7 Turnaround Tips From an Interim CEO

I’ve done it for three decades, turning around companies from agriculture (such as Styrotek) to telecommunications giants (such as ITT). As interim leader, I have to parachute in, quickly gain trust and respect from all levels, determine a course of action, and unite everyone to stay that course—all within a limited timeframe.

It takes leadership strategies far beyond business and managerial chops, though certainly those are necessary. You can’t lead effectively without a connection to the people in the company; emotional intelligence is a must. Think of it as ‘strategic empathy’—being sincerely focused on the individual, but always with the big picture top of mind.

“Fear and uncertainty are fertile grounds for doubt and resistance.”

Whether you are an interim or a permanent CEO, these 7 tips for using strategic empathy bear relevance for anyone in a leading role.

1. Expect anxiety. When I walk into a company in crisis, I expect many people will be scared and angry, entirely natural given the conditions. But fear and uncertainty are fertile grounds for doubt and resistance. So act quickly to quell it, or you’ll have an entirely dysfunctional situation on your hands, where you can’t get anything done.

2. Let them say no. Of course I don’t want to hear no. I want to hear yes. But as a leader, I have to be able to reach other people on an emotional level, or I’ve lost them. I also have to understand and contain my own emotions. So I hear people out, keeping my own feelings in check. When I inevitably hear no, I don’t try to counter it. I show that I respect what they think; that it’s safe to express their opinions. On a practical level, that free speech will come in handy when I’m looking for answers.

3. Do it yourself, don’t send a representative. A perceived vacuum in leadership can have quick and devastating consequences, So make your presence known, and not by proxy. Direct contact is key. I don’t just speak to one level down, then dispatch the VPs to transmit my message to everyone else. That kind of ivory tower detachment won’t create any connection, trust or respect within the company. And unless you can build those, you’ll never get to yes.

4. Focus on the middle. Experience has taught me to listen to every level but focus my attention on the middle. The VPs are like the company’s elder council: their own survival in mind, they may just tell you what they think you want to hear. The bottom are less focused on strategic issues, but you need their confidence, trust, and input—as I found out by spending time on the floor at Styrotek. But it’s the middle managers that translate a CEO’s vision into daily practice. Without them, you can’t effectively implement change.

5. If you see something broken, fix it. If you’re not leading with the goal of improving on the status quo, you’re not leading, you’re following the same flawed path. And decisive action inspires confidence. While the Interim CEO at Robinson Nugent, I joined the shipping team one day to find out why orders were frequently misdelivered. After watching one employee struggling with addresses, I took her aside—much to her relief. She had trouble reading, she told me, and added that for months, she’d been begging for a transfer to assembly. First I transferred her there, where her mechanical skills immediately shone and her wages increased. Then I fired the shipping supervisor, who should have known what was going on in his own department.

6. Everyone has to row the boat. I’m steering a company back to health, but everyone has to row the boat or we’re all dead in the water. So I create an environment that encourages and rewards participation. At ITT, I called a meeting with accounting and financial to discuss how to better support our revenue base. With the VPs and myself on stage before an audience of over 200 employees, I asked, “Is anyone here in sales?” My point was we’re all in sales: without satisfied customers, there are no accounts or revenue. Only one person raised her hand. “Great,” I said to her, “You got the message.” Then I walked into the audience to recognize her, and the whole mood shifted from disinterest to total engagement. Then we could all start getting things done.

7. Know the 8 out of 10 rule. Generally, out of 10 ideas, eight are unusable, but that’s the only way you get to those two good ones. And just because an individual’s title has nothing to do with the issue at hand doesn’t mean he or she doesn’t have a solution. So welcome all suggestions.

While I was interim CEO for a company that was stuck with $50 million of nonmoving inventory, I held a meeting with accounting, marketing and sales, and asked for ideas. First a fellow from accounting suggested we sell the inventory at a big discount. I knew that wouldn’t work (it depended on the same channels that had already failed), but I praised the attempt, which encouraged more ideas. A new MBA suggested selling the inventory to a closeout retail chain. She wasn’t even in sales, but this was brilliant. Put together a team, I said, promising them a percentage. They sold everything.

Often, an interim CEO manages profound change under tremendous pressure. But use a unilateral, top-down leadership strategy, and you’ll lose before you even start. Instead, listen, learn, empathize, and include everyone in your strategy. If everyone is invested in a company’s survival, you’re far more likely to succeed. Remember: everyone’s got to take an oar to move that boat.

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Richard Lindenmuth
Richard Lindenmuth has been an Interim CEO in a number of industries, with business models ranging from high technology and services to heavy- and basic-industries. He has 30+ years general management experience in domestic and international operations, and is noted for his comprehensive execution skills in both high-growth and distressed environments. Lindenmuth is Chairman of the Association of Interim Executives and author of The Outside the Box Executive.

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