Achieving Workplace Stability with Interim Leadership

Turnover happens – even at the executive level. Whether the company will be significantly impacted depends on how it reacts and adapts.

It should be no surprise that a lack of leadership can lead to a misalignment of vision, leading to a lack of direction, leading to mediocre performance, and potentially amounting to additional turnover with employees feeling stressed or burnt-out from the disruption. While losing employees comes at a great cost, losing senior-level leaders can cost even more in finances, time, productivity, morale, and more.

The decision to bring on an interim leader can be the key adaptability factor in times of change. The interim’s responsibility is to ensure organizational stability and clarity, that existing employees are valued and understood amid the turbulence, and that company culture continues to thrive.

Circumstances that Call for an Interim Leader

There are many reasons why an interim leader may be the best solution, but it usually boils down to one or more of these major challenges in a company:

  1. Lack of Management Capacity or Expertise
    Unexpected high-level projects or initiatives arise that current management cannot handle, such as M&A work, rebranding, increasing revenues or profits, new product development, and international expansion. Filling the position temporarily with someone capable, energized, and knowledgeable might be the answer to keeping the focus on the core aspects of the business and filling the needs without any heavy training costs;
  2. Management Vacancy
    Losing an executive unexpectedly due to sudden death, illness, or employee resignation/termination without a succession plan in place can be particularly agonizing. In such a situation, an interim leader provides a company’s board or ownership the time it needs to consider the company’s longer-term needs and work to find a permanent solution;
  3. The Company is in Transition
    A need arises with very short notice, so being able to fill an executive-level role with highly skilled, experienced staff is crucial to maintaining the integrity of the business. The interim would then be able to maintain day to day ops, develop a vision for the future (as needed) and/or prepare the company or department for the permanent placement to move in; or
  4. Reorganizing/Unpopular Role
    Filling a position on a trial basis to determine if a newly created position is needed can be a popular reason for considering an interim leader. Additionally, if the company is going through a turnaround or a wind-down, hiring someone to perform this intense and specialized activity may be the best choice.

Added Benefits of an Interim Leader

Wouldn’t it be a huge relief to bring in someone who has both the experience and expertise without having to be trained and without having to go through a lengthy hiring process? There are numerous benefits a company can enjoy as a result of interim leadership such as:

  1. Independent Perspective
    Independent interim leaders don’t have a stake in the organization and can assess it objectively, reassuring stakeholders that results won’t be subject to internal or external political influences. Your interim leader has a fresh set of ideas and a new way of looking at things. Perhaps their work in a related but different industry could be relevant to your organization. They may have a broader knowledge base because they have been working in other places. A strong interim leader will come into your organization with no preconceived ideas, no excuses, and no “that’s not the way we do it” mentality.
  2. Calming Emotions
    Regardless of circumstances, an executive’s departure causes anxiety among staff members, who suddenly find themselves forced to make sense of new ways of working, their new status, and what the future might hold for them. During the transition, there can be a loss of morale, discord, and organizational chaos, and staff members may feel abandoned, disappointed, relieved, or even angry. An interim leader can provide much-needed stability during the transition and quell organizational turbulence.
  3. Trying on a New Style
    Every leader has a particular style that becomes woven into the fabric of an organization’s culture, especially if the executive has had a long tenure. Over time, the staff becomes accustomed to the way the executive works. They create workarounds and may even offer excuses for an executive who is tardy, overly gregarious, conflict-averse, disorganized, or prone to micromanagement. An interim executive can allow the staff to try on a new executive style before the “wedding”.

Our Experience at DWH

DWH can assist your company in determining what your actual challenge or need is and what the outcome of the engagement could include. In addition, we have a pool of seasoned C-level interim executives who know how to create and manage growth strategies, deliver merger and acquisition support, protect against business disruptions, and provide financial leadership and direction.

Virtually all of our interim executives have owned and managed their own businesses, gaining the insight and expertise that comes only from first-hand experience. They can quickly integrate themselves into any organization because they’ve managed the challenges – and the opportunities – many times before. It’s a high-value solution that gives client companies immediate management leadership when they need it most – without a permanent increase in cost or headcount. This provides owners and investors with high-level management while longer-term decisions and solutions can be made.

To learn more about our strategies for Interim Leadership, click here.

 


This post was written by Heather Gardner
hgardner@dwhcorp.com | LinkedIn

All companies experience change.
Plan for it with us.

 

Create a Turnaround
Plan in 4 Steps

No company is without its challenges. In moments of distress, however, the need for serious change can be vital. This is where a turnaround plan can be pivotal. It’s a process of renewal – one that not only identifies key underlying issues within the company but actively implements change at the deepest levels in order to restore health to an organization.

Making decisions that involve change can vary depending on the types of difficulties a company is facing. The turnaround plan should start with the goal of maximizing the value of a company for all stakeholders while transforming it from an underperforming company to a performing company. There are numerous ways to accomplish this which include doing an out-of-court workout, acting as the chief restructuring officer, being a court-appointed receiver, and/or filing for bankruptcy. No matter what option you choose to accomplish your plan, every plan contains these four core steps:

 

1. Identify the underlying issues affecting the company

  • Assemble a team of advisors/advocates for the company. This may include a financial advisor, a CPA, a debtor rights counsel, an appraiser, and/or customers.
  • Assess the Situation. This includes leadership, finance, operations, sales, and marketing. Talk to key stakeholders. Implement a rolling 13-week cash flow model to provide further insights into the company’s financials.
  • Communicate findings with leadership and stakeholders so they can understand, commit, and support the discoveries.

