A company’s CEO is like the captain of a ship; both are ultimately responsible for the safety of what they are in charge of. If things aren’t going well and the business/ship is sinking, it’s the leader’s responsibility to take decisive action to right things as soon as possible.
Often, it’s the CEO who invites the change manager’s participation. He or she realizes they need sound advice from an unbiased and objective third party, welcomes recommendations made to save the company, and appreciates a chief restructuring officer’s willingness to “sell” tough decisions to the staff. These recommendations are sometimes unpopular with employees who’ll be affected, and the CEO needs an independent expert who is able to convince staff the decisive and potentially unpleasant actions are necessary and immediate. Change isn’t easy, but having an outside consultant on board gives the CEO the support needed to ensure decisions are carried out in a timely and appropriate manner.
Sometimes the restructuring assignment is for an owner or investor who isn’t involved in day-to-day operations, so one of the tasks we undertake is to evaluate the competency of the management team to handle urgent issues. Occasionally, events are beyond the control of any manager, no matter how competent, but other times it’s just a resistance to change that causes problems and we work internally to make sure management understands the situation and corrections that need to be made. There are times, however, when one or more members of the management team don’t have the skill set necessary to respond to the changing environment and we’re asked to recruit new leadership.
How these situations are overseen is different in each case, but the task is much easier if the CEO is the one that initiates change, embraces the hard decisions, works to get the staff onboard, and makes sure recommendations are implemented.
On one assignment, the CEO, a brilliant strategist and great with customer relations, had difficulty implementing new mandates. We brought in a highly-skilled COO, who worked well with the CEO, and the company stemmed losses quickly. Next, we secured development capital to fund growth, enabling the company to become the fastest-growing in its industry.
In another situation, the generational succession plan wasn’t working because the son of the founder preferred engineering to management. Bringing in a competent CEO allowed the founder’s son to become chief engineering officer, where he happily remains to this day.
In one instance, the CEO dealt with subordinates in a very harsh manner, causing most of the competent employees to leave for better working conditions. This was a situation where the CEO had to be replaced in order for the company to move forward.
That, however, is the exception. In most cases, we find a way to work with the existing management team who, after all, know the company and industry better than we do. They just haven’t had experience dealing with circumstances that require change management and it’s our role to help them find the way forward.
That’s what effective restructuring managers do.
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