Look in the mirror, Mr. Owner. You are the one to blame for the problems! Leaving unproductive managers on the management team is a big mistake.
In most every turnaround engagement of a company where I have been hired to solve the problems to make the business profitable, the most significant issue is a weak executive(s) on the management team. At the beginning of each engagement, my first task is to interview each member of the management team to determine if he or she is qualified to do their respective job. When I finish the interviews, it usually is evident which manager(s) are in over their head in their position or do not have the skills or ability to do their job successfully.
Once I determine who the weakest and unproductive managers on the team are, I start working in their functional area looking for the “low-hanging fruit” to immediately grow sales, reduce expenses, and improve cash flow, etc.
The owner of a $30 million-dollar engineering company hired me to turn the company around. His complaint was “the larger we grow, the more money we lose.” This situation is a typical statement by owners that hire me.
Unproductive Managers are a big problem!
During my interviews with the managers, it was clear that the CFO was the weakest executive on the team. When interviewing him, he hinted that the job had grown too big for him. He had started working for the company when the sales were $3 million in one location. Now the company was ten times larger in sales and had eight offices.
I reviewed the financial statements and found many errors. There were no operating budgets as part of the income statements. A substantial increase in the payroll tax expense from penalties was because of late payments to the IRS. The monthly financial package had been issued late each month of the last eight months as well as being inaccurate. He had not reconciled the bank statements for the past six months.
The auto insurance expense was materially higher in the current year than in the prior two years. When I reviewed the problem, I found that the CFO had overpaid the premiums by $90,000. The problem occurred when the company traded in vehicles and acquired a new van. The insurance company added the new van to the policy but had not removed the old trade-in vehicle. This problem had continued during the prior three years. I was able to recover the total premium overpayment once I documented the issue to the insurance carrier.
Unproductive Managers are a big problem and drag a company down!
After the first week, it was obvious that the CFO was over his head for the position. He was one of the main reasons the company was not profitable.
I met with the owner to discuss my findings for the first week. There were $120,000 in savings plus I told him my plan to replace the CFO immediately. We need to bring in a more qualified financial manager for the company. The owner said he knew that the CFO was his weakest manager. Unfortunately, he did not know how big a problem the CFO was to the company! I told the owner that the CFO was an issue affecting the business’s profitability, but not the biggest problem. The main problem is his boss for keeping a weak manager on his management team. I was referring to him, the guy the owner sees every morning when he looks in the mirror.
If you own a business, you should evaluate the quality of your team at least twice a year. If you have a weak manager, you owe it to the rest of your employees to replace him. Your management team wants a qualified manager who can perform all the responsibilities of the position.
If you have UNPRODUCTIVE MANAGERS on your management team, you need to deal with the problem, or hire a turnaround specialist for help!
My name is Robert Curry, and I am an Author, CEO Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I have worked with more than 70 companies taking their businesses from Loses to Profits.
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Recently, I published two books about turnarounds: “From Red to Black – A Business Turnaround” and “The Turnaround.” Both books are true stories about turnarounds of real companies that I have turned around during my career. In both books, I shared all my Profit Improvement Recommendations (“PIR’s”). PIR’s helped to grow sales, reduce expenses, improve cash flow, and most importantly, strengthen the management teams.
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