In this episode, we are joined by Susie Japs to discuss human capital and talent management in the M&A arena. Susie Japs is the Managing Director of Wejungo, a consulting firm specializing in talent management & recruiting strategies. For almost a decade Susie has been training small to mid-size businesses on how to hire smart rather than manage tough by connecting their business strategy to their talent needs. Wejungo is one of California's leading consulting firms, specializing in talent strategy and human capital management solutions, partnering with small to mid-size businesses to redefine success and set new standards for a better way to hire and retain great employees. Susie is an expert at guiding small to mid-size companies during unsettling economic times to create strategic people plans in the event they are forced to change the way they do business.
Selling a business is the American dream, the pot of gold at the end of the rainbow, the reward for years of hard work. Successful entrepreneurs make countless sacrifices in hopes that they would someday reap the benefits of their labor and live a new life of vacations, recreation, and prosperity.
You only exit your business once, so you should feel confident passing this milestone. A successful business exit reflects the preparation done beforehand. Failing to plan is planning to fail.
The owner of a privately held company has several alternatives on how to exit their business. In the absence of an exit strategy, events will inexorably dictate the final exit plan. A costly involuntary exit may be caused by death, disability, divorce, disagreement, or distress.
Selling Your Business with David King will help you take control of the sale process and make it positive one.
In this episode, we are joined by Susie Japs to discuss human capital and talent management in the M&A arena. Susie Japs is the Managing Director of Wejungo, a consulting firm specializing in talent management & recruiting strategies. For almost a decade Susie has been training small to mid-size businesses on how to hire smart rather than manage tough by connecting their business strategy to their talent needs. Wejungo is one of California's leading consulting firms, specializing in talent strategy and human capital management solutions, partnering with small to mid-size businesses to redefine success and set new standards for a better way to hire and retain great employees. Susie is an expert at guiding small to mid-size companies during unsettling economic times to create strategic people plans in the event they are forced to change the way they do business.
Selling a business is the American dream, the pot of gold at the end of the rainbow, the reward for years of hard work. Successful entrepreneurs make countless sacrifices in hopes that they would someday reap the benefits of their labor and live a new life of vacations, recreation, and prosperity.
You only exit your business once, so you should feel confident passing this milestone. A successful business exit reflects the preparation done beforehand. Failing to plan is planning to fail.
The owner of a privately held company has several alternatives on how to exit their business. In the absence of an exit strategy, events will inexorably dictate the final exit plan. A costly involuntary exit may be caused by death, disability, divorce, disagreement, or distress.
Selling Your Business with David King will help you take control of the sale process and make it positive one.
Speaker 1:
Welcome back to selling your business with David King. I'm David King, and I'm the author of selling your business begin with the end in mind, it's available on Amazon. Today is April 22nd, 2021. So happy earth day out there today. I have the pleasure to be joined by Susie JS, the managing director of we Jugo. Welcome Susie.
Speaker 2:
Thanks, David. Glad to be here. Yeah,
Speaker 1:
Susie is a talent strategist and she can explain to us what that means and what she does for businesses. So Susie, why don't you just start by telling us a little bit about yourself?
Speaker 2:
Sure. Uh, well, David, uh, a lot of people are always surprised to find out that I grew up in Minnesota and I, I lost my accent years ago, but I'm from Minnesota. I moved to San Diego 14 years ago and I love it here. I definitely made the right decision weather wise and I started my career in the corporate world right out of college. I was really lucky to immediately learn about everything, including sales, marketing operations at a very young age, in, um, a couple different businesses and around, um, my mid twenties, I, I really wanted to be more intentional about my career path. And I decided to conduct informational interviews, which was a new concept back then, but informational interviews, uh, to just learn about many careers. So I reached out to my parents, friends, my neighbors, my friends, parents, and I ended up actually meeting a recruiter and I was really intrigued by her career and the staffing firm that she owned.
