Baker Tilly mailbag: What are post-transaction challenges involving KPIs, talent? 

At Baker Tilly, we occasionally respond to questions that we hear from clients in the form of a public mailbag. In this edition, Baker Tilly principal Jennifer Finger tackles two questions about the first 100 days post-acquisition. 

Q: What KPIs should our organization establish?  

A: It is extremely difficult to pinpoint standard KPIs that all organizations should implement, as KPIs can vary greatly by industry, by geography, by company and even by department. It is not ideal to say, “These are the five KPIs every business needs to measure its people, its performance and its business,” as by generalizing, you may miss key factors a specific business needs to consider that another does not. 

With that in mind, here are a few pointers that organizations can keep in mind when developing KPIs post-acquisition:  

• Be specific and strategic: KPIs must be clear and understandable, and they should be linked directly to the strategic objectives of the organization. Ideally, KPIs should focus on the key drivers of success for the organization, prioritizing the measurable metrics that will have the most significant impact on your business performance. 
• Consider KPIs by viewing each department individually: When we work with an organization on developing KPIs, we walk through each individual department and examine the measures within each team that are going to affect change and impact the business, both now and in the future. However, we also make sure the KPIs are tied to the overall strategic objectives of the organization to ensure all departments are aligned in moving the organization forward.  
• Be ready to adjust on the fly: KPIs can and should evolve over time (particularly for companies that are just coming off an acquisition). Company leaders must continue to monitor changes (to the industry, the company, the competition, the economy, etc.) and adjust their performance indicators, as appropriate.  
• Real time is the real deal: Corporate leaders should implement dashboards that track key metrics in real time. Generally speaking, the days are long gone when you can simply review a monthly balance sheet or an occasional income statement. In order to accurately monitor your business for opportunities, risks and results – and to make the quick adjustments that your business requires – you need to be reviewing KPIs in real time.  Tools like Power BI dashboards are extremely useful. We implement these tools in most organizations, and if you aren’t monitoring in (close to) real time, then you’re already behind. 

Q: What is the impact of the significant turnover and recruitment challenges, especially in leadership roles, following an acquisition? 

A: We are seeing a large amount of turnover these days, ranging from the lower levels of an organization all the way up through CFOs and CEOs. The “people problem” is a major issue in private equity and throughout many industries, as companies – particularly those that were recently purchased or sold – struggle to recruit, reward and retain key talent.  

Here are a few tips to keep in mind: 

• It starts with recruiting: We often see companies that recruit the wrong people, which has a domino effect on the other elements, not to mention a trickle-down impact on the entire business. I believe most have noted that the post-COVID dynamic has created an additional level of complexity as companies struggle with whether to have their employees work from home, or from the office, or a hybrid model – and of course there are differences in how each generation views this dynamic. Whatever your organization’s stance is on virtual work, you need to recruit people who are on board with that strategy. 
• Consider the consequences: In the merger-and-acquisition world, so many transactions result in the replacement of the CFO, VP of finance, or controller – or the entire finance team. Needless to say, these hiring decisions are costly. Not only does the actual search cost a lot in terms of time and money, but it costs even more – and does more harm to the company – when the wrong person is hired in the first place.  Sometimes it makes sense to spend the money to bring in temporary resources and find the right permanent team down the road, rather than rushing to fill the key positions. If you’re just going to have to replace that key position in a few months, you will have lost even more in the long run with the rush to hire.   
• Accentuate the positives: What do employees want? Well, it varies obviously from company to company. But generally, instilling a positive work culture, creating career development opportunities, promoting a healthy work-life balance and offering competitive compensation are steps that an organization can take to help with recruiting and retaining talent. Ultimately, just listening to your employees and prioritizing what they value goes a long way.   
• Communication, communication, communication: Particularly following an acquisition, there can be a lot of uncertainty among current employees and potential prospects. Business leaders should communicate clearly and openly (at least as much as possible) – including updates on company goals, changes and progress – and, just as importantly, must encourage feedback and listen to everyone’s concerns.