Carrying out your management due diligence, both internal and external should be an essential part of your risk management. Differing values and personality clashes can cause problems in business relationships. If you don’t know about issues beforehand, how can you protect yourself further down the line? If you get it wrong, it could be disastrous.
If you want your business to succeed, you need to employ the best employees. This standard applies to everyone in your organisation, right up to the management level. There needs to be a level of scrutiny in your management team. But also don’t forget about your business partners. Do you know what is going on behind the scenes with your partners?
What is Management Due Diligence?
Management due diligence is the assessment of the senior management team. You can undertake this assessment internally or externally for potential partners. It can help you determine how effective each senior manager will be in meeting company objectives. It can provide valuable insight into joint ventures, mergers and acquisitions, partnerships, and strategic alliances.
The Advantages of Management Due Diligence
Management due diligence can help you assess and understand many different business areas. It can answer some of those questions that might have been unsolvable previously. Here are a few examples:
Finding the Best Employee for the Role
Placing the right employees in the right roles will always help a business. You can take this to a higher level by using management due diligence. Detailed intel can ensure that the right employees receive the proper responsibilities. When managed well, it can increase the chance of a return on investment of that employee by reducing overall risk.
Assessing the Management Team
Management due diligence can help you assess every member of your management team. It can highlight their strengths and weaknesses. It can also help you have a clearer understanding of their contributions to the company. Armed with this intel, you can further understand the ability of each member of the management to achieve common goals.
Problem Solving Issues for Productivity
Management due diligence can help you determine undiscovered dangers that might lead to reduced productivity. This problem could be anything from unacknowledged motives or personal conflict between individuals. For example, this case study from Neotas highlights a toxic workplace environment incident. Forewarned is forearmed, and you can use this information to act before anything happens.
Management Due Diligence Helps Recruitment And Training
It is a valuable tool to double-check candidates for management team positions. It can help a company provide examples of the expected performance for both teams and individuals. This information can make things clearer for employees to work in the same way. Also, it can help determine when somebody at the management level might need further training.
Creating Your Management Due Diligence Plan
You can follow these easy steps to get you started on your due diligence management plan.
- Use an Online Assessment Questionnaire
You can ask the team to fill out an online assessment questionnaire. It should include questions on behaviour and personality. This line of questioning will open up further conversations. There are no correct responses as the information is to discover more about the person’s personality.
- Arrange a Face-To-Face Meeting
Meet each team member in person so that they can talk to you about the team as a whole. Find out how the team member feels about different areas of the company. Ask the team member if the company should improve any areas and why that is the case.
- Create an Analysis and Provide Feedback
Create an analysis for each team member and give feedback to the stakeholders. You can create actionable items from this information. It is also important to provide the investors with an assessment of the strengths and weaknesses of the company.
- Set Up A Support Network
Be open to helping team members after the process. Perhaps there might be areas to update for the recruitment of new employees. Or different parts of the business plan may need to be changed to help the business optimise its success.
Using A Technical Solution To Help You
It is possible to set things up manually, but using an expert technical solution is far easier. People risk is an important area that companies should never ignore. It is as important as commercial and financial risks to a business. Neotas operates a smart AI-driven solution for management due diligence, which interrogates and analyses the Internet, social media and the deep web (open source data) at speed to provide clear risk profiles.
The solution from Neotas focuses on management teams and it can help by looking at the reputational and non-financial risks associated with potential partners. You can find out everything about their background, reputation and network. This vital information could be the difference between the success or failure of your venture.
Planet Compliance asked the Co-Founder of Neotas, Ian Howard, about the main capabilities of their investment due diligence solution.
Ian said, “Supporting traditional due diligence checks with management due diligence helps build a more complete understanding of a target company and the people running it, and enables more informed investment decisions. In a digital era, a data-led approach that considers all risk angles is critical and management due diligence using open source data (found via social media, the surface web and deep web) should contribute to that risk evaluation.
Our advanced technology enables checks to be conducted faster, more cost-effectively and with hyper accuracy. We have uncovered a whole host of risks, including fraudulent activity, corruption, discriminatory behaviour and adverse media, through our AI-driven management due diligence. These risks would not have been flagged through traditional due diligence methods.”
Focus On Your Management Due Diligence
If you don’t have a system already, arrange a meeting with the appropriate people and get started. It is not too late to create a concrete plan and protect yourself. You might discover some urgent areas you need to fix within your company. This proactive approach will ensure you are compliant, and you can rest assured that management due diligence is intact.
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Sally Leslie is the content editor for Planet Compliance and creates B2B content for businesses, entrepreneurs, and startups. She has a PR degree and a background in business development and sales. Sally is passionate about motivation, time management, and the world of financial technology.