The new CEO of the privately held engineering business was faced with a challenge – how to restructure to cope with the declining resource sector.
The previous CEO had built the business as the resource sector boomed and had retired in time to avoid the inevitable adjustments now faced by his successor.
The new CEO, let’s call him Jim, was a ‘people’ person and knew the hazards of restructuring, particularly when it meant possible retrenchments.
I’d previously coached Jim and we shared a high level of trust. So he called me to discuss his options.
“I’ve got 450 people in three locations. I think I need to close one location and shed 30% of people in the remaining centres. What do you think I should do first?” Jim asked.
I asked “What’s been explained to everyone so far?” “Nothing, just a confidential conversation between me and the board. They are worried and want quick action.” Jim responded.
“What signs of the downturn are your people generally aware of?” I asked.
Jim said “Well everyone knows we’ve had declining revenue and longer terms of business. They also see the media stories about the decline.”
I said “What would happen if you called a whole of business meeting on a weekend, paid everyone to attend, and asked them to address the theme “Thriving in the Near Future”. You would ask them to address five questions:
- What do we keep doing without change because it’s working really well?
- What do we keep doing but do differently?
- What must we stop doing now?
- What must we start doing now?
- How do we stay in honour with each other and the business?
"What do you think?”
Jim sat and thought for quite awhile.
“I like the idea, but how could we manage it?”
I said “We’d conduct an Open Space Technology process, I could facilitate it with the help of one of my colleagues. You would sponsor it and participate. Everyone would be invited and whoever turns up voluntarily will be the right people. We could do it in a day but it would better done over the two days. You’ll end up with a book of proceedings that can guide the changes that need to be made. You’d have a high level of buy-in because of their participation. We’d follow up with sessions on “Dealing with the Difficult” and coach people through the changes, supporting them all the way. Those people who are being retrenched get fully supported and dealt with caringly.”
Jim went to the board with me and after being interrogated by them for a couple of hours, we had their approval to proceed.
Fifty percent of the people invited (everyone was) turned up, which was enough. These were the people most concerned, passionate and responsible.
Following discussions around the five questions they suggested these steps:
- Keep the core business talent and capability at the primary location and one other.
- Improve internal communications which included a monthly update on key business big data.
- Close the location Jim had earlier identified and reduce staff elsewhere by 20%.
- Open up the “silo” mentality to create a fully collaborative business and find new markets.
- Find a way to minimise the number of people that needed to be retrenched, because there would eventually be an upswing as the resource sector stabilised and new markets were found.
The board and Jim were delighted with the result and, especially the board, had a new found confidence and respect for their people.
The people were fully responsive to the initiatives and worked together to achieve the changes over the next six months.
Voluntary retrenchments enabled the effective closing of the nominated location.
Instead of further retrenchments the company negotiated a rotation of voluntary part time work to cater for the changed conditions.
The plan was successful because the company involved everyone who cared enough from the outset.
The process of Open Space Technology has had outstanding success and effectiveness for initiating change or improvement, providing the facilitation is experienced and the company committed.
What do you think?
