Project Description

FTSE 50 industrial services Company Governance structure -> High Performance for £’00sM+ P&L improvement

Background

This Global FTSE 50 industrial services company had under performed the market earnings norm for the last 3 years. The business metrics were aloof, prepared by the CFO but has little resemblance to the business performance and weren’t relevant or embedded at operations level, where the decisions were made. As a result the operations activity where the decisions were being made were misaligned with the company strategy. So the operations teams became dependent, because all decisions, firefighting and approvals were made top down. This lost the insight or nuances required to compete in the global regions. Putting it simply the global business with $17bn of assets was too large and complex to manage top down. The executive structure, was akin to a cottage industry, CEO dominated, so lacked functional ownership. This left local functional teams unsupported and development and learning compromised and limited to firefighting and sign off reviews. The metrics lacked balance and there were strategic gaps. The lack of clarity caused politics to thrive with narratives and politics thriving in the international teams. This was falsely justified by executive using the notion of “delegating accountability” to the international team executives.

So with politics thriving, misalignment of operational activity with earnings strategy, and very little process focus or organizational learning, or risk management. This ethos left mistakes repeated alongside performance managed by firefighting. So it was impossible to track performance or risk, across the business, because all accountability resided with the CEO and CFO to manage relations and justify their performance to investors. The business adopted some financially uncontained ideological climate metrics too that weren’t tracked properly. So broader ESG etc investment strategy/contract oversight was not managed or measured, fueling operational overruns and a lack of focus on vendor or strategic procurement excellence.

This business had £17bn of assets on the balance sheet, many assets were tying up cash, so dormant. The business was cash rich but the misalignment left a hundreds of millions of GBP profit improvement opportunity on the table.

The myopic focus on earnings left critical balance sheet performance gaps and dormant assets going unnoticed and risk entirely in the hands of the CEO and CFO.

Ability to integrate into the client company

Tom worked alongside the Managing Director board sponsor, taking ownership of the governance, ownership of the financial and operational reporting and measuring the performance claims vs the reality. In a few short sessions that combined development, operations and financial management and analysis, the gaps, real business drivers and ideal metrics were pulled together, along with a pragmatic perspective of their functional ownership. From this point the structure identified teams to create centres of functional excellence, to develop and support the functional expertise in house. This structure was created to build the capability of the organization and provide a framework of excellence, focus and improvement. Limiting behaviours were identified and the executive was coached on how to cascade the objectives, create a place for everything and leave the ownership with the teams to solve the problems themselves, to break the cycle of firefighting, ambiguous business planning, ad-hoc sign off formats, and reactive controls. This lack of structure, process and clarity undermined accountability regionally, dependent and left the board open to risk. 

Impact on the business / bottom line

The focus on functional accountability, building capability by developing and sharing functional excellence, establishing the annual/ quarterly, monthly weekly business operation, program and capability review structure created the means to cascade the business plans to national level and embed the undelying metrics in the day to day operations.

The platform created was the means to identify track to save/increase revenue to improve profits by £’00s of millions of GBP by keeping the team 100% focused on, aligned with, incentivized on and supported to deliver the strategy.

Clarity on the objectives, accountability, review structure, improvement in relationships and the personal capability development opportunity, provides the functional ownership, motovational structure and capability development to deliver the plan up skill, professionalise and build the team.

The clarity of objectives, better and effective organizational relationships, professional support and development created the platform for the capability development roadmap, high performance and motivation.

Achievement of objectives

This operating model simplified structure, focused metrics, gave the director everything he needed to execute the strategy and develop the internal plan to shift the organisation from a central high risk, command and control / firefighting culture to a professional best in practice operating model that well surpasses their competition in their market. This is the means to proactively, free the time to read and stay ahead of the market, and usurp the competition. This built a stable scalable organisational platform with far higher profit/earning, ROCE and delegated decentralised risk management, so far less risk.

Working style

Hands on, no big reports, the conclusion, new KPIs and operating model was summarised on 1 sheet of paper, Resourceful, Very collaborative, people development centric with a high degree of business acumen, leveraging financial operational experience, product analysis, structured implementation and professional decelopment. Coached the executive team to identify, resolve leadership behaviours, damaging psychology, and communication that had got the business into its demise, from which how to reverse the waste resource, assets to give them the means improve financial and operational improvement, and free the executive team from firefighting to strategy and development.

Leadership / people management skills

The 1 page business model was developed collaboratively providing the board member with the ideal operating structure, specific enabling KPIs and organisation structure. The review structure spanned from the board – shop floor and the risk management model to enable the executive sponsor to internalise and create their own plan to realise the results. Coaching and support has been running in parallel from Tom and is available on tap, to resolve any issues, psychological blind spots, up skill the team, define results / targets and or accelerate implementation.

Sponsors comments: “What you’ve helped me with so far has really enabled me to understand how reporting should work, and with that knowledge, move us to a better world! As and when I hit roadblocks I will be in touch.”