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The future of the rewards profession: Let the sleeping beauty rise
No full textThis paper presents and discusses the results of a survey among 126 reward professionals dealing with their profession's current and future state. The study looks at reward managers' current time occupations and competencies. It also takes a future perspective by looking at the importance of the different underlying reward principles for the future. Comparing the current with desired future state, the study provides a gap analysis, showing that employee vitality, the employee reward experience, remote working, recognition, reward communication, and data management are the main domains where skill development is needed. It shows that reward management is entering a new era, an era of more employee centricity
AOM Annual Meeting Proceedings 2022.
No full textIn today’s changing world of work, an increasing group of individuals are actively taking charge of their careers inside or outside of organizations (Ashford et al., 2018; Parker & Collins, 2010). For these individuals, identity is a key resource that provides a structure to see and interpret the business context and to behave in it (Leary and Tangney, 2012; Markus, 1977). This symposium addresses identity for two specific groups that are currently receiving considerable attention in literature: organizational leaders and gig workers
The influence of private equity and venture capital on the post-IPO performance of newly-public acquirers
No full textThis paper examines the influence of private equity (PE) and venture capital (VC) ownership on the post-initial public offering (IPO) performance of newly-public acquirers. Our results show that acquirers with PE- or VC-backing at the time of the IPO perform better long-term than acquirers without such backing. More importantly, while acquirers without financial backing experience negative long-run returns from first-year acquisitions, acquirers with continued PE- and VC-backing perform significantly better when making acquisitions within the first year after going public. However, acquiring firms and investors should be aware that for mergers in the second and third year post-IPO, continued VC ownership has a detrimental long-term impact. In contrast, higher levels of continued PE ownership tend to have a positive relationship with long-run performance
Collective leadership
No full textOrganizations must develop new strategies and forms of leadership to move from hierarchical leadership structures to a more vertical, cooperative leadership approach. So, how can collective leadership help you and your organization build the leadership capabilities today that you will need in the future, and how can this leadership approach be effectively broached within organizations? Although leadership development starts with a focus on the individual, leadership development should ultimately transform the entire organization, enabling them to operate within a collective leadership approach
Brand religions. Is it time to choose yours?
No full textIf you’re taking your first steps into brand management, it can be challenging to even know how to start. And there can be a temptation to try to embrace all approaches to brand strategy – or switch between them as you develop your own brand identity. By thinking of branding as a religion, organisations can find focus externally and internally – which can drive business success. The big question is, which religion will be best for your organisation? This white paper gives organisations the ability to consider clearly which brand religion may work for them, and choose a principal approach that provides focus for the rest of the organisation
Determinants of the discount for lack of marketablity
No full textThe valuation of private companies is a matter of interest for many stakeholders, including valuation professionals, auditors, courts, and tax authorities. The matter is deceptively complex, notably because there is no consensus on the nature, size, and determinants of the so-called discount for lack of marketability (DLOM). The DLOM can be defined as an amount or percentage deducted from the value of an ownership interest to reflect the relative absence of marketability. Indeed, most valuation methods lead to value indications for a marketable interest, and it is generally accepted that investors attach a lower price to assets that are not readily marketable. The DLOM is oftentimes oversimplified as the difference in value between an illiquid (unlisted) stock and an all-else-equal liquid (listed) security. This value gap is important but ill understood. Leading scholars have noted time and time again that fair market value calculations often boil down to taking a marketable value estimate and reducing that amount by a contrived percentage. In practice, DLOMs of 20% to 40% are routinely used for valuing private businesses. The extant literature has proposed various DLOM estimation methods that fall into two broad categories: theoretical and empirical models. All of these models have been challenged, either because they require the input of information that cannot be objectively determined for private companies (theoretical models), or because estimates based on the comparisons between liquid and illiquid valuation subjects are by nature always imperfect and thus prone to discussion (empirical models). Nevertheless, and in the absence of better information, the empirical models, especially, have received lots of attention and the averages presented