Speaker 2:
And from there I thought, wow, this is a really cool job. I never even knew existed. And I decided to take that same informational interview model and reach out to like 20 different recruiters throughout the twin cities. Assuming that, you know, maybe if I was lucky five would say yes to my call. And so I cold called them. I pulled out the yellow pages and guess what? All of them were open to talking with me <laugh> so I ended up actually having interviews with all of them to learn about recruiting. Uh, and I, I thought, gosh, this is my calling. I'm so excited about it. I understand the challenges and what makes you successful from all these interviews? And so I actually then moved into staffing. I was in global staff staffing for a number of years, and it was interesting, David cuz immediately when I, um, was probably like three months in, I realized companies don't know what they're doing when it comes to hiring most of the time, they don't really know what they even need.
Speaker 2:
And so immediately I, I stood out at this like very different recruiter when I asked for more than 30 minutes of their time. And I asked them really thoughtful questions about why this position, what are they looking for? And I realized that that was really unique. Not a lot of recruiters ask a company that to make sure they get clear. Um, and, and honestly I think the system is kind of built so that recruiters are focusing on just making a placement and not really carrying at the end, how it's gonna turn out, cuz they have to move on and fill that next job order. And so companies, um, there's no really benefit for them oftentimes. And so then I created Wegen go. And I think that's kind of led me to today.
Speaker 1:
Super now people sometimes use the term head hunter and I, I don't think that that adequately captures what recruiters do when they're doing their job right in the sport of boxing head hunter is, is not flattering because it's kind of a one dimensional fighter. That's only looking for a shot to the head and doesn't know how to work over the whole body. You know how to work over the whole body. You know what the whole art is to, to working with companies, to fill the, the staff staffing needs that they have. So please tell us more about your work today and what you do for businesses today.
Speaker 2:
Sure. Yeah. So oftentimes, uh, companies do mistaken us for kind of a staffing firm, like the traditional recruiting firms that I started out with long time in my career. But in 2011, I set out to have, uh, a talent strategy consulting firm. And that back then was not a buzzword like it is today. That term barely existed back then, but it's really the idea of going in and showing companies how simply and effectively a bad hiring process can actually turn, um, your company into a company that's really not the great place to work. And if you can change that and you can have a best in class hiring process and recruiting strategy, how that can be a game changer. So that's what really, what we do is we work with companies. Um, some of our core offerings are hiring strategy and process. So we'll go in and we'll audit a company's existing process and approach and we'll help build the best practice one around their company, their culture, it's completely customized to the positions they need to fill.
Speaker 2:
And with a process like that, it really reduces the need to use outside recruiters. So really 80% of your positions, you should never need an outside recruiter if you've got a great process. Um, and then we also do a lot of what I call strategic workforce planning and that's where we go in and assess a company's organizational structure to make sure they have the right positions from their current state today to the future state of what they actually wanna accomplish as a business. Cuz there's oftentimes a huge gap from what a company looks like today and what they actually need to look like in the future, if they want to accomplish the goals they have.
Speaker 1:
Okay. Now, do you have credentials certifications in human resources? Various?
Speaker 2:
Yeah. It's a great question. Yeah, so I don't a lot of my, um, what we actually are, are, um, giving as advice is best practices, improvement techniques. So we've been around for, uh, 10 years at this point and worked across hundreds of different companies and there are processes in different industries. And so a lot of what we teach is not the traditional tactical HR practices that you would get from certifications or from being like, let's say an HR manager in a company, a lot of ours are more strategic and um, business focused, even though it's HR practices that we are teaching, it's all around understanding what the business needs to accomplish as an operation and connecting people in operations together.
Speaker 1:
I see. I see. And what, what are your typical client, uh, businesses like in terms of their size and their industries? Do you have a sweet spot that you serve?
