Kay Napier freely admits that she felt a little lost in early 2010.
After years as a successful vice president with Procter & Gamble and McDonald’s, she had taken over as CEO of Arbonne International LLC in August 2009. But she couldn’t admire the view from the summit for too long. About a month later, it became apparent that Arbonne was headed for a crisis.
“The company had grown very rapidly and hadn’t built the infrastructure that they needed to be successful, either at the current volume rate or to get set for future growth,” Napier says. “There was a lot of volume sold that didn’t get to the end consumers’ hands. There was a lot of positive momentum in the business, but not the follow-up that needs to happen from a training standpoint. So in that setting, what goes up must come down.”
The company, which sells health and beauty products to consumers through more than 30,000 independent consultants, was suffering from poor business practices that had created a large amount of debt. In September 2009, the company’s board made the decision to file for Chapter 11 bankruptcy, in order to restructure the debt to equity and allow the company’s lenders to become the owners of the business. The company officially declared bankruptcy in January 2010.
Napier had never gone through a bankruptcy before, so almost as quickly as she settled into the CEO’s role, she was undergoing a baptism by fire, dropped directly into the middle of an organizational turnaround.
“I was very concerned, as were the potential new owners, that we would have a lot of defections, particularly in the field because these people are independent contractors who can go work for another company very easily,” Napier says. “Any time people here the ‘B’ word, you’re going to be concerned about defections.”
Napier had to get nearly 1,000 internal employees, as well as tens of thousands of consultants, to see past the bankruptcy proceeding and look toward a new future with Arbonne. The new CEO had to instill confidence in a company that she was still learning about herself.
Read and react
In some ways, Napier is glad she was still a rookie CEO when news of the bankruptcy first emerged. She didn’t have a chance to overthink things. Much like a first responder in a disaster situation, she had to rely on her training and instincts. And her training and instincts told her to start informing everyone in the organization, employees and consultants alike.
The first item she needed to make clear was that the company was not in jeopardy of going under. Everyone was still going to have a job, both now and in the future.
“In this case, there was no liquidation,” Napier says. “Everyone got paid, it was business as usual largely. But you can say that, and your people will come back and say ‘Sure, just wait until next month when you cut our paychecks or whatever.’ I had to trust that our new owners and potential owners were telling me the truth regarding that, because that’s what I was communicating to our troops.”
To help simplify communication and ensure that Arbonne’s corporate leadership was broadcasting a consistent message to everyone in the company, Napier and her leadership team produced a series of videos that laid out, in a straightforward manner, what the bankruptcy meant for the company.
“They were done in an interview style,” Napier says. “I told everyone in the video that I had to learn about this, too. I told them what this really will be is a strengthening of the balance sheet, because for us to continue with the level of debt we had would have been a very challenging business situation. We also wanted to outline that everyone would get paid, and that this would ultimately be a good thing for the organization, not a bad thing.”
Your messages in a time of crisis should be realistic, but whenever possible, optimistic. Employees normally only see surface evidence of what is happening within the company, and if the surface evidence looks like bad news, they’ll start envisioning worst-case scenarios — unless you intervene with the truth.
“Communicating in these situations is like producing a good ad,” Napier says. “Someone has to see it six times before it really sinks in. If you assume saying it one time is enough, you’re wrong. You have to reassure your people twice as much as you think you need to. In my case, I was just coming in, so they didn’t know me from a hole in the ground. They had to trust that I was telling them the truth, and that was the case for both the employees and the consultants.”
Napier says communicating during the bankruptcy wasn’t a complicated process. It was a matter of doing simple things repeatedly.
“You know your subject, which is an old Dale Carnegie principle, and you know your heart,” she says. “I think that is some of the best training for any communicator. I was definitely living and breathing my subject, and I maintained a positive attitude because I wanted to be positive about this situation. I knew this had the potential to turn into a great situation for us over the long term.”
Get others involved
In addition to a jump right into crisis communication, Napier also had to jump into prioritization. She was already working on a number of new initiatives when bankruptcy proceedings began, and she had to determine how to best lead the company on a day-to-day basis in addition to piloting the company through the bankruptcy. It took the involvement of Napier’s leadership team, which at the time was a combination of holdovers from before.
“There wasn’t a lot of balance right away,” Napier says. “I’d be lying if I said there was balance. I had to perform some delegation of responsibilities, but at the same time, there were gaps with what I had in terms of resources, so I couldn’t delegate everything. For example, I didn’t have a head of marketing until we emerged from bankruptcy, so in addition to the CEO hat, I had to wear the marketing hat, as well as the bankruptcy hat. I think we did well collectively with the bankruptcy, and I think I did reasonably well as a CEO overall. On marketing, I think I deserve a C-plus. There were things that happened with marketing that, if I had more time to devote to it, we would have done a better job. But I could only work so many hours in a day.”
