Managing a turn around: Keeping staff, customers and the Board on the bus.

Managing low staff morale and market dissatisfaction whilst meeting the Board’s business turn around expectations

XYZ Labs is one of 3 major pathology players in Australia.  The organisation is owned by a private equity company, created by the amalgamation of 3 companies of various sizes in 2017. The market segmentation of the new company ranges from non-complex, high volume primary care pathology to complex hospital pathology, including a large focus on histopathology and oncology. Very little was done to integrate the cultures of the 3 companies at the time of the amalgamation, with many staff still identifying themselves as an employee of one of the 3.  Despite cultural challenges and a disconnect between services, the organisation was holding its own in the market.  Six months later (October 2017) a decision was made to make 4 significant changes to the organisation within 3 months including:

  • Transition to a new Clinical Information System
  • Implementation of automation in the main laboratory
  • Move of data entry services from WA to Malaysia
  • Roll out of staff redundancies

The changes lacked local leadership, were made with very little regard to the WA market and without staff consultation and project management discipline.  The negative impact on the performance of the organisation (turn around times and accuracy of reporting), its brand and reputation and the morale of staff is significant.

Commencing as the new CEO, in February 2018, with a clear mandate to turn the business around, my focus for the first 90 days has been to stabilise the business and rebuild trust with:

  • Our customers: to stop revenue leakage
  • Our staff: to improve productivity and service and reduce sick leave, stress claims and resignations

The impetus by the Board for an immediate bottom line turn around however is reflected in the 2018/19 budget which is built on an aggressive growth target (3 x current run rate).  This will require the business to not only win back customers but sign new business, implement stringent cost controls, including further redundancies, whilst ensuring staff are motivated to improve productivity to mitigate further impact on service quality.

Seeking thoughts on:

  1. Effectively balancing getting ‘burnt out’ staff back on the bus and rebuilding market credibility whilst making further change to achieve bottom line targets?
  2. Setting and managing Board expectations 10 weeks in to a role without creating a perception of not being able to deliver on profitability?


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Participant comments on Managing a turn around: Keeping staff, customers and the Board on the bus.

  1. Seems like a pretty Handy task !

    HR side
    > People work for three things:
    1. Purpose
    2. Appreciation
    3. Profits
    building a sense of common purpose amongst diverse teams / people, and an urgency to achieve that common goal would help drive up performance and integration of members.
    setting up recognition programs, with small milestones achievements (and reverse for failures)
    Reward systems (monetary or otherwise)

    > S.M.A.R.T. Goals – Specific, Measurable, Achievable, Realistic, Time bound Goals widely circulated and having buy-ins.

    > Procedural Justice – Even when we have to take tough decisions, doing the procedure with righteousness has long proven to work well. In this event, the need for axing (however unpleasant), the process and the judicious implementation are key.

    Board Expectations
    peer comparison
    historic data of other companies in same sector
    similar precedences in similar markets in different industry sectors
    a proper timeline oriented Plan Of Action with Specific milestones
    … all these could help set right the expectations, while convincing that the CEO is capable and realistic at the same time.

  2. Certainly a tall order!

    The board will want to have a good understanding of the plan to achieve budgeted targets and the pathway to success. As a new CEO coming in there should have been an expectation from before starting that the first 100 days would be assessing the organization and performing a SWOT analysis of the overall company.

    It is clear the biggest weakness and threat is the employee moral issue. Focus here will be paramount to any future success. Creating a non-negotiable culture around employee engagement is necessary. Leadership from the top down should focus on the key areas of staff engagement, connection to the purpose of the work, clear expectations of the job, the basic tools and equipment to do their job, recongnition for contributions to the team and an opportunity to provide input to changes within their areas. This is not an easy task and falls to the most junior leaders – direct supervisors. I would recommend implementing a structure around these areas immediately. The importance of this endeavor can not be under estimated and may require an outside resources. This would be an ask of the board for support of this direction and funding. Also creating a sub-committee of the board to oversee the progress in this area could be helpful to show consistent improvement.

    Communication to all levels of the staff and a “playbook” on how we will communicate, the words we will use and how we will refer to business entities will be important. And clearly identifing communication channels and expectations around engaging in those channels will be necessary as well.

    Finally preparing a road map to walk the board through just how dire the situation is and then providing the plan with key deliverables and time frames will be important to develop a realistic and achievable budget and expectation for performance in the near (24 months) term.

