Interim CEO / Turnaround at COVID times
The company is one of the most important producers of frozen food in Austria and has been facing a negative business development for more than 10 years. A turnaround is essential for the continued existence of the company. Changes, cost savings and strategy adjustments required. The business model is suitable and can be managed with success, but the changes at the production site should be realized by an interim mandate.
- Family-run, innovative and partnership-based company with a high connection to nature and regional farmers with more than 50,000ha of production area. Important producer of frozen products in Europe and a significant export share.
A lack of focused plant management was not practiced for many years and led to negative earnings development. Customer relationships with low to negative earnings contribution. In addition, there were production processes with low standardization, professionalization and efficiency / productivity and the issue that the focus on resources was hardly sharpened. In addition, investments were made without a clear focus and the very committed employees were shown or given few prospects within the company.
The central challenge lay in:
- Strategy processing of the product / customer segment
- “Cost Out” and Savings
- Development of new product segments relevant to earnings
- The “human” factor
- Covid rules of the government
- Work through customer segments with sales / controlling and take the appropriate steps.
- Implement price adjustments with the customer or terminate the customer relationship.
- product segments within the Group in order to improve the company’s results.
- Focusing and “healthy shrinking” on the strengths of the production site.
- Discuss the P&L together with the management team and work out the savings with the team (So far this culture has not been fostered by the plant management).
- Elaborate and critically scrutinize savings (man-machine-material “3M”) in all areas.
Hurdle perspective for the future:
- Very large product segment without a focus on their strengths did not indicate a future strategy.
- Demotivation and disorientation were present in the workforce.
- Unrealistic concepts for the future were drawn up and discussed, which were not coordinated with the group of companies.
- Many employees with longer tenure with the company have become accustomed to the prevailing conditions.
- Hardly any employee development with a clear focus and performance mindset.
- Dedicated employees were often not heard.
- Focus was on sensitivities than on uniform standards of togetherness.
- Error culture of “cover-up” was the order of the day.
- The changes required for the team due to the turnaround were already very high and demanded a lot of energy and commitment.
- The uncertainty of COVID developments and short-term government demands pushed the team to its limits.
Procedure in the individual areas
Customer meetings were challenging for the team and price increases were realized, in addition process optimizations were implemented to reduce costs. Furthermore, products were relocated to other sites on the basis of the “new manufacturing strategy”. The main focus was now on professionalizing the core product segments, as well as terminating customer relationships that did not contribute to earnings.
A social plan for staff reductions was agreed with the trade union and energy & resources were focused on in order to realize sustainable savings. Service contracts were reviewed for content, adjusted and renegotiated or terminated, and purchasing standards were discussed, defined and implemented. Professionalization and focus on core – production – segments with manufacturing standards in efficiency, productivity and quality. Significant improvements in production efficiency and productivity, as well as the integration of process improvements and standardization with clear USP. Optimization in the cooperation of the plant needs with farmers.
Perspective for the future:
- Reorganization / change of the plant organization and lean – restructuring, as well as the social employee reduction.
- Low investment program was clarified with the leadership team according to clear thematic priorities.
- Integrate employee development into plant policies.
- Regular operational information on the changes and the outlook on business development.
- Increase alignment with the business group and visualize their presence with employees.
- Integration of a new strategic product segment in coordination with the corporate group with a significant effect on earnings.
- Introduction of the error culture so that mistakes could be learned from.
- Employee training in parallel with focus/responsibility building in the sub-areas of the plant.
- Performance-based pay and promotions have been implemented.
- Assumption of responsibility of issues by employees in projects, improvements or developments.
- Involving managers in the development of the company (strategy process).
- The challenge was to discuss the measures with the required degree in a small plant team and to realize the legally compliant safety measures so that the food operation could continue in a safe condition.
Interim deployment successes and results:
After more than 10 years of family ownership, the earnings contribution was clearly turned around from “negative” to “positive”. For this purpose, the team was honored and awarded by the company management and family. In the second year, the changes were still professionally anchored in the plant organization. In addition, the second year of the family trust was strengthened by the enormous strategic investment in the new product segment at the site. The turnaround was successfully realized with a lot of energy and sustainability even in COVID times – FULL SUCCESS for the team !!!
Key success factors for success:
- Courage to change in the customer / product portfolio and clear view of profit contribution and not volume contribution
- Realization of restructuring, efficiency and productivity improvements, savings with significant P&L effects
- Social employee reduction and focus on the new rules of the game for togetherness
- Integration of employees into the plant process
- Assumption of training activities
- Assumption of improvement topics and partial project responsibility
- Change to performance-based employee classification (management to production employees)
- Trust culture “Error culture” as a source of improvement
- Development of the joint perspective with the corporate group and investment in the new strategic product segment in the second year