As part of my series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times,” I had the pleasure of interviewing Renee Fellman.
Renee Fellman, winner of the Turnaround of the Year Award from the international Turnaround Management Association, is a Certified Turnaround Professional (CTP) who has rescued publicly held, privately held, investor-owned, family-owned and employee-owned companies from the brink of disaster. Clients have ranged from startups to long-established businesses; from one location to multi-state, multi-national; union and non-union.
She has been Interim CEO for 20 companies and an outside consultant to 18 in industries including, but not limited to, construction, healthcare, manufacturing, medical devices, packaging, printing, restaurant, retail, technology, transportation and wholesale distribution.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
After graduating from Northwestern, I taught 8th grade for four years. At age 30, I was the first woman elected to the City Council of Beaverton, Oregon and was elected mayor two years later. (Did not serve due to concurrent charter change.)
Subsequently, when my husband was diagnosed with an incurable terminal illness, we knew we had approximately 5 years and that I was going to have to support myself, so I went back to get my MBA. One of the women in the program was living with a man who led hospital turnarounds. As soon as I heard about that, I knew I wanted to lead turnarounds! Of course, I had no business experience, so when I started looking for work, I told people I was looking for a company that needed an “organizer.” People had seen me organize successful neighborhood action groups and political campaigns, so three months after I started looking, I landed my first project, a referral from someone I had met during my council tenure.
I vividly remember an early marketing meeting with the man who became my personal attorney. When he asked, “What qualifies you to do turnarounds?” I responded in part, “Well, I taught 8th grade for four years. If you can handle 8th graders, you can handle anything!” He had no idea how true that was!
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
In the turnaround business, mistakes can kill the client. I remember 3 key mistakes. Not one was funny!
For example: When leading a turnaround of a business “in the zone of insolvency,” I have an obligation and do my best to ensure that no creditor is worse off than the moment I begin. For that reason, I commonly have my client stop paying any amounts owed before my tenure and pay cash in advance going forward. In that way, creditors can be 100% certain of being paid going forward, and my client can get off credit hold, which gives us a better chance of fixing the company.
Early in my career, a former vendor came to meet with the owners and me asking for money owed him before my arrival. Of course, I refused. After the meeting, however, I learned the hard way that before my arrival the owners had given this man a signed check that he had been holding at their request. The guy promptly cashed it, so we did not have enough money to cover payroll the next day. Luckily, when I called the bank, the bank advanced enough to cover payroll.
The lesson: Check with appropriate parties to get all the facts about the situation before meeting with a creditor!
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
For the first 10 years of my career, as I graduated to larger and larger companies, I recruited Larry Custer, who had led the Northwest consulting practice for an international accounting firm, to assist me. From him, I learned many things; e.g., what kinds of information to gather and reports to generate and how to present financial information in a way that made it easy for various stakeholder groups to grasp.
My first client was in dire straits. The company was factoring its receivables. The owner was literally crazy. The sales manager was a former male stripper. The first minute I was there, I had to field a call from an angry creditor. Later that week, an IRS agent appeared unexpectedly and declared, “I’m going to shut you down unless you have a plan.” Shortly thereafter, Larry said, “You may have your MBA, but now you’re going to get your PhD.” The company was cash flow positive within two months and was acquired by a company identified by me. That turnaround launched my career and would not have been possible without Larry’s sage advice.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
I am not a company. I am a single shingle, but I did contemplate seriously how I wanted to conduct my practice and myself. I am lifelong do-gooder and a report-card person committed to achieving the best outcome for my clients, to saving as many companies as possible. To do that, I decided to accept only one client at a time so that I would never be tempted — like some competitors — to become overcommitted and to delegate project leadership to less qualified professionals. In addition, I made a personal commitment to stay informed about legal requirements, management tools, technological advances and the ever changing macroenvironment.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
All turnarounds are tumultuous. When I parachute into a troubled company, my goal is to create an effective, goal-oriented team that plans and implements a turnaround at warp speed. After interviewing key managers, I select The Turnaround Team. We meet, go through the financial statements and discuss alternatives. Out of those meetings we produce the turnaround plan. It’s not my plan. It’s their plan, and all participants understand precisely what actions they need to take and what results they need to achieve.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
Someone once observed that I have a “survivor” personality. In addition, I am a challenge junkie. Perseverance is in my DNA. At the same time, I am a realist whose clients are extremely distressed businesses. Occasionally, I do conclude either that the company cannot be fixed and/or that I am not the right person to fix it.
What would you say is the most critical role of a leader during challenging times?
The most critical role of the leader — at anytime — is to inspire confidence and articulate clearly the ground rules and plan, how the company will navigate the challenges ahead.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
Share the plan, keep people informed, share victories broadly and give compliments when well-deserved.
Let people know that it is safe to be themselves. As we were about to start a team meeting, one of my managers said that he had a headache. I said, “Dale, be like me. I emote. I don’t get headaches.” Dale responded, “I know you don’t get headaches. You give headaches!” We all laughed!
Have fun. At another client, the night before the sales team from the US and Canada gathered for a two-day planning meeting, my older son and I wrote two songs for everyone to sing at the beginning of the meeting. The first, to the tune of “Where have all the flowers gone?” started, “Where have all the sales gone….”. The second, to the tune of “The Battle Hymn of the Republic”, began, “Mine eyes have seen the glory of five-hundred thou’ a week…” It turned out that one of the salespeople had been a camp song leader, and everyone followed his lead and sang with great gusto! It was a spirit-lifting start to what proved to be a very productive meeting.