    1. Agree with the concept of the First 90 days — go in and listen to the frontline, resist making big bold decisions prior to understanding the culture.

  3. Great assignment. Below are my thoughts.

    1. set a purpose (make it clear so everyone understands this is not an easy task and you cannot do it alone)
    2. build your team (do you have every employee on the right seat?)
    3. Establish short and long term goals

  4. Why not gain some buy in by engaging leadership from the 3 different companies, along with the board in developing (or revitalizing) your mission and vision statements? Re-calibrating goals for the organization through a group think exercise may create emotional (not to mention, political) buy in.

    The exercise of engaging stakeholders in development of something “new” creates emotional capital.

  5. It seems like a difficult position you are in as CEO.

    Additional to the other comments I would rediscuss the goals for the next period; with the 4 changes shortly after the merger is must be accepted that focus to the inside should be priority. However, this should be timed with some inspiring projects to give your staff confidence and company feeling. This inside lok should also be short and intensive, less then a year with a smaller follow-up every year. That way you can start prioritising the business after this period.

  6. A great task, highly challenging opportunity.

    I see main areas of work:
    1. regaining committment from 3 fused organisations:
    – Get to know and gain trust from all relevant leaders, make site visits to gain trust of ALL employees
    – Listen to individual challenges, fears in small gatherings
    – Engage leaders in defining a new mission, vision and set up the development of a new strategic plan.
    2. Given the challenges integrating 3 organisations, too aggressive business goals should be avoided. Can you formulate realistic targets for the board to avoid fear and burnout by coworkers?

    1. Agree with these comments. In addition, provide a clear plan with realistic expectations to the Board you report to! The timeline and approach may be very different from their expectations.

  7. Private equity owners do not always understand what is doable at an expert organisation with high quality services. If I were you, I would carefully review their goals and estimate which goals are realistic to reach. For the other ones I would have a bold discussion on whether there is a need and possibility to change them. Once your own goals are in line with the board expectations, I am sure you will manage to lead your organisation towards your own vision. But first you have share the values and goals of the board or convince them to adjust the goals. After that I think merging 3 cultures is still a minor task compared to the original board expectations.

  8. Consider:
    1. Set a plan to get your people and culture where you want them. bear in mind that culture is a combination of a bunch of things that you can lever and control – leadership, recognition, reward, etc. – but will take time to get where you want it. you need to understand where you are, and what levers you can/should adjust first to get better cultural outcomes.
    2. Create a plan for the board to demonstrate how you will begin to work towards your targets – you’ll likely need at least a quick win or two; ideally things that specific influential board members have been pushing for – with the culture/people plan as a key enabler to getting things done.
    3. If there are big disruptive things you may need to do, to get the business and operations parts right, do those straight away. Buys you time with the board in the form of action, and you’ll need that all squared away before you can really implement your people plan

  9. The aim can only be achieved with all stakeholders sharing clear understanding of all challenges faced by company owners and staff. Its urgent to develop a clear diagnosis of the situation, biggest bottlenecks, make the board understand all risks involved, ask them to support you and those with energy to save the company, providing a clear message to the whole staff. The staff has to understand why tough decisions are being made. Everyone’s help is wanted and those working close to the clients know better where costs can be cut without lowering quality. You could identify Pathologists with managing skills and willing to help and ask them to lead the change around their specialties, coordenating from grossing room, slide preparation to case sign out within their specialty.
    Communication of company financial and operational situation has to be very clear to all to create the sense of urgency on all employee that decide to stay and fight for the company. You have to recognize publically the challenge and give hope through a plan that guarantees quality and recognition to people. You could reward ideias that save money or time.
    Needles to say that finding the new culture that will represent all merged labs has to be defined by the board and showed to the staff. Some of the the staff will prefer not to stay given the new conditions, whereas others will understand that the challenge and new culture is actually a great opportunity for those that decide to stay.

    Communication, quality, recognition!

  10. I would recommend planning a retreat with the frontline staff to hear what the major issues are related to burnout and low productivity. It would be a great opportunity to co-create a new mission/vision and values for your organization. Frontline engagement in planning will allow for a better understanding and engagement in the overall mission and provide them with a ‘guiding light’ in terms of employee purpose. I agree with other posts on also defining clear metrics so they have a target/ end in sight and enable them / the company to honor successes.

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