2. Develop a clear, realistic plan that creditors will support

  • Identify ways to raise cash. Options include A/R collections; new sales; vendor payment plans; expense reductions; reduced inventory – sell and don’t replenish; ownership cash infusion; and sale/leaseback of property.
  • Evaluate the company’s lending situation and options such as a forbearance agreement; over formula on the line of credit; and other financing.
  • Stabilize the company – utilize customer communication and relationships; key employee retention plans; maintain employee relationships; communicate with the bank; leadership changes (if appropriate); operational issues addressed – safety, equipment, process improvements, etc.; and financial issues addressed – current financials, inventory costing, etc.
  • Considerations – take into consideration the long-term stress the company has been under; customer frustration; vendor frustration; that COD/Prepays are most likely in place; and an over recognition of the environment in which the company is operating.

3. Validate the plan by ensuring buy-in from stakeholders

  • Stakeholders – revisit who key stakeholders are; present the plan to stakeholders and explain how they will benefit; articulate what the company needs from stakeholders and determine what stakeholders need from the company.
  • Communication – develop a communication rhythm that may include a weekly call with the bank, a weekly review of cash flow, daily/weekly check-in with the leadership team, daily/weekly call with key customers to discuss quality, delivery, and/or funding needs as applicable or daily/weekly call with key vendors.

4. Execute the plan with a sense of urgency

  • Assign responsibility and accountability with due dates
  • Conduct daily/weekly meetings with leadership on plan status
  • Weekly review of rolling 13-week cash flow to drive decisions and actions
  • Measure progress and make adjustments as needed

 

All companies experience performance challenges at some point. If your business finds itself facing some immense challenges, just know that you’re not alone. We work with clients who have questions about what this all means for them, what options and conditions for support or exemptions apply, what implications are for team members, how to mitigate business value erosion, how to manage communications with banks/creditors/vendors/customers, etc. All that to say, we’ve seen businesses make successful turnarounds when they choose to implement a plan.

At DWH, we’re here for you. Feel free to reach out for a conversation on how we can be of assistance as you focus on thriving and not just surviving.

 


This post was written by Heather Gardner
hgardner@dwhcorp.com | LinkedIn

All companies experience change.
Plan for it with us.

 

5 Qualities to Look for When Choosing a Financial Advisor

Over the past 18 months, many businesses have experienced financial stress.  This may be due to COVID-related slow-downs or shut-downs, supply chain disruptions, or even from tremendous growth.  If you have found yourself in this position, you may have been urged to or required to get some help and may have been provided a list of names to call.  But how will you know who to choose? By cost? By personality? What qualities do you look for? It can be difficult to know what you need if you have never been in this situation before and the stakes are high.

 

The 5 Qualities


Core Values

A good financial advisor devises strategies to maximize the value of a company and proactively communicates a clear strategy and its benefits to each stakeholder. This will minimize unnecessary conflicts, which erode value through the consumption of time and money that could otherwise be allocated to value-creating activities. Ask potential advisors how they work with other stakeholders such as vendors, customers, employees, and lenders/investors.  Try to determine the advisor’s experience and likely credibility with each of these stakeholders.  See if their approach aligns with your values.

Experience
Navigating financial challenges involves more than financial models and analysis. A financial advisory firm should possess a breadth of business competencies and experience successfully guiding the business through the specific challenges you are experiencing.  Ask potential advisors about their experience with situations such as your own.  Ask for references.  Also, a financial advisor who has a team with real-world experience allows them to empathize with your challenges as they assist in developing and executing the best path forward.  So, make sure you ask about the experience of the people who will work on your project.

Capacity
Speaking of team, it is important to make sure your advisor has the capacity to support your business in the time frame you need them to. Make sure you clearly articulate what your expectations are and ask them to provide you a scope of work and timeline in writing.  Ask the potential advisor how they would support you if the timeline needed to be accelerated or the scope expanded.  Ask them if any additional resources would be brought in that were not part of the advisory firm’s normal staff.

Ability to Listen and Understand
Your financial advisor’s ability to listen and understand rather than talk over you with a lot of material is important. Their ego should be left at the door. They should be willing to listen to the issues you are facing and then develop a comprehensive plan to address these issues.  Does the financial advisor ask probing questions and listen to your answers?  Does the advisor speak in a language that is easy to understand and relate to?

Seeing the Bigger Picture
You need a financial advisor who can understand and frame the issues within your broader operations and mission. What other issues are there? What sub-issues exist? What are the goals? How will issues impact other stakeholders? Are the recommended solutions an approach that is sensitive to all stakeholders? Don’t win the battle – win the war. Make sure your advisor is asking questions that show they are focused on the overall business success and not just solving the immediate issue.

 

Choosing the right financial advisor can be intimidating and overwhelming but remember the five topics described in this article when you meet with potential advisors.  This can help you select an advisor who will best represent your interests in a way that is aligned with your core values.

 

All leaders experience performance challenges at some point over the life of their business. You are not alone. We can help. At DWH, we’re here for you. Feel free to reach out for a conversation on how we can be of assistance as you focus on thriving and not just surviving.

 


This post was written by Heather Gardner
hgardner@dwhcorp.com | LinkedIn

All companies experience change.
Plan for it with us.

 

 

If you found this topic interesting, our strategic partner, JACO Advisory Group published content you may find relevant as well: 4 Qualities to Look For When Selecting a Financial Advisor to Super Charge Your Business Results