How can business leaders drive success in separation strategies?
McKinsey highlighted strategies for talent, performance, and communication.
Business leaders can ensure the success of both existing and new businesses during separation by developing strong operational models, aligning talent to the right roles, and clearly articulating the purpose behind the change, according to McKinsey.
In the report, McKinsey explained how companies can integrate discussions about talent into their separation plans and use these conversations to reset expectations about operating models, culture, and value creation.
As a first step to executing a separation, companies should create an operating model that serves the dual purpose of strengthening the remaining and new businesses.
This requires leaders to think strategically about the people at the centre of their operating model and organisational culture.
Moreover, McKinsey’s research showed that talent allocation is the second most important sticking point for organisations in a separation, following only transitional service agreements.
Another critical factor is the establishment of a consistent performance management framework during the transition.
During the separation planning process, leaders will need to determine how to adjust the existing performance management system to achieve new business goals.
This will mean defining or redefining the KPIs and financial and nonfinancial incentives to ensure they are aligned with overarching corporate priorities.
Furthermore, leaders may need to focus more on capability building, offering upskilling and professional development opportunities to encourage growth, and conducting regular performance conversations with employees as roles and organisational priorities change.
Throughout the separation process, leaders will also need to consistently communicate why the planned change will benefit all stakeholders, including investors and employees.
Leaders should be clear about the rationale behind the separation and how it will serve the purpose of the new company.
Companies should deliver a “true north” vision that will inspire employees to get behind the change and feel connected to the work required to meet the new objectives.