Speaker 2:
Yeah, it's a great question, David. Um, we worked with companies on a national level and we worked with a company as small as a $2 million company. Um, that was, that was pretty small and up to a billion dollar company. Um, but we're, instead of the size, we're actually looking at more of the mindset, the mindset and approach and potential the company has. So if we're looking at a company who's really open with a business leader, who's admitting yeah. You know, we don't know what we're doing, we're not getting the results we want. We're willing to do something different and to put the time and effort that it's gonna take to change our behaviors, change our process. Then that's really a great fit. So we've been fortunate to have worked across really all industries and, um, private and public companies with 80% of our client portfolio being privately held businesses.
Speaker 1:
Okay. Now this is a podcast about business mergers and acquisitions sales of businesses. And there's a variety of different aspects of a deal. The, the financial, the, the accounting, the legal ends of it, but people who have been with companies that have been through mergers or been through exit transactions for the owners can tell you that the whole deal, the whole wheels of the business can come unglued. If your Brady bunch doesn't like each other, or if, if just becomes so dysfunctional through this process, because it's a very distressing, uh, event for people that work for our company, the management may be excited about it and, you know, present it as an, a great opportunity, but people are very anxious about these things coming up. So I wanna focus on those and how you can help businesses that are either planning to have an exit for the owners or planning to merge with another company and, and how you can work with their employees or work with managers. So they can work with their employees to present this and, and retain their people so that they get the full value at our merger. So why don't we just start with that? If you're looking at, say the company that's going to be acquired the target company, what, what sort of issues do you want to talk with their management about?
Speaker 2:
Yeah, so, um, and that happens often, so that we'll get brought in and at the due diligence phase of, you know, what are we really getting if we acquire this company? And what does that look like? If we, if we're we put ourselves together, um, how much do we wanna keep or, or use or whatnot? So the first thing we look at is the leadership. And, um, it's not to say, uh, are those people valuable or not? Of course they're valuable. That's why they've been successful and they might be acquired now, but it's to look at how are those leaders integrated into the business? A lot of times, if let, they've got one or two key leaders, you may find that that business actually relies heavily on them. They're really touching a lot of parts of that business and they're, they're in the weeds. So if that's the case, then we need to start breaking apart.
Speaker 2:
How much are they actually responsible for? How much of the business is dependent on these two or maybe five key individuals? Um, for example, customers do customers buy from the company because of a relationship with one or two single people in the organization, rather than the business, um, what's going to make this transfer or this merger, uh, difficult. Um, also even thinking about, uh, transitioning once, once there is, um, a company that acquires another, who's gonna stay, who's gonna wanna leave. So we're going in and assessing not only the quality of talent, but also how the processes and people are connected to understand, um, essentially to predict the future. How will this play out?
Speaker 1:
Yeah. It's it said Susie, that, uh, post merger that there's never two CFOs at a company, there's gonna be one, right? Yeah. Um, and so, you know, but their whole accounting staff that works with them, that that is probably gonna stay. A lot of the, the people will stay and they'll be reporting to a new CFO. So you've gonna get these people comfortable that they're gonna have a new boss. What what's, what's the best approach for working with them and, and getting the individuals on board that, Hey, you're gonna survive. You're gonna like your job. This is a transition to go through. But, uh, at the light, at the end of the tunnel, things should be better for you.
Speaker 2:
Yeah. Well, it's all, I'm sure you've heard this before. It's all about communication and transparency. Mm-hmm <affirmative> so a lot of our clients, um, will say, how much do we disclose? Should we tell people things? And I, and I say, yeah, the sooner you can actually, uh, allow those people, that team to be part of the conversation, the more they're gonna feel bought into it and not feel like it's a surprise. So it, people get nervous when they don't know what's going to happen. What's what's going on. So I would actually bring, let's say for your example, the county department, I would bring both CFOs together in that conversation, figure out what is our messaging? How do we wanna involve that department, but have both of them, co-lead that conversation and show the group how that transition's going to play out how it's going to be different and better.
