Family Business Restructuring
The owner of a small family business had recently stepped back in to day-to-day management of his firm. The previous general manager’s management style was autocratic which was causing problems with a loyal and long time work force. Sales were flat, productivity had declined and customer service was beginning to suffer. All of these issues contributed to a decline in profitability. The owner was confident that the company was capable of higher sales and significantly better performance but was not sure how to improve operations. John Hehre stepped in as interim COO/General Manager in order to evaluate ongoing operations, make necessary changes to improve operational results, achieve the growth targets desired by the owner and ultimately to find a permanent replacement.
Several issues were immediately apparent. Although the workforce was very loyal and hardworking, the professionalism needed to move the organization forward in several key functions was lacking. Several employees were clearly in the wrong positions. There were a number of persistent performance problems that had been ignored for a long time. Fundamental business processes from scheduling and shop floor control to accounting were not well established. Performance measurement was non-existent. Relations with a key customer were deteriorating. Further complicating the situation were some potential family issues that needed to be addressed immediately.
John replaced the Controller and the Production & Inventory Control manager almost immediately. He quickly implemented simplified financial reports so the management team could more easily understand the performance of each of the individual business units without the bias inherent in the traditional cost accounting system. He began mentoring several managers who showed long term potential for success in their positions. Over time, several managers were reassigned to more appropriate positions. The performance problems were dealt with quietly and effectively. Outside resources were brought in to analyze market opportunities in current and potential business areas. A simple scheduling system was implemented to better manage capacity and delivery performance. The customer issues were mostly resolved by the improvements in scheduling and inventory control. Family issues were handled with a combination of coaching, management development and mentoring. A successful executive search resulted in a replacement that embodied the specific skillset required to continue the forward progress established.
Portfolio Company Turnaround
The president of a portfolio machinery, tooling and supplies company installed immediately after the acquisition by a private equity company failed to provide the necessary leadership and take immediate action on some urgent issues. As a result, vendor relations deteriorated and several key salespeople left the company and went to work for a local competitor. The original CEO removed the president and the board placed John Hehre as CEO. A new president was hired to work primarily on restoring customer relations and rebuilding lost sales. John focused on restoring vendor relations, operations and cash management and maintaining the banking relationship. John worked out new arrangements with key vendors and found additional vendors to replace those lost. Weekly cash management controls were established and strictly adhered to. Relations with remaining employees were restored and additional employees were hired for key functions. After the initial critical issues were resolved, John worked with the president on strengthening sales and developing new market opportunities. Over time it became apparent that the best course of action would be to find a strategic buyer and exit the business. John worked with the board to find, structure, and close a deal with an appropriate buyer.
Consolidation of Administrative Functions
Two closely related businesses with common ownership had separate administrative functions. The structure made sense when the second company was in its startup and initial growth phases but as it matured the redundancy provided an opportunity for consolidation and cost reduction. The concept of consolidating the administrative functions of the two organizations was an attractive idea but the top management of the two companies was concerned about the implementation and potential success. The CEO decided to bring John Hehre in as Chief Administrative Officer to oversee the Accounting, Credit, Purchasing, Human Resources and Information Technology functions of the two organizations, manage the consolidation and ultimately find a permanent replacement.
In addition to the issues presented by the consolidation itself, each of the functions in both companies had serious problems ranging from attitude and performance problems to a lack of functional skills and capabilities. The operating managers in both companies were upset and frustrated by the lack of service provided by these important administrative service organizations.
John immediately took an active role in managing each of the functions. Working with the operational managers in each business, he quickly identified and prioritized the issues that need attention. The IT Manager was replaced within the month with a person who not only understood importance of IT as a service organization but could support the use of IT as an enabler of strategic initiatives. The credit function was outsourced to a company formed by the former credit manager. The remaining HR manager was capable and basically needed support, coaching, and management development. One of the two controllers decided to retire. The second controller, although lacking in some key areas was capable of managing day to day activities. Top management agreed that the permanent replacement would have solid CFO skills that would provide the necessary support for the existing controller. A successful search located an ideal candidate with the requisite skills and capabilities was hired.