Could this role save your business?

Celebri­ty chefs and hotel inspec­tors offer­ing cru­el-to-be-kind advice to fail­ing estab­lish­ments may guar­an­tee TV rat­ings, but for the new-breed chief restruc­tur­ing offi­cer (CRO), enter­tain­ment is not in the script.

Once strict­ly rev­enue-focused and work­ing pre­dom­i­nant­ly in con­sul­tan­cy, chief restruc­tur­ing offi­cers are now in demand in any organ­i­sa­tion whose over­all busi­ness strat­e­gy, or board­room, is in need of a reboot.

UK com­mer­cial prop­er­ty oper­a­tors, cur­rent­ly digest­ing a record 46 per cent jump in exec­u­tive direc­tor changes in the six months to Sep­tem­ber, are ahead of the game in hoover­ing up any spare CRO mus­cle.

Yet with esti­mates sug­gest­ing there may be few­er than 100 to 200 UK-based, bona fide CROs to go around, cus­tomers in oth­er hard-hit sec­tors such as trav­el, retail and leisure may be wait­ing for their own “com­pa­ny doc­tor” for some time.

Although sur­viv­ing a cri­sis requires the best of an entire C‑suite, an outsider’s warts-and-all per­spec­tive on top­ics as far-reach­ing as inno­va­tion, resourc­ing and per­for­mance can ruf­fle feath­ers, par­tic­u­lar­ly as CROs tend to be imposed on boards.

Instances of an inter­im chief restruc­tur­ing offi­cer going on to replace an under­per­form­ing chief exec­u­tive can only increase board­room mis­giv­ings.  

“It is impor­tant to recog­nise that CROs are often not wel­come by the board and have been forced on the busi­ness by a chair­man, own­er or fun­der who has lost con­fi­dence in the man­age­ment team’s abil­i­ty to arrest a decline,” says Chris Clegg, chair­man of New Street Con­sult­ing Group (NSCG).

The knives are out for the CEO

A crit­i­cism of many C‑suite teams, he says, is they either “have their heads in the sand” or in true Nero style “refuse to wake up and smell the cof­fee”.

In con­trast, a pro­fi­cient chief restruc­tur­ing offi­cer injects “a sense of real­ism and urgency”, as well as a stel­lar con­tacts book, into the mix.

Sep­a­rat­ing exist­ing man­age­ment from a CRO out­sider is an impor­tant safe­guard for the C‑suite, par­tic­u­lar­ly when painful deci­sions must be made.

CROs are often not wel­come and have been forced on the busi­ness by a chair­man, own­er or fun­der who has lost con­fi­dence in the man­age­ment team

Despite this desir­able delin­eation, togeth­er with the objec­tiv­i­ty which allows a CRO to think com­mer­cial­ly, rather than emo­tion­al­ly, about a busi­ness, there are issues.

Refer­ring to the “Wild West of restruc­tur­ings”, Clegg draws a dis­tinc­tion between a gen­uine expert and a wannabe, point­ing out that for­mer CFOs who claim to be pro­fi­cient at suc­cess­ful restruc­tur­ing vast­ly out­num­ber those with the track record and CV to back this up.

“An authen­tic CRO will be able to nego­ti­ate deals that exist­ing man­age­ment teams may not think achiev­able, includ­ing sup­port from key cus­tomers, extend­ed terms from sup­pli­ers or greater sup­port from the bank,” he says.

To be effec­tive, a chief restruc­tur­ing offi­cer  will, by def­i­n­i­tion, work close­ly with all mem­bers of the exec­u­tive team. Close col­lab­o­ra­tion with the CEO is cru­cial, as is knowl­edge-shar­ing with the CFO as res­i­dent C‑suite expert in com­pli­ance, rev­enue gen­er­a­tion and finan­cial strat­e­gy.

How­ev­er, restruc­tur­ing also over­laps with the role of the chief oper­at­ing offi­cer, often con­sid­ered sec­ond-in-com­mand, over­see­ing day-to-day admin­is­tra­tive and oper­a­tional func­tions, and the chief mar­ket­ing offi­cer, whose prime func­tion is to cre­ate and lead a mar­ket­ing strat­e­gy which gen­er­ates busi­ness growth.

With tech­nol­o­gy reshap­ing all glob­al indus­tries, the lead tak­en by the chief infor­ma­tion offi­cer in man­ag­ing and imple­ment­ing new tech­nol­o­gy is vital, as is the con­tri­bu­tion of the chief human resources offi­cer, who aims to sus­tain morale even as head­counts are falling.

“Whether the goal is cost-reduc­tion or improved effi­cien­cy, those com­pa­nies for­tu­nate enough to have a senior human resources leader at the table will ben­e­fit huge­ly from their exper­tise, par­tic­u­lar­ly in terms of the impact on cul­ture and engage­ment,” says Dean Hunter, founder of HR con­sul­tan­cy Hunter Adams.

Warn­ing of the impact sig­nif­i­cant change can have on per­for­mance, focus and pro­duc­tiv­i­ty, Hunter advis­es organ­i­sa­tions to “man­age any restruc­tur­ing with­in a set time peri­od as, although phased change appears less painful, it may cre­ate the prob­lem of change fatigue”.

Preparing for black swan events

Aside from gov­ern­ing day to day, the role of the C‑suite must always be to look ahead and pre­dict which way the wind is blow­ing for the busi­ness.

While plan­ning for unknown sce­nar­ios is desir­able, many busi­ness­es have lim­it­ed capac­i­ty in this area and may need addi­tion­al crys­tal balls, says Karl Weaver, mem­ber of the Future Strat­e­gy Club and for­mer chief exec­u­tive of Pub­li­cis Groupe’s Data Prac­tice.

“It can be very chal­leng­ing to cov­er both the day-to-day run­ning of the busi­ness and the future think­ing need­ed to adapt and stay ahead, and this may all come to a head in a black-swan event like a pan­dem­ic,” says Weaver.

As for bring­ing in a ded­i­cat­ed indi­vid­ual to lead a make-or-break restruc­tur­ing project, hope­ful­ly with­out trig­ger­ing a turf war, he has lit­tle doubt.

A good CRO, he says, is “a pret­ty unusu­al ani­mal, with an abil­i­ty to cov­er a wide range of busi­ness skills, work with stake­hold­ers to gain and main­tain trust, cre­ate clar­i­ty when all around is messy, make things hap­pen with a sense of urgency, but with­out cre­at­ing pan­ic, and main­tain the focus to mobilise and align peo­ple oper­a­tional­ly”. Weaver adds: “It’s fair to say that a high EQ [emo­tion­al intel­li­gence] is incred­i­bly valu­able too.”

While the temp­ta­tion to rely on exist­ing board­room exper­tise in a cri­sis may be under­stand­able, NSCG’s Clegg urges all C‑suites to act fast when they sus­pect their busi­ness is begin­ning to fal­ter.

“CROs are already in demand and as gov­ern­ment sup­port schemes come to an end, the urgent need for them will sky­rock­et,” he says. “While the best of the bunch cer­tain­ly don’t come cheap, they may just save your busi­ness.”  

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