Speaker 1:
And, and that's true. And you touched on a great issue, Susie, that, okay, you, you know, you do want to let employees know so you can help, you know, keep them on, uh, you know, explain this to them, them and get them comfortable with the transaction that they're gonna be going through. But you can't announce any, a merger or a sale of a business too early, so that you lose your employees. You lose your customers, your competitors seize the opportunity. You can damage a business by letting it out too early. Okay. Do you work with companies to help them strike that right. Balance and say, now this is when you can let upper lib upper level management know about this deal. And this is when you can let all your employees know, cuz once it gets out, it spreads like wildfire and everybody's gonna know about it.
Speaker 2:
Yeah. And I always tell them it's a lot like PR you wanna control the story. Mm-hmm <affirmative> you don't want it to become this other story that's being told where you didn't control the narrative. So yeah. So we would map out with the, with the company, here are the timing here's who you involved in the conversations and when here is even the scripting of how you're gonna approach it, who in who you're gonna involve sometimes, um, we'll actually go in or have, let's say the other CFO go in as a consultant. That's how they're introduced first into that group as a consultant, just to help kind of get us to that next level, introduce the team, see how the dynamic is, what that individual, without saying that they're going to be, that, you know, the permanent person, because we don't wanna disclose yet that, you know, there's gonna be a deal.
Speaker 1:
So you work with both mergers where two companies come together, a business combination and business sales say smaller businesses where they may just be one or two owners, a mom and pop business, and they're gonna sell it to a new owner. You handle both of those types of situations,
Speaker 2:
Correct? Correct. And actually over the last, um, couple months, or I'd say the last six months, um, so typically we're doing due diligence for, uh, a buyer, um, where we're gonna, we're gonna go in and help assess so they know what they're getting. Um, but actually in the last six months we've been asked to come in on the other side too, to say, Hey, can we know like what should we be, um, planning for and how should we be able to present honestly, and truly what we are offering so that our business is valuable, um, from the seller side as well. So there's a lot of work on both sides. Um, and the process is actually very similar on how to get, you know, the right data to, to show the story about your business or what you're buying.
Speaker 1:
Okay. That makes great sense because if you're working on kind of the exit strategy, the sale of a business, it's probably pretty hard to convince the seller, to invest a whole lot into telling their employees something they don't want to tell them, but the buyer sure is heck better have a plan for how they're gonna keep this. Or, you know, this flock around after the deal is done and continue to get the most out of them, decide who they want to keep and, and who, who should probably go. Does that make sense that you're working more with the buyers?
Speaker 2:
Well, absolutely. I mean, we're working with both, so we actually have a, um, a company they're 8 million, so they're not huge, but 8 million up in Santa a and they, the owner is going to sell, like that's a decision he's already made, but he actually did have us go in, do a workforce assessment, um, and really lay in a really nice report. This is my business. These are my key people. Here's where their strengths are. Here's the weaknesses here. If you remove me what you would need to build up to replace someone like me in the organization, here's the value, here's the market opportunity, et cetera. And we built up this really nice report that he's now able to use with perspective buyers, where they're like, wow, we've never seen this. We've never seen somebody be so open so that we can really have a partnership of how we can be successful to buy your business.
Speaker 1:
I guess you're dealing with a different range of issues. If, if you've just got, uh, if you've got a merger, say some form of business combination, and then the employees are gonna have to deal with a number of different issues. One the, the changing culture of the business, uh, who they may report to ultimately their benefits and people are gonna, Hey, you know, I want the people to go to the same doctor and the same amount of vacation. And they're, they're probably pretty anxious about, you know, all of the other perks of their job are gonna remain the same. You have to smooth over a lot of that.
Speaker 2:
I, I think that the thing that I've noticed stresses employs out the most when you're looking at a merger is how does, how does my job change? How are my responsibilities? Is it, am I doing my same job? Am I sharing my job? Is there somebody else with my job, will my job completely change? That's actually the thing that they, uh, are concerned most with usually immediately. So the more you can, you can be transparent and share that or help kind of develop that, that roadmap of here's what your role will look like. And here's the transition and how they correlate, um, really helps from the retention standpoint.
