Turnaround + Growth = Transformation

Chris McLain is an experienced CEO who has an impressive track record of quickly turning around and growing businesses that are struggling, particularly those providing technical, engineering, emergency repairs and facilities management services. Here he explains his approach to transformation and turnaround and some of the key considerations. 

The need for growth

When I’m brought into a company it’s because a business is struggling and the leaders either don’t know how to fix it or don’t have the bandwidth to fix it themselves. There’s generally a short window of typically less than a year to stop losing money and get the business on track to being transformed. So right from the start, I’m also thinking about how we’re going to get the business growing and make it attractive to investors who want to buy a profitable company that’s moving in the right direction.

Identifying problems and opportunities 

I start by looking at all aspects of the business to identify where it’s going wrong. I speak to everyone from the top down to the people ‘at the coalface’ to find out what they’re doing, how they’re doing it and where the problems might be. It’s not about catching people out, but just trying to understand why things are done the way they are. 

Every situation is different, but there never tends to be one particular problem – it’s often a series of things. But what I commonly find is a culture where people aren’t being held to account and they’re not measuring the right things. You’ve got to have accurate and timely management information (MI) that tells you where you’re at. 

What you end up with is a list of areas to tackle and then it’s a case of weighing up what impact the improvements will have, how easy each one is to address and how quickly you can do it. It’s almost like a cost-benefit analysis. There will always be some quick wins but while other areas may take more time, they’re often the ones that will ultimately transform the business. 

Case study: Finding efficiencies and incentivising 

One home emergency services company I turned around was losing £12m a year. There was a lack of accountability from the very top and the whole process from booking jobs to completing them was inefficient.   

I identified that we needed to raise the number of jobs our engineers were completing, from an average of less than four to at least six. Using MI we could see which teams were better than others. So we got better performing managers to work with managers of less-productive teams to share ideas and raise the standard. It was important to get buy-in, so each team was also encouraged to come up with their own ideas to make themselves more efficient. 

Through this and improvements in the call centre, the average number of jobs went up to 4.5 a day, which was better. We then introduced an individual financial incentive scheme, and the best team members achieved the six-job target, proving it was possible. 

But we still had some people not reaching that level, so we changed the incentive to make it team-based rather than for individuals. Very quickly it becomes self-managing because the more productive engineers want their bonus, so they encourage the others. What you get is more efficiency and a high-performance culture. 

Case study: Using your expertise to diversify and grow  

In a similar company, some of the systems and processes were good but the business model itself wasn’t right. The company used subcontracted engineers who were paid on a time-and-materials basis – essentially incentivised to take as long as possible and to fit as many parts as they could. We changed that by introducing an enhanced but fixed-rate-per-job, paying them more but incentivising them to correctly complete more jobs every day.  

It became much more efficient, they completed more jobs in a day, the customers were happier, the contractors were happier and so was the company. It’s always about looking at the situation you have and working out how do we get the best out of this? 

Because we then had a very efficient model, we could tender more competitively, and grow more quickly. We were also able to diversify and offer repairs of white and brown goods, which required little effort on our part. So we went from a company that was making about £2m a year to one making £4.6m, all within one year. 

Always think bigger 

Most companies just don’t think big enough – why think in double digits? When you look at turnarounds they are generally measured seismically going from a significant loss to a profit. But how do you really measure that in percentage terms?

When I think about growth, I’m thinking how do I at least double the EBITDA? How do I leverage that to double my top line, which in turn should way more than double the bottom line. There are many ways you can leverage what you have to win much larger contracts – it’s often just thinking about things differently. 

Look at the order of magnitude of your contracts. What’s the difference from one national contract to another: 200 buildings to 400, £4m to £8m, 50 staff to 250 staff, 250 to 1000? Look at what skill sets your people have and how much spare capacity is there in your systems? From a practical perspective if you want to grow by £20m, how many contracts do you have to secure at £100k each rather than at £1m, (200 rather than 20), and how much more time and effort is required to win one at £1m? It’s often not a great deal more – certainly not 10 times more.

Often it’s about engagement, encouraging their ideas and contributions and then showing them that it’s about working smarter not harder.

Managing pushback 

Throughout this process, you will get resistance, because you’re changing things that have been done a certain way. An ops director once said to me, “you’ll never hit those targets”, but we did within just a few months. You need people at all levels to buy in. 

Often it’s about engagement, encouraging their ideas and contributions and then showing them that it’s about working smarter not harder. You need to show people that the journey is happening and the situation is improving day by day. This is also where bonuses and incentives come in. Putting measurable targets in place and introducing financial rewards is a big motivator. 

There will be some who refuse to change and some will leave, but you’ll often need to reduce headcount anyway. I’ve rarely had to do a big redundancy programme – it all comes through natural attrition, people wanting to be ‘on the bus’ or not!

What to expect and when

When it comes to a turnaround, the first three to six months for me are about understanding the business and putting things in place. Realistically, you should expect the business to be performing differently within those six months and by the 12th month you should see significant financial impact and growth. It’s not always easy, you have to make significant, often difficult changes, but turnaround and growth is always possible.