
The reason for doing this is because staff will invariably ask their immediate managers questions more freely than they would to senior executives. “If a staff member turns to their manager and asks them what they know, and the manager says they only heard about it at the same time as everyone else, you’re already behind,” Beattie says.
“But if the manager says, ‘I don’t know much more than you, but this is what I do know,’ it turns the question into a positive statement, which is a lot more assuring.
All the speculation around a change in ownership can be disruptive to productivity. “It’s hugely distracting as people try and speculate what new owners will be valuing, what the business model will be,” Frahm says.
It’s a similar sentiment to Inman’s yesterday.
“I think the biggest challenge I would say to anyone, and that they really have to be conscious of trying to prevent from happening, is that companies tend to go into inertia,” Inman said.
“They want to, kind of, stop making decisions… It’s trying to ensure you stay as a team and that you manage the private equity organisations but still keep the organisation focused on delivering a result.”
The key way to keep staff engaged goes back to communication, Beattie says.
“It’s not rocket science,” she says. “The most unsettling thing for people in change is not knowing. Once people know something, they can plan and get on with it.”
Myriam Robin is a journalist with LeadingCompany. You can follow her on Twitter at @myriamrobin. This article first appeared on LeadingCompany. Download your free LeadingCompany eBook “10 Key Considerations for Succession and Business Exits”.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