Speaker 1:
It, it must be quite in an art and I trust that you can do it. And probably a lot of people couldn't so see that you're, you're trying to give people a sense of job security. Don't worry. You're not gonna be let go tomorrow. But some of those people probably will. You don't wanna, preannounce, who's staying and who's going, but you want people to feel a general sense of job security for sure. Is, is it true that there's a kind of an art to what you're doing there,
Speaker 2:
There is. And I mean, if you've already identify people that you, you really do need for the short term to make it a successful, um, transaction or transition together, but that, you know, in like a year they're, they're probably not going to be needed. My recommendation always is to develop a, a retention plan, a short term retention plan, be transparent with them, get, put some incentive behind it, so that they're all in and they're helpful, but also be respectful to them if you know, really there's an end date to it so that you can help them transition to their next opportunity.
Speaker 1:
Do you help people put together severance packages and plans like that to,
Speaker 2:
Yeah. So we'll help them think that out and develop that. Um, we, we don't offer any like post, um, like help for coaching or things like that. There's a lot of organizations out there who will help coach their employees on how to go job hunt, how to put a resume, to get all of those as our great outplacement services. We don't do that, but we will help the company, um, develop the right retention plan and how to communicate properly and map it out. So the employee is confident that they're gonna be taken care of, but also is gonna put in the effort that the company needs in the short term.
Speaker 1:
How, how much time do you need to do this properly? If you're, you know, brought in at the last minute, I'm sure there's not a whole heck of a lot. You can do, but if you do you need three years, do you need a year? Do you need six months?
Speaker 2:
Yeah, it really depends on what that looks like. So for example, we had, um, a client that was in the, um, was in the hospitality, uh, sector, and they were gonna acquire two other properties, but they were gonna keep the name. They were gonna keep the branding. They were gonna keep pretty much everything. They just wanted to own it. And it, and, um, the only thing that was different was the back office, like admin, accounting, you know, it, all of that was gonna go through their corporate as support. So that one wasn't as difficult because they really wanted to truly keep everything the same. That's why they were buying. It is just to expand their footprint. But if you have an organization that's truly wanting to merge together, you're gonna rebrand. You're gonna now have people have different identities culturally with the company. Then I would say, at least two years is really the, the time you want to be thoughtful and do it right. And execute it. But to your point, many times we get brought in with a much shorter time window. Mm-hmm
Speaker 1:
<affirmative> do you coordinate your efforts with, uh, say employment attorneys or any other professional advisors?
Speaker 2:
Yeah, so the, the professional advisors that help most in our engagements that we'll bring in is we will bring in, um, attorneys, CPAs, um, tax attorneys will also bring in sometimes executive coaches because there may be some things that, you know, the, the key leaders when they, they haven't really thought through personally how that's gonna actually affect their life or their transition, because they know that they're gonna help with the merger, but they're not gonna be staying long term mm-hmm <affirmative>. So there there's lots of pieces. Um, also bringing together two management teams, if you're gonna merge them together, there's some things you wanna flush out. So there's really good business coaches and executive coaches that do that. Those are probably the three key ones though, as the CPA's, um, you know, business transaction attorneys, just to make sure everything's being well thought out, because a lot of times we actually get brought in pretty early on, um, because we're known as HR strategist. So they're bringing us in from the strategic planning piece. They haven't necessarily, um, gotten too far into the deal.
Speaker 1:
Well, Susie, I always emphasize, and I, part of the title of my book that you begin with the end in mind. So when people are running a business from day to day and it's in advance of when they're gonna bring you on to do this project, but what sorts of things would you recommend that they do to make this be as painless as possible when they do after prepare their people when the, for this sort of a transition?
Speaker 2:
Yeah. So, um, I think, you know, I, I'm probably sounding like a broken record, but we always look at the business and the operations first and then the people. So I think one thing that companies can do to set them up for success is when they're growing their teams or when they're building, or when they're looking at the organization from a value perspective, it's about the positions you have not the people meaning figure out the right positions that you need to execute your business well. And then you say, do we have the right people? And if not, then go hire those right people or make sure they're in there. So many companies, when they're looking at their business, they actually create positions around the people they have. And that can get a little bit dangerous when you do that as a business, because that will hinder really the success you need cuz you're then not gonna always have the right people, you'll have loyal people and good people, but not the right people.
