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Demerging a High Street Conglomerate
Here is an action summary of the key points to manage and watch out for when managing the organisational and people aspects of a demerger.
Planning the demerger …
- Consider what management competencies will be needed.
- Recognise key decisions to be taken.
- Identify relevant success criteria (both hard and soft) against which to assess the demerger process as it proceeds separately from the eventual outcome.
- Understand the human resource risks, and how to combat them.
- Understand the relevance of the culture to demerger success.
- Plan to track the demerger in real time to inform the progress of the demerger. Capture unfinished business. Generate useful PR and learning material.
- Understand the dynamics of the process, including the shifting collaboration and competition between component businesses and head office.
- Let managers know what to expect and what to do.
- Know how and when to communicate to the various stakeholders.
- Know how to get value for money from professional advisers.
Looking ahead …
- What past strengths should the new organisation try to hold onto?
- What opportunities does the demerger offer to create a different kind of organisation?
- What head-office ‘parenting style’ will be appropriate for the future business?
- How should the demerger affect management development programmes?
- What administrative practices that existed to serve the pre-demerged organisation will need questioning in the context of the new organisation?
- How will the new organisation avoid recreating the problems that the demerger was intended to solve?
- What will the organisation learn from the way the demerger process is managed?
For more information on best practice, see Demerging Organisations: A Guide to Best Practice, Financial Times Management.