Why restructures fail
Restructures often fail because corrective action is taken too late and is relatively superficial in scope. In Australian turnaround and restructuring management, financiers often use “hands-off” external advisors to review and monitor a client’s financial position. Performance deterioration often continues because such reviews can lack strategic and operational focus. Management generally has limited if any turnaround skills and has often played a significant role in the demise of the business.
Alternatively, external advisors develop a turnaround strategy but implementation is left to management. Inadequate implementation processes, structure, funding, skills and a realistic timeframes can all impede success. Stakeholders often become uncomfortable with the plan, progress to date, information integrity or timeframes, and support quickly evaporates.
An interim CEO, manager or executive brings credibility and capability to evaluate, formulate and implement the plan, in what is often a compressed timetable. The interim executive’s expertise and “hands-on” approach to restructuring and turnaround management significantly increases the prospect of success.
Why use an interim manager, CEO or CRO for restructuring and turnaround?
There are a variety of reasons why an interim manager, CEO or CRO may be required;
Scope of interim executive engagement
The circumstances and nature of an appointment vary. Generally an interim executive or CRO will evaluate the business and work closely with the Board, CEO, management, financiers and other stakeholders to initiate, implement and lead the turnaround and restructure strategy. In some cases an interim CEO or CRO may replace an ineffective CEO. Aligning the strategy with outcomes sought by stakeholders and integrity around communication of results and progress, are key success factors.
The scope of a restructure also varies and the interim CEO or manager may need to deal with a myriad of issues. These include transition to offshore supply, closure or divestment of unprofitable products/businesses, outsourcing products or services, renegotiating financial arrangements with clients and suppliers, standstill agreements, equity raisings and restructuring business sites and processes.
The interim executive will also develop initiatives to drive revenue growth, reinvesting cost savings into more profitable products or new ventures.
Duration of an Interim CEO or CRO appointment
An interim CEO, manager or CRO can be imbedded alongside the CEO and executive team for three to twelve months whilst pre-agreed financial, structural or performance outcomes are achieved. Larger more complex assignments may require a longer engagement period.
It has taken a considerable time for Australian financiers and Boards to embrace the concept of interim CEO’s, interim managers and CRO’s as part of restructuring and turnaround management. However, these roles are rapidly gaining acceptance and interim executives offer compelling, cost effective advantages over traditional approaches to restructuring and turnaround management. Marriott Interim provides a comprehensive executive interim management solution.