Speaker 2:
Um, and the other one is really understanding what makes your business valuable. And what I mean by that is, um, you know, we had a client, I think it was about two years ago, a manufacturer, they had grown their revenues by double digits for several years in a row. Um, they, they had a huge increase, but when we looked really closely with them, it was coming from a single customer. And then we looked even closer of how that business came in. It was through one particular salesperson. This salesperson was a very difficult personality. They pretty much kept them because they knew how important that that client was. And that relationship was with that, um, person. So we said, okay, if we know that you want to, um, be acquired, cuz this is actually a company that wanted to be acquired and wanted to be seen as attractive for that. They said, okay, for the next two years, how do we build out differently? So we are not depending on this one customer and this one sales person. And we had to kind of completely create a new organizational structure and a sales plan with them, which again is connected back to the people part. So that over the next two years they could completely change their model. So they weren't dependent again on just a couple factors.
Speaker 1:
Got it, got it. And, and that, that kind of plays into my next question, but what, what, what are the most common mistakes that can be detrimental and, and even frustrate the ability to close a deal altogether that you see as far as the, uh, the human capital?
Speaker 2:
Yeah. So I think for that piece, the, the biggest mistake is that they don't, uh, companies don't always realize how important, uh, having things documented is. And when I say documented, I mean, even the jobs you have, because again, people are replaceable and also people are human beings. So things happen to us, right? Maybe you have to move because your parents, um, passed away and you have to take care of a family member. There's so many things that could happen. And I think a lot of companies depend on some certain key people without focusing on the positions they have and actually while documenting it. So when there is a merger or there's an exit or some type of transaction that whoever is, is taking over or, or merging in together can easily replace people. So having those positions well documented, having great performance management, um, format around that. So you know how to manage accountability, how to manage performance. What does good performance look like? A lot of times we've worked with companies that will go in, they'll acquire a business and then they'll say, well, I don't really know, like if this person's good or not, I, I can't tell because there's no measurements, there's nothing that's been tracked. There's nothing documented.
Speaker 1:
I see. I see. Well, Susie, I want to have you back on again. And this, this is crucial for people to know because business owners will tell you, senior management knows if they've been through this sort of a merger before that. Sure. There's the finance ends of it. And you look and okay, we've got synergies here and we can, you know, expand our market footprint. And, you know, our, our, our, our businesses will align nicely. But if the people don't merge, if the culture of the businesses don't merge and the, and, and the human capital you'll lose it, a merger will fail a, a business transition will fail. And, you know, these are the issues that make, make, or break a successful transition for a business owner.
Speaker 2:
For sure. Yeah. And I, and I think companies, um, again, look at when you're, when you're looking at a transaction, look at what are you actually buying? Cuz if you think you're buying specific people, you're not because they can leave anytime they can, something can happen to them anytime. So you, what are you really buying when it comes to the people? And that should be clear, defined driving lanes, um, the positions, right. Well defined. And I don't mean just like a traditional job description. We at, we jungle have what we call talent profiles. And these are like eight page documents that might sound overwhelming when I say eight pages, but it's literally to the granular level of what does someone have to do to be successful? What does that look like in the position? And it's an internal document that then used for the entire life cycle of the employee, like how you hire them and recruit them to interviewing, hiring, and then even onboarding and performance management. But imagine if you have that for all of your positions, how much better off you are when you do have, uh, uh, a merger or you acquire or you are being acquired
Speaker 1:
Well, everyone listening knows that if you have Susie in your corner, your talent management strategies will be tight. They will be pulled together and they will make for the success of your business. So I really appreciate your time and I will have you back on if you've got, got more time to share with us about mergers. So everyone, please subscribe to this podcast, selling your business with David King, please like this episode and like others, uh, enjoy the rest of your earth day and come back and see us again on selling your business with David King.