Transition Management

From OrgChart.net

Overview

In the face of the current economic scenario restructuring and reorganizations are increasingly being carried out. A firm may choose to handle the process by itself, but escalating costs and expertise issues make it a mammoth task, where it is best handled by transition managers. Blame it on market volatility, but the job has become greatly challenging in the recent times. It takes the wind out of any possibility of safe predictions and disallows any room for a fair amount of risk-taking.

The successful transition for any firm entails correctly analyzing the risks and understanding the costs. It is imperative to have the complete and best quality data at all times during the process. Equally important is a suite of execution tools including charting software, which is used to build the execution strategy, and which fits the situation in the best possible manner. Astute planning ensures that the transition mangers are in seamless control of transactions, as monitoring risk during the transition is absolutely vital.

A Maze of Data

Transition management as a process requires a lot of analysis, interpretation, foresight, strategizing and alertness to new possibilities and change. The objectives of cost minimization and risk mitigation, without adversely affecting the reputation or performance are primary. There are several aspects that a transition manager has to keep in mind and if related issues are handled deftly, it could mean a smooth and glitch-free process, complete in the shortest possible time. Selection of the appropriate tools in the beginning minimizes the scope of error. For instance, organizational charts provide a comprehensive view of data which could otherwise escape notice. Prior to initiating the process, transition managers have to draw up a review of the existing portfolio legacy and also their target portfolio.

The transition manager can use the portfolio-related information and generate intelligent charts using the charting software, giving involved people a clearer view of a complicated picture, especially where illiquid components are also a part of the portfolio and need to be managed.

Pitfalls to Avoid

There are several pitfalls that need to be looked out for and avoided during the process. Transparency is a huge issue where transitions are concerned, for greater transparency spells greater trust. The costs pre-estimated by the transition managers often times overshoot the reality. It is increasingly being adopted as a regular practice where comprehensive reports are given to the client. Client firms that are at the cutting edge also demand everyday reports of losses avoided, resources used, risks that still need to be handled, etc.

Experts in the area also suggest complete segregation of transition management functions and asset management. Clients are often skeptical about the ability of asset managers, as their perspective on dealing is essentially long term. Transition managers can prove their worthiness by executing the plans in the shortest possible time. It not only indicates a lower cost, but also absence of delays indicates that the client does not have to suffer opportunity costs.

Another observed trend to ensure greater transparency is where transition managing firms are presenting data to analytics companies, where the history of their work, costs, turnaround time etc. would be stored and accessible for reference.

Anticipating the need for, and obtaining timely clearances from regulatory authorities is another area that needs to be handled well. Clearly, rebalancing a portfolio requires clever strategizing combined with sophisticated risk management techniques for efficient transitions.

Post process, a general audit procedure must be carried out by transition managers to ensure that numbers tally. After the transition manager exits, and in case of an audit, if the numbers do not match, the exercise could mean a lot of trouble for the client.