By: Neil Grant
“The right people, at the right time, and in the right place” makes a big difference.
Most of us are aware of the massive losses incurred by BP following the Gulf of Mexico oil spill – running into the billions. And we can probably refer to fabulous entrepreneurs who have generated billions in corporate value. But on a more day-today basis, individual mangers can motivate great levels of performance from employees, and those employees can choose to build value through their commitment to high productivity. The opposite is of course also true, where organizations lack high calibre leadership, don’t invest in the development of their management, and underestimate employee engagement.
Getting the “people” bit of any organization right is essential for immediate and long term gain.
While interim execs have come into their own as a highly skilled professional calling, individuals sometimes apply to the Association without valid credentials.
Just like any other specialty, great professionals tend to produce great results. And unskilled labor could easily, well, mess things up. We’re big believers in Michael Collins’ principle from Good to Great: first get the right people on the bus.
Here are the three problematic mindsets in the marketplace and that we seek to avoid for membership:
More than 250,000 middle market businesses are in trouble. Their survival may depend upon how quickly and how vigorously a course which will generate financial and human capital is pursued. But, usually, by the time this warning is sounded, performance has deteriorated sufficiently to jeopardize lending relationships, customer contracts, credit ratings and employee confidence. An antacid may relieve the symptomatic heartburn but fail to find and treat the cause(s).
As times become critical, managers may react to improve liquidity. But the drain in working capital continues unless a tourniquet is applied to stop the bleeding. Even then, without a valid prescription, the corporate organism continues its natural daily battle with competing forces. The problems can be resolved only through changes in the manner by which the enterprise is managed.
An outside director is a member of the board of directors or advisors who is not part of the executive management team. These professionals are sometimes referred to as independent or non-executive directors. They are not employees of the company and are differentiated from inside directors, who do serve as executive managers and/or corporate officers.
Outside directors are advantageous because they rarely have conflict of interest and they often see the big picture differently than insiders. While corporate governance standards of public companies require a certain number or percentage of outside directors because they are more likely to provide unbiased opinions, private companies are normally left alone — but, I highly recommend that unbiased advice.
In today’s business environment, smart organizations frequently seek outside expertise. Traditionally, companies invited advisors to join their board of directors. There is now, however, more risk to these directors based upon recent legislation (Sarbanes-Oxley). While there is formality (shareholder reporting, responsibility, risk, liability) and more expense (D&O insurance, etc.) to a board of directors, there is a budget friendly alternative in the form of a ‘board of advisors’ who is beholden to management. The main difference is in where the fiduciary duty lies: to the shareholders or to management. Regardless of which vehicle you use, there is great value to be obtained by hiring an outside director.
Although in a globalized economy business practices become increasingly standardized, entering into global business relationships provides unique challenges.
Here’s the definition of one interim executive’s recent employer: The Dutch-owned company with significant U.K. and Belgian investors had U.S. and Canadian leadership and was doing business in Germany.
For global ventures, especially amid mergers and acquisitions, the differences must be minimized. It’s not your culture, it’s not my culture: it’s our culture. To create that new culture, an early focus on communication styles is essential.
Flying through the Twittersphere and elsewhere was a scathing letter from an American executive in the tire industry to French Industry Minister Arnaud Montebourg. French daily Les Echos got hold of a copy and published it in all its glory. In sum, he calls the French lazy.
In the letter, dated Feb. 8, Titan International TWI Chairman Maurice Taylor tells the French minister exactly why his company walked away from buying a plant that Goodyear Tire & Rubber Co. GT is shuttering in northern France. The French government had apparently contacted Titan in a bid to get Taylor to reconsider.
Here’s one translation, compliments of Bloomberg, of Taylor’s communique to that French minister:
“I have visited the factory several times. The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three. I told the French union workers this to their faces. They told me that’s the French way!”
There is a corrosion character in our society. The post World War II ethic of loyalty, honesty and commitment has long disappeared. While the current goal-centered individualism has contributed significantly to our entrepreneurial environment, one that is more creative and interesting, it has resulted in significant social and economic instability. Are loyalty, security and ethics casualties of our times?
The news continues to be replete with examples, including our governing Congress that has lost all sense of civility.
In 1835, Alexis de Tocqueville commented that the love of wealth is the motivation for all Americans. This need to accumulate took on more significance and covered more segments of our society as our economy grew. He also suggested that we are better at spending than other peoples. As a result, our greed seems to have undermined the concern for others’ human condition. It is important to note that greed and ambition are vastly different. Without boundaries, greed often infects beyond an individual to poison the entire body upon which an institution is built.
Veteran interim executive Don Bibeault has more than 30 turnarounds under his belt, ranging from steel mills to financial services companies.
Bibeault knows something about leadership. He’s been doing turnarounds, 9 of which were interim CEO assignments, since the 1970s. He was the first ever recipient of the Turnaround Management Association’s lifetime achievement award.
His best-selling book, Corporate Turnaround, How Managers turn Losers into Winners, has for years been a key text in the study and practice of turnarounds.
A manufacturing renewal is quietly developing in the United States. The US is re-emerging as a best value manufacturing nation and is now very competitive with low labor cost countries.
Verto Partners LLC, a performance improvement firm serving the middle market as advisors to management, as interim management or in Board of Directors roles, has been tracking this “re-birth” and compiling information regarding emerging trends that currently support and will enable US manufacturing growth to accelerate in the coming decade. Any Company considering its own plans for manufacturing and/or sourcing manufactured components outside of the US should reconsider those plans in light of this developing trend. Furthermore, any non-US company considering manufacturing for the American market should consider investing in the United States.
(This article was co-written with Lance Wimmer.)
The regular football season recently ended and we, once again, witnessed the annual parade of head coach beheadings. Whether or not you participate in the debates surrounding these firings, it’s hard not to be fascinated by the high profile nature of these events.
However, away from the spotlight similar unceremonious leadership changes are common. A company’s stock falls and the CEO is ousted, a television station’s news ratings declines and the News Director is let go or in-store sales are flat for a national retail chain and the CMO is released.
So what’s the problem? Shouldn’t poor performers be shown the door?