Part-Time Executives: Making an Enormous Impact in Less than Forty Hours Per Week (Part 1)
The right part-time executive can provide more than full- time results. In this series, we delve into case studies where part-time executives made a strong impact.
This series on part-time executives is an excerpt from our new book The Executive Search where we break down the myths of interim executives.
Part-Time Director of Operations: Operations Can Make or Break Any Company
Jim is a serial entrepreneur who owns several companies; he became concerned that one of his companies in the retail distribution business was not making enough profit to sustain the business. It had grown to $200 million in revenue over a relatively short period of time, and yet no employee could figure out how to fix ongoing operational issues that were plaguing his business. They were too close and couldn’t really see the forest for the trees.
Jim recognized the need for additional resources to help improve the company’s operational performance. Fortunately, he didn’t have to look far for how to improve the situation.
During the previous ten years, Jim had used interim and part- time executives on various occasions to solve issues ranging from human resources challenges to due diligence during acquisitions. He had operational leadership personnel in place but knew they didn’t have all of the tools and skills they needed to identify and close the gap. Rather than hiring someone to come in above or to replace his current team, he engaged a part- time director of operations: Brian.
The first issues to be addressed: reduce increasing costs and increase accountability—two items that are likely on every business owner’s wish list.
Brian quickly got to work with a network- and supply-chain analysis. Working a few days a week, Brian laid out a plan based on the analysis and leveraged the existing team to accomplish a number of goals over the next year. He started by halving the number of warehouses while still meeting two-day shipping commitment to customers. He provided the team and the owner with increased visibility into the operation’s activities through weekly reports on key performance indicators (KPIs) and worked closely with the finance team on the monthly budget versus actual reporting.
Improving reporting was challenging at first due to the arduous nature of obtaining information and closing the books each month. Brian knew it was time for the company to also step up their technology. From prior experiences, he was intimately familiar with enterprise resource planning (ERP) implementations and led the team through a warehouse management system (WMS) selection and execution, increasing efficiency and capturing more timely and accurate performance data.
With all of the newly available data and analysis tools, Brian was then able to implement a system with suppliers to reduce external spend. Freight cost alone was reduced by 80 percent through renegotiations, reduced services charges, and changes to customer freight charges.
During the interim assignment period of about eighteen months, Brian accomplished a 40 percent improvement to Jim’s
troubled organization’s EBITDA while also improving customer wait times at will-call by 75 percent, simultaneously reducing the number of warehouses the company operated, and maintaining a two-day shipping commitment to customers. The implementation of a WMS provided increased efficiency and the ability to capture performance data by employee.
There is a saying that certainly proved true in this situation: “What gets measured gets managed: What gets managed gets improved.”
The right part-time executive can provide more than full- time results. KPIs are often spoken about, but rarely correctly tracked and acted upon. Brian set up weekly KPIs and monthly financial reporting and trained the internal team how to use them.
When Brian completed the assignment, the internal team had acquired both the tools and the cultural mindset to be customer-focused and to strive for continual improvement.
Part-Time CFO: In Case of Death, Know How the Business Will Move On
If ever there were two partners who worked well together, they were the two at the helm of this company, a $100-million consumable goods distributor. However, one day, the partner who had been the CEO, the visionary, and the strategist had a massive heart attack and died.
This was a terrible shock to his partner, Charlie, who had always relied on his partner both professionally and personally. Charlie was distraught. He needed help. To get it, he went to a good friend in the same industry and asked what he should do.
When Charlie stepped into the CEO position to fill the gap, he found a number of financial indicators that had started to decline. He knew enough to identify some of the issues, but not enough to identify the problem, create a plan of action, and execute it. The company had lost not only the captain of the ship but the sole financial leadership of the company as well. With the captain gone, everyone was now lost, without direction.
His friend immediately sent him to Cerius, where he identified a part-time CFO, Sam, because the organization was not as profitable as it should have been and Charlie was not as good with the financials as his partner had been.
Sam came in approximately three to four days per week and not only helped Charlie’s company to become more profitable but also strengthened other weaknesses in the company, especially in his South American subsidiaries.
Over the course of his assignment, Sam provided the regional managers with much-needed insights and information to help them narrow down where declines were coming from. Despite a legacy accounting system, Sam put together a series of reports that were easily kept updated, showing SKU sales and margin analysis by region, client, and item.
Approximately one year after the interim CFO started the part- time assignment, Charlie was approached by someone in the industry who was interested in acquiring his company. He was very excited about the merger, as he knew the owner of the other company well.
When all of the dust settled, Charlie was shocked at the offer he received from the acquiring company. The valuation was significantly higher than he ever could have imagined a year before; he was almost speechless. The transaction went through without a glitch.
Sam was invaluable to this company throughout the process. The $1.5 million savings he brought to the company’s bottom line, as well as making sure every subsidiary was profitable, helped to make this company significantly more valuable to the buyer. The valuation at the end of Sam’s term with the company was three times what it had been when he was first brought in.
When unforeseen circumstances push you to make a serious staffing change, hold off on any knee-jerk decisions or reactions. You don’t have to marry the first suitor who comes along, and nothing is permanent. Even from the worst circumstances, opportunities may be salvaged by level heads and steady hearts. Consider short- term, medium-term, and long-term organizational needs. Finally, with the right expertise prior to looking at possible suitors—even part-time—you have the potential to sell for three times more with a little extra help from the right expertise.