The role of a CEO or a profit centre head is getting more difficult by the day. With business pressures and growth challenges in an unpredictable economy any CEO has to be a visionary, a financial wizard, HR specialist, motivator and an implementer all rolled into one.

 

And nowhere is this more evident than in communication business. With business models changing rapidly, new emerging media, consolidation of agencies, pressure from global holding groups and diminishing returns from the clients both in terms of the fees and credit period the role of the CEO has become much tougher.

 

More so it is the agency cost structure which makes things much tougher. Unlike most of the other business 60-80% of agency cost is under one head. Payrolls. Or to look at it from a agency perspective, the cost of talent. Ours is a human resource led business where revenue depends not on technology or machines or factories but the human ingenuity. We are supposed to be in the ideas business for which we need talented people. Yet when something goes wrong the only cost that one can cut is human resources. For cutting anything else contributes to a paltry saving. Today's blog is about how should one go about handling the turn around issues in an agency. And how, I handled such situations.

 

In the last 10 years twice I have come into agencies which were bleeding. There had been a client exodus, sometimes due to competitive pressure and sometimes due to global realignments. Like any organisation, the shareholders were wanting immediate solutions while looking for more long term stability.

 

When an agency loses clients or it's revenue stream gets affected, increments are withheld, bonuses shelved and incentives scrapped. This is usually a double whammy for the staff whose morale is also down because of loss of clients. I faced these situations both as an opportunity and a challenge.

 

The opportunity obviously is to let go of the non performing staff. In any organisation there will be some staff that by internal comparison also falls short of standards. Lot of times these people were yesteryear stars or people who had become jaded. The opportunity is to let go of such people.

 

But there always will be two other types of people. The workhorses and the talented ones. The challenge is how to motivate them without bonuses and increments to get them to stay. I always believe that those who do not appreciate tough times and start showing signs of frustration and impatience because of financial issues should be allowed to go, immediately.

 

The rest is obviously your core team. Ideally you would not want to lose these people. Yet you may be in a situation that some of these people have to go. The trick is how do we handle such situation. It's important how we deal with such departures as this affects the morale of people who are not going.

 

I have always tried to get these people jobs within the industry. Made an effort to reach out to peers and convince them about what these people can bring on board. Showing that you care for these people not only lessens the blow for them but it makes the ones staying have more faith in you. You do not come across a cold, calculating number cruncher but a genuine human being who has the good of people at heart. Your survivors tend to believe in you more and then their loyalty to you increases. Furthermore when things turn around the same people whom you helped get placed will come back too.

 

So the first step for the CEO is to be a good HR person. He has to demonstrate good HR skills in filtering his people and in then motivating them for a turn around.

 

The second step is one which an agency practices for almost all it's clients but rarely does for itself. Position yourself. Look at your talent, look at your competition, look at your current clients (it is much cheaper to consolidate with current client than acquiring new ones), the clients in the market, are their any new happenings or offerings which could be relevant for the market……For me, once the opportunity was to be a creative boutique and the other time to be a total solutions agency with digital at the forefront.

 

Once this is clear, sell the positioning internally. Get a total buy in from your key senior staff. You may need to hire some new people to make the positioning a success. Do it. Maybe at the cost of some old employees. If some of the current employees will not help you amplify your positioning, they will have to go. Do not procrastinate, do not be emotional about it. Just implement it.

 

The third step is to have a detailed action plan. Which clients you will go for with this new positioning? Does this help you consolidate with current clients? Who will be responsible for the same? Do your credentials now reflect this new positioning? You as the CEO will have to be responsible for a detailed programme about this positioning. At this stage you will have to be a hands on CEO. Have a time bound programme. What sort of results are expected, by when? Do not be overtly optimistic, but be realistic, give yourself enough time but not too much also. Get a buy in from your board. Let them be your associates. Invariably they can help you a lot. If there is clarity in your thoughts and action then the board will give you enough time and support.

 

Finally get your whole office to buy into this. Let them understand what is required of them. Redefine everyone’s target and role. Put it in writing. Specially the key senior people. For you cannot do this alone. You have to carry them with you and they need to carry your plan.

 

Trust me, if done honestly and with the right vigour this works, nine times out of ten. For that one missed time you need what Napolean always wished for. Luck.