A Turnaround CEO is often the key to reviving a company in crisis, stepping in when a business faces declining performance and mounting challenges. In these dire situations, their leadership can make all the difference. This article explores the critical role of a Turnaround CEO, from the qualities they possess to the strategies they employ to turn a company around. It also highlights real-life examples of CEOs who successfully navigated their organisations through turbulent times, offering valuable insights into what it takes to lead a company back to stability and success.
When to Bring in a Turnaround CEO
When a business is in dire straits, the signs are often evident: declining revenue, mounting debts, dissatisfied customers, and a demoralised workforce. These symptoms indicate that the company is in need of a drastic change in leadership and strategy. A Turnaround CEO is brought in when the situation becomes critical, and the survival of the business is at stake.
Some staff of companies in crisis mode may ask why they need a CEO to lead turnaround efforts. The following are some reasons to call them in.
Fresh Perspective
A Turnaround CEO brings an external perspective, free from the biases and limitations of the existing leadership team. This fresh set of eyes can identify issues that internal stakeholders might have missed.
Specialised Expertise
Turnaround CEOs have a track record of successfully navigating troubled waters. They possess specialised skills in crisis management, financial restructuring, and strategic planning.
Decisive Leadership
In times of crisis, decisive and resolute leadership is paramount. A Turnaround CEO is not afraid to make tough decisions, such as cost-cutting or restructuring, to steer the company towards recovery.
Change Catalyst
These leaders have a knack for instigating cultural and operational changes within the organisation, which is often necessary to reverse a company’s fortunes.
Qualities of a Successful Turnaround CEO
A successful Turnaround CEO possesses a unique set of qualities that enable them to tackle complex challenges head-on.
Visionary Leadership
A Turnaround CEO must have a clear vision for the future of the company. They can articulate this vision to the team, instilling confidence and motivation among employees and stakeholders.
Resilience
Dealing with a struggling business is not for the faint of heart. A Turnaround CEO must be resilient in the face of adversity and be able to bounce back from setbacks.
Financial Acumen
Understanding financial statements, cash flow, and budgeting is paramount for a Turnaround CEO. They need to develop and execute financial strategies that restore the company’s fiscal health.
Strategic Thinker
A Turnaround CEO is a strategic thinker who can assess the business landscape, identify opportunities, and develop a roadmap to recovery. They must be able to prioritise initiatives that yield the most significant impact.
Communication Skills
Effective communication is vital when dealing with anxious employees, concerned investors, and wary customers. A Turnaround CEO should be an adept communicator, capable of managing expectations and delivering tough news transparently.
Scott Hartley: A Turnaround CEO in Action
To see where the above attributes fit into existing CEOs doing turnaround, let’s look at Scott Hartley, installed as Insignia Financial’s CEO on 1 March 2024, succeeding Renato Mota.
Mr. Hartley earned his stripes in the turnaround C-suite field, using his decades of wealth management experience at NAB/MLC to shepherd Sunsuper into a merger with QSuper as the ART, then adding Kinetic Super and Austsafe Super into the mix. He would later be in charge of AMP Australia, reorganising super and wealth products under Alexis George before a restructure put him on redundancy.
For Insignia, Hartley faces the tough task of implementing a three-year strategic roadmap to rebuild the business and its client relationships, and also to regain share value. One critical element of the workload will be the activation of a new financial advisory services partnership for self-employed licensees, called Rhombus Advisory.
Strategies for a Turnaround CEO
The path to recovery for a struggling business is not straightforward, but a Turnaround CEO typically employs a combination of strategies to stabilise the company:
Financial Restructuring
This involves a thorough review of the company’s financial health, identifying areas of waste, renegotiating contracts, and refinancing debt to improve liquidity.
Operational Efficiency
A Turnaround CEO evaluates operational processes and identifies areas for improvement. This may include streamlining workflows, reducing excess inventory, or optimising the supply chain.
Cost Reduction
Cost-cutting measures may be necessary to trim excess spending. This can involve layoffs, outsourcing non-core functions, and renegotiating contracts with vendors.
Product Portfolio Review
The CEO assesses the company’s product or service offerings to determine which are profitable and which are not. Non-performing products or services may be phased out if not temporarily discontinued.
Talent Management
People are a company’s most valuable asset. A Turnaround CEO assesses the existing team, identifies key talent, and may need to make tough decisions regarding personnel changes.
Stakeholder Management
Building trust with investors, customers, suppliers, and employees is crucial. The CEO should maintain transparent communication and demonstrate progress towards recovery.
Notable Australian CEOs Who Led Successful Turnarounds
Australia has seen its fair share of successful CEOs who played pivotal roles in reviving struggling companies. The following are some notable examples.
Grant King
Grant King was Origin Energy’s CEO/managing director after the company’s spinoff from Boral in 2000. He successfully managed the company’s transition from a focus on retail energy sales to a more diverse energy company with investments in gas exploration and production. This diversification strategy contributed to Origin Energy’s resilience and growth. King stepped down in 2016 to lead the Business Council of Australia.
Alan Joyce
Joyce assumed the helm of Aussie flag carrier QANTAS in 2008, a year when the airline faced significant challenges due to rising fuel costs, increased competition, and serious inflight emergencies. He implemented a comprehensive turnaround plan that included cost-cutting measures and restructuring the airline’s international operations, banking on his experience working for Irish national airline Aer Lingus, the former Ansett Australia, and Jetstar, where he was CEO. Under his leadership, QANTAS rebounded and returned to profitability, but after a decade of challenges (including the infamous but necessary shutdown of 2011), Joyce turned over the controls to current CFO Vanessa Hudson in September 2023.
Andrew Mackenzie
Andrew Mackenzie took over as CEO of BHP Billiton in 2013 when the mining industry was facing a downturn due to falling commodity prices. He initiated a strategy to reduce costs, divest non-core assets, and focus on core mining operations. This turnaround strategy helped BHP Billiton weather the commodity downturn and maintain its status as one of the world’s largest mining companies, leading to a rebrand as BHP in 2017.
John King
A businessman with over 30 years’ experience in US and UK retail, Mr. King assumed the CEO role at Myer in 2018, at a time when the retail company suffered $486m in H1 FY18 losses and challenges from major investor Solomon Lew. Under Mr. King’s stewardship, Myer launched “Customer First,” a multi-front plan designed to improve customer access to products and services through easier searching, aggressive right spacing, and comprehensive loyalty programmes. The plan revitalised Myer’s fortunes and helped it stay afloat during and after the COVID-19 pandemic. Mr. King announced in June 2023 that he was stepping down at the end of this year to return to his family in the US.
Conclusion
In the challenging world of business, the appointment of a turnaround CEO can be the lifeline a struggling company needs to avoid collapse. Their visionary leadership, resilience, and strategic thinking, combined with effective financial and operational strategies, can set the company on a path to recovery.
The Australian business landscape is no stranger to companies facing adversity, but with the right leadership and a well-executed turnaround plan, many have not only survived but thrived in the aftermath of the crisis. A turnaround CEO is not just a leader but a catalyst for change, a guardian of business continuity, and a beacon of hope for employees and stakeholders alike.
DISCLAIMER: This article is for informational purposes only and is not meant as official business placement advice. AVANTE PARTNERS has no relationships with any company or executive mentioned.
