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INTERIM MANAGERS AND CRO’s DRIVE PERFORMANCE IMPROVEMENT

Restructuring and turnaround managementTurnarounds and restructures attempted by existing management and advisors with no operational expertise have a high prospect of failure. To address this deficiency, the role of a Chief Restructuring Officer (CRO), interim CEO and interim manager are rapidly gaining acceptance in Australia. All three roles use highly skilled interim executives who have operated at CEO level, and leverage off their financial and operational expertise. Where a more radical restructure and business transformation is necessary to restore the balance sheet and underlying performance, interim CEO’s and managers offer a compelling solution. Marriott Interim provides highly skilled interim CEO’s and managers to undertake complex turnaround and restructure assignments in Australia and offshore.An effective interim CEO, interim manager or CRO is a decisive and experienced CEO capable of taking control and providing strong leadership. Interim CEO’s and CRO’s have been prominent in the U.S. and Europe for many years and are engaged by a Board or financier. Interim executives are commonly “embedded” into a company to formulate and implement a restructure plan, stabilise the business, improve performance and reposition for future growth. The process requires strong business transformation and change management skills to restructure the Balance Sheet and underlying operations.While interim managers and CEO’s in Australia are often employed in a restructuring and turnaround context, they are not restricted to business stress or crisis situations. An interim CEO, interim manager or interim executive may be engaged where a business is not meeting its performance expectations and neither the Board nor existing management can overcome the position within an appropriate timeframe. An interim CEO or interim executive can also undertake operational restructuring for productivity and efficiency gains, manage divestments, guide post-merger integration and provide stability and support during periods of high growth.

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;

  • The scale of potential change is beyond the capability of existing management.
  • Management is unable to develop or implement a credible and cohesive plan.
  • Stakeholders have lost confidence in management and its ability to execute the plan.
  • Executive resources are already stretched and an interim CEO, manager or CRO will enhance management focus.
  • An accelerated timeframe is required.
  • The financial position continues to deteriorate, with no agreed solution in sight.
  • A financier will not renew facilities unless an interim executive is engaged to deal with critical strategic, underperformance or information issues.

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.

Summary

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.