It’s lonely at the top for small- to mid-sized business CEOs

Wednesday, April 7th, 2010 at 9:17 pm

It’s lonely at the top for small- to mid-sized business CEOs

(ARA) – It is no secret the economy took its toll on the nation’s businesses in 2009. Some businesses shut their doors, others made major sacrifices to stay afloat, while some lucky ones thrived through the turmoil. So what’s the secret to sustaining healthy revenue and profits?

Executive peer issue processing.

According to ChiefExecutive.net, “In the past few years, the failure rate of CEOs has increased significantly even as average tenure has dropped sharply . . . The resulting turnover has placed CEOs in difficult environments without much support.”

This was true for Vistage member Gus Cicala, president and CEO of Project Assistants, Inc., a project management consulting company based in Delaware. After losing clients, such as Freddie Mac, at the end of 2007, other clients began cutting their consulting budgets and Project Assistants saw their revenues drop more than 50 percent in just a year and a half. Facing a cruel reality, Cicala knew he needed to make some cuts, and struggled to make the hard, emotional decisions on his own. He turned to his executive coaching group for help.

Last March, revenues continued to fall, so Cicala’s executive coaching group helped him make one last cut. “It was that last Wednesday in March when things had gotten really rough and I knew I might have to do something drastic,” says Cicala. “When I walked into my Vistage meeting and informed my group I might have to shut down, one member said ‘not on my watch.’”

Sixteen heads are better than one

* Making cuts without cutting too deep. Cicala’s executive coaching group helped him reduce head count and cut salaries, and coached him on how to do this without damaging the morale and work ethic of those he kept. Project Assistants went from 30 to 15 employees and everyone, including Cicala, took a 25 to 35 percent pay cut. With strategized cutbacks, he didn’t have to shut his doors.

* Create variable costs. His executive coaching group helped him see and create variable costs and now Project Assistants is making more profit than when they were double the size. Losing five percent in the first quarter, Cicala made some adjustments with the advice from his Vistage colleagues. While revenue continued to drop throughout 2009, they were able to make a two to four percent net margin for Q2 and Q3 and a seven percent margin for Q4, ending the year with increased profit.

“We survived because my Vistage colleagues insisted I keep trying,” says Cicala. “It was painful advice, but I did it. We are a stronger company because of the employees who stayed with us, and I am a stronger CEO because my executive coaching group taught me how to run a more profitable company.”

Executive coaching groups not only provide the support CEOs need make emotional decisions, but they also help companies remain proactive and ahead of competition.

CEO Dave Dastur, of Chicago’s oldest architectural firm, Jensen & Halstead Ltd., says his company never felt the recession like most of his industry did. According to the American Institute of Architects, January of 2009 was the worst month ever recorded in the 15 plus years they’ve been tracking the industry revenue, jobs, and leads … and they have yet to see an upturn.

“One hundred percent of our work is repeat and referral,” says Dastur. “So, for me, it was about hiring the A players and focusing more on keeping the current clients happier by being engaged.”

While Dastur’s executive coaching group is extremely helpful, Dastur says the monthly speakers were a big help early on.

Expert speakers

* Brian Beaulieu, on macro economics. In the fall of 2007, Dastur thought seriously about a macroeconomics speaker who predicted the downturn. Following the speech, Dastur decided to be proactive in protecting his 141-year-old company, in case the predictions were true by making sure he had cash in hand.

* Jeff Vogelsang, “Lessons Learned on the Turn-Around Trail.” Jeff talks about the things to do to help a failing company. After Jeff’s speech, Dastur took a hard look at his gains and losses and cut a lot of non-essential items that wouldn’t affect the business. This not only helped Dastur cut expenses but helped build cash in case business slowed down enough to need it.

* Kraig Kramers on “CEO Tools.” Kraig has turned around a number of companies and several of his management techniques, as well as ways of tracking numbers and “what gets done,” are helpful in tracking the trends of Dastur’s business and making sure they are moving in the right direction.

Dastur’s Vistage group helped him realize that it was OK to let some clients go. He started off with 20 percent of clients producing 80 percent of the revenue. Now, they have 45 percent of clients producing 80 percent of their revenue.Through December of 2009, 23 percent of architectural jobs have been lost through the recession, according to the American Institute of Architects. While most of the industry had to lay off large numbers of employees, Jensen & Halstead was able to maintain stability.

Executive coaching groups make the top less lonely, and provide sounding boards for companies without a board of directors.

Vistage International is one example of a handful of CEO executive coaching organizations. The organization is represented in 15 countries with nearly 14,500 members. Collectively, members run companies with an estimated $300 billion in revenues and employ two million people. In addition to their executive coaching groups, CEO members have access to expert resources speakers and receive monthly one-to-one coaching from a mentor called a Vistage Chair. The sharing of information in a group is completely confidential, allowing for the open exchange of issues, ideas and solutions. For more information go to www.vistage.com.

Courtesy of ARAcontent