When CLG’s management informed its employees that the company had been sold, the announcement hardly caused a stir.
“In April of 1998, when the announcement was made, it was the most uneventful day in our company’s history,” says Leslie Braksick, president, CEO and founding partner of CLG, a Moon Township consulting firm that provides executive coaching and helps companies develop human resources strategies, processes and behaviors.
CLG has offices in Pittsburgh, San Francisco, London, Singapore and Atlanta, and an operations center in Morgantown, W.Va.
Doing lots of preparation for the change of ownership and engaging employees in the design of the blueprint for the sale ensured no one was caught off balance by the transaction.
Had the same message been delivered just a couple of years before that, however, the reaction would have been a lot different. CLG was — and is — a much different company than it was in 1996. It’s now back in the hands of two of its original partners, its employees through an employee stock ownership plan and 17 investors.
And it’s larger, with 180 employees and $22.5 million in sales last year, with a healthy increase in revenue expected this year.
But perhaps most significant change is that CLG is now governed by management, an organizational structure and processes that were lacking in its early years, threatening the health, if not the very survival of the company.
CLG, launched as the Continuous Learning Group in 1993 by Braksick and two partners, Julie Smith and Larry Lemasters — who sold his interest in the company as part of the 1998 buyout — had by most measures done well in its first three years. It took in revenue of $1.2 million its first year of operation and doubled that figure every year for its first five years.
By 1996, it had 60 employees, contracts with Fortune 500 companies — and some knotty internal problems.
CLG was founded by partners with a passion for their profession but not necessarily a burning desire to run a complex business, says Braksick. When it operated on a smaller scale, the partners could easily make decisions and communicate with employees and each other.
“There was a person-to-person model of operating, and it really worked pretty effectively,” says Braksick.
But as the business grew and took on larger and more numerous clients, the channels of communication and the control the partners exercised began to erode.
“Because of our growth, we had gone from three partners running the business to nobody running the business, because it wasn’t clear who was in charge. So then it became which of the three you could access,” says Braksick.
And CLG was wrestling with other problems faced by many fast-growing companies. The partners were handling a substantial amount of the hands-on work on client projects and were less focused on the nuts and bolts of running the business.
Taking on large contracts with big clients created cash flow pains as payment schedules were stretched over several months. To ramp up for projects, the company needed to hire additional consulting and support staff but didn’t want to expand its capabilities too rapidly.
“Because of our growth, we got to a point where we really needed processes to govern us,” says Braksick. “We missed that. We didn’t get those processes in place fast enough.”
Communication breakdown
An inherent strength of CLG exacerbated the communication issue. The company hired consultants and allowed them to live anywhere they chose, reasoning that requiring them to relocate to a central location was an obstacle to recruitment. If prospective consultants wouldn’t have to uproot their families to join CLG, it would have a larger pool of high-caliber professionals to recruit from.
“We set up the company to work on a virtual basis, and we were pretty successful at that,” Braksick says.
But the lack of structure and communication fostered misunderstandings and created isolation between the partners and the consultants. Because consultants are compensated by a combination of base salary, billable days and corporate profitability, there’s an incentive to work as many days as possible. However, in some cases, consultants were working fewer days than they desired in some months, although CLG had contracts secured that would provide ample work in future months.
But without a system to routinely and smoothly keep consultants up to speed on upcoming projects and the role they might play in them, the consultants operated in an environment of uncertainty. That, says Braksick, sowed the seeds of discontent within the ranks.
The warnings surfaced gradually. Terse, just-the-facts e-mail messages replaced the collegial ones that Braksick and others were used to receiving. Subtle changes in tone of voice and body language signaled employees were unsettled. Braksick began to hear second-hand disparaging comments about the company by some employees.
Questions about compensation and the roles of the partners came up more frequently. And the partners found they were making decisions that, at times, worked at cross purposes with each other.
As with many growing companies, systems and support systems weren’t put in place rapidly enough to accommodate expansion and change.
“The biggest red flag was rapid growth and change without the infrastructure to support it,” says Steve Jacobs, a senior partner.
Bodega Bay
In 1995, CLG landed a large contract with Chevron Chemical Corp., now ChevronTexaco Corp., in San Francisco that would take two years to complete and stretch CLG’s resources nearly to the breaking point.
“We all started running very, very fast,” says John Dale, CLG’s vice president of e-business.
There was a sense at the company, says Dale, that the Chevron project was a make-or-break for CLG.
Braksick, who had a 10-month-old baby, took the lead on the project, commuting a couple of times a week on a red-eye flight between California and Pittsburgh. After a few months, Chevron offered her a house and a car near its headquarters to allow her to eliminate the travel and stay with her family. The arrangement eased her domestic situation but further isolated her from the day-to-day operations at CLG.