in these studies are often used in practice without much formal reasoning or economic justification. In order to shed more light on the determinants of the DLOM we have turned to an alternative source of information that can bring additional insights. Specifically, we have turned to court decisions that decide on private company valuations, including the DLOM to be applied. The court typically justifies its decision by referring to how the specific company is situated, and the rights and obligations attached to the valuation subject. This contextual information provides more background than the pure financial information that can be found in traditional data sources. This method which combines elements of qualitative and quantitative analysis has allowed us to demonstrate that the company’s ownership structure, its operations, the transfer restrictions on shares, the exit possibilities for shareholders, and the level of control attached to the valuation subject have a significant impact on the DLOM
A dynamic “predict, then optimize” preventive maintenance approach using operational intervention data
No full textWe investigate whether historical machine failures and maintenance records may be used to derive future machine failure estimates and, in turn, prescribe advancements of scheduled preventive maintenance interventions. We model the problem using a sequential predict, then optimize approach. In our prescriptive optimization model, we use a finite horizon Markov decision process with a variable order Markov chain, in which the chain length varies depending on the time since the last preventive maintenance action was performed. The model therefore captures the dependency of a machine’s failures on both recent failures as well as preventive maintenance actions, via our prediction model. We validate our model using an original equipment manufacturer data set and obtain policies that prescribe when to deviate from the planned periodic maintenance schedule. To improve our predictions for machine failure behavior with limited to no past data, we pool our data set over different machine classes by means of a Poisson generalized linear model. We find that our policies can supplement and improve on those currently applied by 5%, on average
The DNA of a digital financial leader. How to develop a digital transformation strategy for the finance function and what are the main characteristics of a digital finance leader
Get PDFWith the continuous development and adoption of new technologies and trends – such as cloud computing, robotics, blockchain and Artificial Intelligence (AI) – and the availability of vast amounts of data, people’s roles in the finance function are undeniably changing. Furthermore, the COVID-19 pandemic has served as a wake-up call for many finance leaders to start investing in the digitalisation of their department. Indeed, today’s finance leaders have the opportunity to act as a catalyst for reshaping the business strategy and deploying AI technologies to digitally revolutionise the finance function and enhance their value creation and value protection role. The digital journey, however, encompasses more than the mere adoption of several technologies: it involves many challenges that go beyond the obvious technical aspects, such as organisational and cultural difficulties. As the finance function must not lag behind in the digital era, a crucial task awaits finance leaders: they must reinvent themselves and their department in order to successfully embark on this digitalisation journey. We believe our synthesis of how to formulate a digital transformation strategy, along with the 9 must-have characteristics of a true digital finance leader, can equip these leaders to successfully tackle the upcoming challenges of digitalisation! Our Centre for Financial Leadership and Digital Transformation has the ambition to reach out to all finance leaders to help them embark on a successful digital transformation journey and become true digital finance leaders. In our first workshop, the Centre tackled the question: ‘What should the finance leader of the future look like?’ The insights of that workshop were gathered and analysed and resulted in this white paper. A must-read for each finance leader whose aim is to inspire, support, and empower his/her department to embrace the digitalisation of the finance function
The impact of control on the discount for lack of marketability
No full textValuations of private companies can be required for tax purposes, merger and acquisition transactions, divorce settlements, partnership restructurings, etc. Very often, these valuations take place in litigious circumstances. The process for valuing private companies is deceptively complex. This is notably because there is no consensus on the size and determinants of two important valuation discounts that may need to be applied: the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM). We have constructed a unique dataset based on court decisions that decide on a DLOM and identify its determinants. Ultimately, this dataset has allowed us to examine whether the level of control attached to the valuation subject has a significant effect on the DLOM. This paper finds that control, while normally attributed solely to the DLOC, also impacts marketability. This hitherto overlooked determinant has a statistically significant impact of 8% on the DLOM. Contrary to conventional wisdom, control applies not once but twice to a private company’s value: as the primary driver of the DLOC and again as a key determinant of the DLOM