Show your appreciation. Volumes have been written about ideas for company perks. Such perks can be critical in helping people do their jobs effectively and to keeping them with the company, but nothing is better than letting people know that you really “see” them and appreciate their efforts; e.g., “Great job!” “Great idea!” “That is a huge help!”
What is the best way to communicate difficult news to one’s team and customers?
Communicate honestly and directly, and, if possible, avoid surprises. Never lie or misrepresent. Maintaining trust with all stakeholders may spell the difference between success and failure.
How can a leader make plans when the future is so unpredictable?
Prepare the best plan you can based on the information available and, to the extent possible, with input from all stakeholders (customers, vendors, shareholders, board, employees).
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
It’s all about the people. If all management team members are bright, capable, have the right skills, know how to get results and speak up if an idea seems ill conceived and/or if a problem has arisen, the company will have the best possible chance to succeed.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
The most common mistakes I have seen turnaround clients make before my arrival include
- Issuing edicts from the corner office without involving key managers
- Selling to customers who won’t pay
- Cost cutting without carefully considering the consequences
To avoid these mistakes leaders can
- Involve key personnel in the action planning process to help ensure that plans are realistic, have considered cross-functional impacts and that managers are confident they can meet their goals.
- Be sure the company has policies and procedures in place to ensure that only credit worthy customers get credit! Have a customer that is way overdue but lacks cash to catch up? Start requiring cash in advance. They get the product they need; your company gets the profit.
- Often, the key to cost cutting is changing people, processes and systems in a way that simultaneously increases revenues and decreases costs. In addition to asking “What costs can we cut?” ask “How can we change our people, processes and systems to deliver our product or service in a more cost-effective way that will delight our customers?”
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
I lead turnarounds, so a difficult economy means more work for me!
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
Based on my experience as a turnaround expert who parachutes into middle market companies that are in dire straits and facing both financial and operational problems, here are my five recommendations.
Convey confidence and competence through your demeanor and stakeholder communications. For example, within the first hour I am on the job, I communicate with all employees, either via a company-wide meeting or other means appropriate to that situation. As a part of those communications, I explain my role, authority, an overview of my background and track record, what steps I plan to take, how I will communicate with employees and the best way for them to communicate with me.
Shortly thereafter, I meet with key management team members and provide them with very specific ground rules and answer their questions. In addition, I encourage them to let me know if they think that there are facts I need to know or that we should pursue a different path. I say, “Just because I sound like I’m right doesn’t mean I am right!”
Rally the troops. In tumultuous situations, it is critical that all employees feel that they are part of the team and part of the solution, so I keep them informed, solicit their input, make it safe for them to share their ideas with me and implement those ideas when it makes sense.
In addition to interviewing key management team members, I conduct a company-wide survey. Some amazing facts come to light!
For example, in one company with 35 branches, one employee wrote, “If a customer calls one branch three times on one day and talks to three different people, that customer may be quoted three different prices.”
An employee of a distribution company wrote, “Our terms and conditions say that we accept no returns on special order items, but we have accepted $600,000 in special order item returns so far this year!” That piece of information allowed us to immediately eliminate approximately $1MM of annual cost.
Employees feel that they are truly part of a team when they see their ideas become reality.
Prepare a plan that defines the path going forward.
Even in tumultuous times, failing to plan is planning to fail, so shortly my arrival at a new client, I convene a meeting of key managers to prepare a turnaround plan.
If my client were Zoom during the Covid pandemic, the meeting would focus on what is the best way to respond quickly to growing demand, to issues we need to address and to customer needs as more and more people use Zoom. My turnaround client companies, however, are on the ropes, so we go through the financials line item by line items to answer these questions: How can we increase cash, increase revenues and decrease costs?
Out of that discussion comes a written plan that includes who is responsible for completing what actions by what date and monthly financial projections that are the numeric representation of the plan. These projections are supported by a description of the assumptions on which the projections are based, and the model is detailed enough that we can use it to run various scenarios to evaluate different courses of action as the situation unfolds.
Develop contingency plans.
The future is always somewhat unpredictable, but in tumultuous times, the future is extremely unpredictable. As a result, contingency planning is a must. The CEO and key managers need to be alert to shifting internal and external circumstances and to ask, “What might change? What might go wrong? What steps should we take now to be ready in case that happens?” If enough information is available, the team can run scenario analyses using the projections that accompany the plan the team created.
Know what you don’t know.
Tumultuous times require rapid, meticulous execution. If you can possibly avoid it, this is not the time to experiment on the job, and there are countless qualified experts in almost every imaginable discipline. If you and your team lack the requisite skills, find someone who has those skills.
Results matter. Before hiring an expert, contact that expert’s references and ask, “What was the situation, and what results did this expert produce?”
Seeking help is a sign of strength, not of weakness. Although I have deep expertise in many areas, in every project, I have engaged experts who have helped my clients fix numerous issues quickly. Examples of their specialties include finance and accounting, packaging and printing, sales and marketing, ERP systems, foundry control, recruiting and more.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I do not have a favorite “life lesson quote.” The key lesson of my upbringing and the guidepost of my life is that I was put on Earth to do good deeds, to make the world a better place, and I try to do that in both my personal and professional life.
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