Interim Executives: Filling Critical Gaps When It’s Most Necessary (Part 2)
Lessons learnt from companies that brought in interim executives as experts rather than risking the business’s future.
For part 1 of the series on interim executives filling critical gaps, please click here.
Interim VP of Sales: Never Go a Day Without Sales Leadership, Let Alone Months
It is exciting to be brought into a new CEO role for a portfolio company recently purchased by a couple of private equity firms, but the excitement can fade quickly with declining sales and no viable prospects to replace the open senior VP of sales position.
With over 450 retail locations distributed over a large regional geography, this company was struggling to drive sales. Staff at branch locations were selling a financial product. There was nothing customers could touch or feel, so the level of training needed went beyond that which would normally be anticipated. After trying to cover the open position by conducting a search for several months, the CEO decided to bring in an interim sales executive. The CEO and the rest of the leadership team simply couldn’t continue to cover the vacancy, particularly with declining sales.
Focusing on what needed to be accomplished in the next year, the CEO worked with the VP of marketing to select the best executive for the interim role from a highly qualified shortlist. After interviewing the top two executives, they agreed on Don, an executive with a strong sales turnaround background and retail industry experience. Although his experience was in consumer retail, Don had no prior experience with financial products.
It didn’t take Don long to close the knowledge gap; then he was off and running. Over the next few months, he spent most of his time traveling, visiting locations, speaking with teams, and identifying some quick wins. He was laying the groundwork for both necessary ground-level changes and also for how to implement them. With hundreds of retail locations spread over a large geography, bringing everyone into a single location for training was not an option.
Once Don had the background information, and the rest of the leadership team had bought in on the plan, he started restructuring retail location staffing models. Part of that involved a store-in-a-box concept that helped streamline operations, improving store-to-store consistency and training. He was then able to implement a defined selling process and a customer retention program. Next, he redefined the sales compensation structure and made store-level performance a priority.
Less than one year later, the company had realized a 20 percent increase in its year-over-year revenue run rate, with a twenty- four-point improved hit rate for online sales productivity and $3.3 million in annualized payroll savings. This was primarily achieved through restructuring the sales team. The prior sales team had been comprised of “farmers,” waiting for business to walk in the door or for existing customers to automatically renew. As attrition occurred, Don replaced the exiting sales personnel with “hunters.” Since the hunters were able to bring in more business, fewer sales personnel were needed to produce more sales which in turn also reduced the total number of sales personnel and total payroll.
Finally, Don helped identify goals for a full-time sales leader to aid in the recruiting process and helped on-board his replacement.
Interim Executives Lesson Learned
When there’s a hole in an organization’s leadership, the most likely outcome is those being led will fall into it. With the availability of interim executives, there is no longer a need to risk this happening. Gaps can only be covered for so long. Despite wanting to wait until they found the right VP of sales, the CEO had a great HR leader who brought in an out-of-the-box solution to immediately address their biggest problem: declining sales. Acting sooner rather than later allowed the company the breathing room they needed to create appropriate infrastructure, then hand the reins to the right long-term executive for ongoing leadership.
Interim COO/CRO: When the Best Bet Is to Exit as Gracefully as Possible
We got the phone call on a Friday morning. An interim COO was needed. Oh, and by the way—an interim COO was needed Monday morning.
It was Friday afternoon. All hands were on deck.
After a busy weekend of interviews, Mark was selected as the interim COO and started first thing Monday morning.
We have a saying at Cerius: “If it were easy and simple, clients wouldn’t need us.” There was certainly nothing easy or simple about this assignment. The CEO was facing many challenges, including a mandate by his client that would significantly reduce his business over the next couple of years and mounting challenges attracting new customers. The business was running at a significant loss and had lost its direction in general. Last, but not least, there were pending legal issues to be sorted out.
A few weeks after starting the assignment, the position transitioned from interim chief operating officer to interim chief restructuring officer. It had become rapidly apparent to Mark the company was going to need to make significant adjustments. Mark immediately put into place measures to reduce and prioritize costs to enable a restructuring of the business. He evaluated all options and provided a set of recommendations, with which the owner and CEO agreed.
In short, they eventually would seek and effectuate a sale of the company or its assets.
Mark interviewed and selected an investment banking firm. He identified, developed, and negotiated the sale of the company’s intellectual property (IP) to its largest client and transitioned the workforce to one of its largest competitors. Mark then guided the company through the bankruptcy process with the remaining assets. Mark was also instrumental with in-house counsel, negotiating a settlement and resolution of remaining legal issues.
In the end, the owner was able to exit with a multiple of revenue greater than one—an outstanding result, considering the condition of the organization when Mark walked in the door.
For Mark, it was just another walk in the park. For the exiting owner, the employees who retained their jobs under new ownership, and everyone else involved, it was life-changing.
When it seems like there is no positive way out of a cascade of operational problems, an interim executive has the emotional distance and the business acumen to assess the situation and make dispassionate, objective recommendations that create the greatest benefit for all parties. Although exit isn’t always a planned event, a chief restructuring officer can transform even dire situations into an opportunity for a great exit.