Magazine article Management Review

Achieving That 'EVEREST Feeling'

Magazine article Management Review

Achieving That 'EVEREST Feeling'

Article excerpt

Many business turnaround stories resemble descriptions of the Civil War-sibling vs. sibling fighting amid unimaginable carnage and suffering-with, of course, a happy end-ing, at least for some.

Turnarounds are never easy, but they need not be so brutal. My most recent turnaround experience at LSG Sky Chefs, the world's largest caterer of airline meals, suggests there is a better approach. The numbers tell part of the story: From 1992 to 1997, the company's EBITDA rose from $10 million to $179 million.

When I arrived in 1991, our biggest problems were operational. We were the industry laggard by almost every mea-sure, with low productivity, high costs and the worst profit rates in the business.

I knew that the power within all levels of management had to be unlocked. You may ask, "What power?" Believe it or not, the CEO of just about any company can find know-how, insight and even man-agerial brilliance within the business-no matter how badly it is performing.

The CEO must act quickly, however, because delay is the enemy of a turn- around. The first task is to have intense consultations with key managers and then set dramatic turnaround objec-tives- for the company, decentralized units, specific processes and individual managers. These targets must be focused and detailed, whether they are based on return-on-capital hurdles or the prof-itability of your most capable competitor.

Targets and timetables should be so demanding that they result in that "Ever-est feeling," the sense among employees that they are embarking on an endeavor demanding their utmost. People who are comfortable with business-as-usual won't like this at all and will consider working elsewhere. That's life.

The rewards of climbing the moun-tain must be enormous. Don't expect people to help turn around a company just because it's there. This is where gen-erous economic incentives come in. At LSG Sky Chefs, middle managers collec-tively owned 20 percent of the company.

They knew that if we reached our tar-gets, the value of their shares would in-crease tenfold.

Teams of managers and line person-nel will be the primary agents of the mis-sion, and the chief executive must mobi-lize them swiftly. Our productivity teams started by revisiting one of the inviolate principles around which we and many of our competitors normally structure work:

The longer the lead time when delivering meals to flights, the greater the resulting efficiency and reliability. …

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