While new CEOs in turnaround situations need to move quickly and decisively, they shouldn't come off as a "know it all" and need to make friends quickly, according to an article in The Wall Street Journal. John Challenger, president of Challenger Gray & Christmas, stressed the need to "find some people you can trust to really tell you the way things are and give you the lay of the land."
The article offered four suggestions for new CEOs handling the transition:
Conduct a review and consider worst-case scenarios: Thomas Lutz, a senior partner at Boston Consulting Group's consumer and retail practice, told the Journal that new CEOs "must account for every penny of cash flow in today's economy," and personally review monthly cash-flow statements to make sure costs are aligned with revenues. Once the thorough review is completed, action must be taken to cut expenses.
Set an agenda and be decisive: Jim Citrin, senior director at Spencer Stuart and co-author of "You're in Charge, Now What?," recommends new CEOs identify three distinct themes to focus on and organize efforts around for the near future. "A new leader really needs to have some quick wins, as people are looking for some evidence of progress," said Mr. Citrin.
Communicate constantly: Actions and direction must be continually explained to get employees to buy into the turnaround plan. Kimberly Till, who became CEO of Harris Interactive, the market-research firm, last October, told the Journal, "I keep all the employees in the loop through weekly emails, town hall meetings and forums, video clips of big decisions and visits to the offices."
Be aware of personal habits: Taking over a front-row parking spot may be taken the wrong way by rattled employees. But just the way a new CEO engages associates in hallways helps define how employees respond to any turnaround plan. Said Mr. Lutz, "These interactions make up how your employees feel about you."
Discussion Questions: What steps must a new CEO in a turnaround situation make to help assure a smooth transition? What common mistakes are made?