A joint venture will generally require it to be headed by a senior executive with an entrepreneurial mindset to optimise the partners’ strengths. The joint venture agreement may be signed, but it is the executive’s duty to identify the best way to operate the venture and ensure that the results are achieved.
Recruitment
The joint venture partners may either decide to hire internally, by designating one of their current executives to operate the joint venture, or externally from outside their current companies.
The choice of an executive, whether a CEO, CFO, CTO, or other, is one always wrought with caution. They will be the leaders of the joint venture, and will need to balance the general autonomy of successfully operating the joint venture whilst also addressing the management of the vested interests of the founding partners.
The normal recruitment of senior executives, whether internally or externally recruited, involves reviewing their track record, drive, insight, credentials, and commitment, to ensure the venture’s success. Though a further hurdle may arise around the technicalities of the negotiated joint venture agreement, and how this can be implemented, whilst utilising the partner’s unique strengths. This may be different than reporting to a standard board of directors, being that each partner has their own vested interests and deep knowledge on the subject.
The executives of a joint venture will need to have certain aptitude and soft skills to be able to assess and manage the joint venture partners. For example, it could mean that when certain management decisions are taken, they seek the advice of the party who is more in tune with the mechanics of a particular area.
It needs to be established as to the different levels of autonomy that the joint venture executives are to be entitled to. Considerations such as the senior management needing to go through the partner group every time a decision needs to be taken, or whether they can proceed simply by knowing that they are within their remit.
Selection committee
It is recommended that a selection committee is set-up to assess the proposed senior executive candidates. The selection committee will consist of representatives of the joint venture partners. The senior managers should be recruited on the basis of the direction of the enterprise, by mutual consent of the selection committee.
Operations and culture
Ultimately it is the day-to-day operations that are the factor that will make all the difference for the consortium’s success. Factors such as language of choice, timeliness, means of recording the key performance indicators, and adaptability in a changing market environment, are what will drive the enterprise’s success.
It must also be considered that the joint venture is likely to start developing its own culture once the operations commence. This may be dissimilar from the culture that the partners are used to. For example, it could be a case that the one of the partners has a very structured line of reporting, whilst the new joint venture being that it is smaller in scale will have a very flat / horizontal management structure, that allows for the employees to be more entrepreneurial.
Also, the joint venture needs to consider that should the venture start facing difficulties, what would be the preferred course of action. For example, will the senior management be changed as a joint decision, and will one of the partners step in in the interim period until a replacement is found or possibly indefinitely.
Conclusion
Whilst one may have the best processes and market insight to undertake the operations of a joint venture, it is ultimately by recruiting the right personnel that the joint venture is able to realise that vision. Thus, the joint venture needs to place particular importance in identifying and retaining the person/s with the right aptitudes to ensure that the joint venture’s success is optimised.
Throughout the executive’s tenure one will need to ensure the partnership’s ideals of; trust, alignment, mutual loyalty, and results, are utilised to attain the joint venture’s vision.
Sources:
https://chiefexecutive.net/the-joint-venture-ceo-success-equation/https://medium.com/@water.street/seven-reporting-practices-of-highly-effective-joint-venture-ceos-8b57786f0000
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