Corporate spaghetti: How do you rationalise and eliminate global complexity?
October 16, 2015
‘Corporate spaghetti’ – the proliferation of legal entities of whatever make up (eg companies, partnerships, trusts) within your corporate structures compounded by complex intercompany matrices.
Companies commonly find themselves in complex structural situations after merger and acquisition (M&A) activity, There is often little time to put the optimum corporate structure in place during a deal and, post deal, the primary focus for the first 100 days+ is on integration of operations and businesses. This leaves the corporate structure very much as an afterthought which is often put on the back burner to be dealt with “later”. The result is a legacy and cumbersome group structure. When this corporate spaghetti is spread around the globe, the question we are typically asked is, ‘How do you even start to rationalise this?’
The answer has to come down to two key points; first, sponsorship at the highest level in your enterprise and second, a robust and experienced Project Management Office (“PMO”) for a legal entity rationalisation (“LER”) project.
If we take it that board sponsorship has been obtained, to address the second point, our experience in running global PMOs for LER projects can be distilled into the following top 10 tips.
1. Location, location, location: location is key for the Project Management Office (PMO) – consider where key team members are situated and recognise and factor in cultural differences and time zone issues. The UK overall has the benefit of GMT, being well placed to manage time zone issues.
2. Resource: Resource is consistently constrained so look at the availability of the team and consider what they already have as business as usual (BAU). Do they have sufficient time to be involved? Identify pinch points and plan accordingly. There is no point in starting a legal entity rationalisation project that cuts across busy periods such as year-end financial reporting.
3. Engagement: You need to create a buzz. The team should understand the vision, the value and how it is to be delivered. If everyone understands their role and impact on others of their role this helps to create engagement. Working cross jurisdictions, whilst challenging, can be interesting and this can be leveraged to generate that buzz.
4. Momentum: A highly effective LER project is one that gains momentum which is achieved through some quick wins. This generates energy, engenders a sense of purpose and reinforces engagement.
5. There’s an app for that: As there are multiple work streams in an LER project, for an effective PMO it is imperative that all people stay connected and long lines of communication are truncated. An easy to use project management tool that provides sufficient detail and real time information on progress against milestones and tasks whilst also giving a snapshot at any one time of progress against deliverables is an important element in an LER project.
6. Flexibility: LER projects have to be dynamic and flex to meet the challenges that can arise. An inflexible process is highly likely to fail.
7. Be creative: Following tram lines of previous projects can mean you don’t make the best use of the team. Consider all options and look at how to cut the LER project into manageable chunks.
8. Sustainability: One aspect that enterprises should take into deeper consideration is the sustainability of the project. Though it may not be the primary factor, taking the time within the PMO to upskill the organisation on LER will cut costs in the long term.
9. Team building: Team building continues to be a strong trend and lifts a project’s effectiveness. Typically global LER projects involve people who don’t regularly work together. Finding ways to motivate, inspire and build camaraderie with colleagues will help to push things through when the going gets tough.
10. Measuring success: So did you create the vision and what value was delivered? Rather than measure it at the end, measure it as you go so people can see the rewards. It builds the incentivisation to see the LER project through.
Many global projects to untangle the corporate spaghetti wither on the vine due to underestimating and/or not sufficiently valuing the PMO role. Recognising that LER projects are not BAU and using specialists who regularly run global projects can be the cheapest solution in the long run. The PMO is the fork in your spag bol that spins your corporate spaghetti into digestible and manageable chunks. You end up with a clean plate and nothing splattered down your shirt i.e. a successful outcome.
If you are interested in discussing further how to tackle your global corporate spaghetti with a specialist PMO whilst not getting indigestion in the process, schedule a meeting here.