Ultimately, Braksick says, she and her partners realized they needed to take serious action to unearth the internal turmoil and get everyone back in step.
“We knew that there were issues. We knew that we had to step back, regroup, right the ship and figure out how to do things a little bit more systematically from a process standpoint,” Braksick says.
CLG hired a consultant to take a fresh look at the company. He interviewed everyone at CLG and briefed Braksick and her partners on what he’d found.
Now, with no doubt that CLG was buckling under the strain, the partners planned a two-day meeting in Bodega Bay, Calif., where employees could throw their issues onto the table, and hired a facilitator to channel the dialog into a useful, constructive direction.
The first day was emotional and tempestuous for the partners and CLG’s employees as the hurt feelings and misunderstandings came to the surface.
There were angry, loud exchanges. Employees poured out their frustrations and anxieties. Some broke into tears, others confessed their own complicity in feeding the flames of discontent.
“It was gut-wrenching, very emotional,” says Braksick.
The disillusionment ran deep. Jacobs, who had joined CLG just months before, said he made it clear he had real reservations about recommending clients or colleagues to CLG if things didn’t change. Even in the brief time he had been with the company, he’d witnessed things that were troubling to him. He didn’t hold anything back.
“I became famous for my candor that day,” Jacobs says.
Royce Heiskell, CLG’s chief financial officer, had joined the company only a few months before as well. Heiskell had been recruited from an architectural firm and had spent a good chunk of her career at a Big Six accounting firm. After the first day of the Bodega Bay meeting, she says, she wondered if she had made the right decision.
“I remember going to my room and thinking, ‘Maybe I’ll be looking for a job next week,'” says Heiskell.
Heiskell says the candor was unlike anything she’d experienced.
“In my previous experience, I hadn’t seen a company be so frank and open and lay it on the line like that,” says Heiskell.
But by the end of the second day, she says, the doubts raised on the first day had dissipated.
“We had a really strong feeling that we were a company that was going to overcome this and go forward and be stronger,” says Heiskell.
But the facilitator who had helped employees get their concerns out wasn’t as optimistic. Braksick says he gave the company about a 5 percent chance of healing.
Dale describes the Bodega Bay experience as a “flight to health,” in which the company realized its shortcomings and vowed to fix the problems. But, he says, it took a second company meeting at Bodega Bay some months later to cement the structural changes.
At that meeting, the company selected a more rounded leadership group that was more likely to speak up and voice their opinions and concerns. It put Braksick in the CEO spot and put an end to the mushy structure that having three partners at the reins had fostered.
Beefing up staff
CLG had a critical need to bulk up staff to provide support to consultants in the field. It added a travel agent — even though there wasn’t an immediate need for a second one– to coordinate consultants and travel and ease the workload.
Staff was added to retrieve and modify documents to fill requests by the consultants, and someone was hired for sole purpose of launching new projects.
Dale says he believes the company survived because its leadership took a hard look at its own role and made a genuine effort to correct the problems.
“I really believe our leaders were pretty introspective about their leadership of the company,” says Dale.
Jacobs gives credit to CLG’s employees, whom he says work hard and set high standards for personal achievement, yet never let their egos and personal gratification get in the way of working as a team. He says it took the 3 Cs — commitment, courage and candor — for everyone to own up to their responsibility to the company and to each other.
And he doesn’t view the Bodega Bay experience as an unusual one for companies.
“My personal feeling is that something like Bodega Bay is a defining moment at some level and quite appropriate and necessary at some level,” Jacobs says.
Braksick says she had to shake the feeling that she was responsible for the problems that led up to Bodega Bay.
“I never felt like I had screwed something up so significantly, so I had to just swallow it and move forward,” Braksick says.
These days, she says, issues are out in the open and everyone is encouraged to bring up concerns. And the lines of responsibility and processes for bringing those concerns are clear to everyone.
“We’re not perfect; we’re highly imperfect,” says Braksick. “But we talk about everything.” How to reach: CLG, www.clg-online.com
Keeping the lines open
When companies move into fast-growth periods, they often encounter difficulty lifting their noses off the grindstone just when it’s most important to take a look around and see what’s really going on.
Reflecting on the experience of CLG, Leslie Braksick, its president, CEO and a founding partner, recommends that leadership not lose sight of activity within the company. She suggests that leaders:
* Recognize that peak periods may be the best time to examine whether the processes in place are the ones that are needed.
* Reflect on how well they are living their vision and values.
* Structure formal communications about the health of the processes that contribute to running the company.
