The CEO is only one person. He or she can set the strategic direction, sign off on policies and plans, and encourage a professional and productive atmosphere, but significant change is implemented by managers and employees often far removed from the CEO’s corner office. If managers and employees do not embrace proposed change, it will not happen as planned. After defining direction and plans, the challenge is having changes implemented efficiently and productively.
I was hired as CEO of one of Australia’s largest property companies. The company was losing more than $10 million a month and running out of cash. We needed to implement change fast, and I was an outsider – the only American in an Australian company. I knew what needed to be done: reduce operating costs, exit money losing businesses, and implement programs to accelerate revenues from more profitable business lines. But if I ordered such plans to be implemented, there would be no “buy in,” and the plans would not be implemented successfully. Employee morale would decline leading to a loss in productivity at the same time we needed greater productivity.
We started weekly senior management meetings with more frequent committee meetings focused first on defining a mission statement and near term objectives. What did we do well, where did we have competitive advantage, where should we concentrate limited time and resources? Everything was shared with the managers including cash flow forecasts. We developed a mission statement and objectives, and every senior manager took ownership.
We then went to the employees, and I hosted employee-wide, town-hall style meetings. What were our greatest challenges and how did we plan to meet them? Why couldn’t we conduct business as usual? If we implemented changes, what were the prospects for growth and future success? Follow-up meetings were held every month to report on the company’s progress. It helped that we served food and drinks at the meetings, assuring good attendance even from those with initially lesser interest.
We did sell some businesses, we streamlined operations, and we invested in more productive parts of the business. Within a year, the company turned profitable. A confidential employee survey disclosed that prior to the engagement strategy, the company was rated in the lowest 3% of companies surveyed for employee satisfaction. After implementing the engagement strategy, the company was rated in the top 25% of all companies surveyed.
ABOUT THE AUTHOR
Scott MacDonald’s new book, Saving Investa; How an ex-factory worker helped save one of Australia’s iconic companies, will be released worldwide on November 1, 2016. Scott has been CEO or President of several companies and is considered a corporate turnaround expert.