Strategies for Turnaround CEOs
By Tom Ryan
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
Discussion Questions: What steps must a new
CEO in a turnaround situation make to help assure a smooth transition?
What common mistakes are made?