Salmirs brought the team of direct reports who would serve as the executive committee to the final meetings with BCG. Feinberg and Webb met the squad and listened closely to their questions and suggestions. Among the ranks were the future project champions, or owners, as consultants describe client-side employees who assume leadership positions in the coming transformation.
Salmirs, for his part, scrutinized the staffing issue from the supplier side. “I wanted to meet the key people who would be on the team,” he says, “not just the high-level partners you see at monthly stewardship meetings.”
In April, BCG was chosen to handle Phase One of the assignment and stay on to handle the subsequent phases. “What put BCG over the top was alchemy,” says Salmirs, who felt BCG had established a strong rapport with his team, a bond that he believed augured a solid working relationship once the actual project began.
Planned as a four-step process, ABM’s transformation began in June 2015. The first step was creating a roadmap—a long-term strategic plan. The roadmap was completed by September and quickly approved by the board. ABM then signed a follow-up contract with BCG to begin Phase Two. Working in tandem, ABM and BCG identified ABM’s key verticals—areas where it could most readily build a competitive advantage—as commercial buildings, aviation, healthcare, education and high tech. Next, they restructured the company around those, replacing a geographic orientation in place for over a century. Thus, employees who cleaned hospitals in Philadelphia were now in the healthcare division, rather than the Philadelphia branch office. The third phase, launched last May and scheduled to conclude in October 2017, involved standardizing account-management processes and detailed work rules across the new verticals, creating what the company calls process tools and providing additional training based on the employees’ new responsibilities.
Initial results of the new organizational structure were evident when ABM reported Q3 operating profits of $18.5 million for fiscal 2016, compared with an operating loss of $7.6 million in the same quarter a year earlier. Salmirs attributed the improvement to several factors, one of them the new operating structure, and noted that the company originally looked for the reorganization to produce 1 percent margin growth.
For a company that had been operating on a razor thin margin of 1.2 percent, meeting that goal represents an impressive 83 percent margin jump. To date, the transformation initiative has already gotten ABM halway there and the company is reportedly on pace to hit its goal by the end of 2017.
In BCG, Salmirs selected a large company, but the $300 billion global consulting market is made up of hundreds of firms of all sizes and with varying specialties. Whether CEOs are contemplating a global powerhouse or a boutique shop, Salmirs’s diligent approach, with its emphasis on compatibility and responsiveness, is a good one, industry veterans agree.
“It boils down to looking at three things—competence, credibility and chemistry,” says Ted Bililies, managing director at AlixPartners, who urges CEOs to vet the capabilities of prospective firms with their peers. “I can’t emphasize reference-checking enough.” As with ABM, chemistry is often the deciding factor, he adds. “Chemistry isn’t just, ‘Do I like you?’ It is, ‘Do you get me? Have you taken the time to understand our company—our culture, our shared beliefs, values and behaviors?’ Without that, consultants can do unintentional harm, coming in like the proverbial bull in the china shop.”
Industry knowledge—as opposed to process mastery—can also be a differentiator. Some strategic consultantsargue that their broad experience across industries and practices enables best-of-breed thinking rather than we’ve always-done-it-this-way stasis. Others readily claim industry cred. Heather Ziegler, manager of Deloitte’s Stamford, Connecticut practice, notes that consultants “should be able to share anonymized engagement details with you,” to help you imagine what teaming with them might look like and what you could achieve together.
When shopping for advice, McKinsey’s managing partner for North America, Gary Pinkus, recommends setting one’s sights high. “Make sure the size of the prize is worth the journey,” he says. “The cost involved—not just the value of our time, but the internal costs you’ll have when you put first-rate talent on the project team—can be a reasonably expensive event.”
It’s also key to recognize that the journey doesn’t end when the consultants leave. “The CEO needs to name champions of sustainability who will be measured at the 6-month, 9-month and 12-month mark based on continuing the initiative,” says Bililies. “He needs to say, ‘John, Mary and Scott, you need to let me, the CEO, know if the organization is flipping back to its old ways.’ Ultimately, it’s all about effecting and sustaining change.”—Warren Strugatch