When Napier did delegate, it was more out of necessity than by design. But by trusting her team to take on responsibilities and help her lead, she began to develop a sense of familiarity with them, and they began to understand her leadership style and trust her decision-making skills.
“For any leader in a situation like this, I would tell them that whatever you do is going to be magnified,” Napier says. “If you’re not positive, no one is going to be. Even if you are a realistic executive, and you might be realistic about your bottom line and financials, you have to be a cheerleader when leading your management team and the people in the field. Because if you don’t believe in what is going on, they’ll never believe.”
Napier kept coming back to the old saying about making lemonade when life gives you lemons, and began preaching that to her leadership team. She asked her team to follow her example by remaining positive and finding whatever positives might exist within the crisis.
“The first thing you’re going to do when considering joining a company is decide whether there is a future in terms of business growth,” she says. “When I looked at this company, I knew there were financial issues, but I believed in the fundamentals of the business. That is what allowed me to come in and be positive about the future. You can make lemonade out of lemons in most situations, and people are going to keep looking to you to do that. So you need to maintain a positive attitude even when you just want to scream and run out the door. If you stay positive, others will respond, and you will start to feed off of each other.”
Over the course of the first months on the job, Napier’s focus on getting others upbeat and involved started to pay dividends.
“When I announced to the national vice presidents that we were filing for bankruptcy, one of our consultants told me that she was excited that we were going for bankruptcy,” Napier says. “I still kind of kid her about it, because it summed up the attitude that we’re going to turn this into a great thing for us, and we have. We have great new owners who are in it for the long term; they don’t force me to do anything that isn’t right for the business in the long term and they challenge me in a very good way. It’s all in the power of how you approach it, how you get others to approach it, and continually trying to make lemonade from the lemons you were given.”
Prepare for the future
Arbonne emerged from bankruptcy in 37 days and rebounded to post $353 million in revenue during 2010.
“I think it’s still the world record for the fastest Chapter 11 emergence in history,” Napier says.
To make sure the circumstances that led to Arbonne’s bankruptcy never appear again, Napier and her team have begun to reform how the company does business. In particular, Arbonne has revamped its training regimen for independent consultants.
“Before the bankruptcy, there was a lot of product being sold by people who were not ready to enter the business,” Napier says. “It wasn’t a majority of the growth, maybe 20 percent, but no matter what business you’re in, if you recruit somebody to do a job, but don’t teach them how to do a job on an ongoing basis, you’re going to be a flash in the pan. We had a lot of that, people being recruited with no follow-up.”
Napier and her team have produced a video aimed at giving prospective consultants a detailed overview of Arbonne, its business concept and what is expected of consultants from a business standpoint. Arbonne’s leadership team has also solicited input from the field on the training topics most in need of emphasis.
“There were not as many company-generated training devices as there should have been,” Napier says. “The problem is that when you leave anyone alone – be it employees, consultants, your kids, anyone — if you don’t give them a structure, they’re going to create their own stuff. So you want to get everyone involved in that creative process. Our consultants are much better at creating these training vehicles in collaboration with us than we would have been by ourselves.”
Napier has learned a lot of what she now knows as a CEO on the fly. Now that she has a chance to step back and look at Arbonne since the bankruptcy, she says she is glad that her first few years on the job didn’t just follow the script. In the long run, the need to react to a crisis is essential for any CEO.
“It’s kind of like your mother teaches you: Get in there, and do what you have to do,” Napier says. “I had never been through anything like that before, and I think my career background prepared me to walk into a situation that I knew nothing about and do the best I could. You have to know what the goal is and coalesce around that goal.”
How to reach: Arbonne International LLC, (949) 770-2610 or www.arbonne.com
The Napier file
Education: Double major in studio fine arts painting and economics from Georgetown University
First job: My first real job outside the house was at a pharmacy in Montgomery, Ohio, when I was 16.
What is the best business lesson you’ve learned?
When you’re dealing with something difficult – be it a bad boss, a bad experience or just a challenging experience – you can use that to emerge as a better leader, better manager and better person. I am a huge believer in persistence. If it doesn’t kill you, it’s going to make you stronger.
What is your definition of success?
In general, success is reaching your goals, and feeling like you have accomplished something. If you’ve set your goals as a person or a company, and you achieve some of those goals, you start to feel a sense of self-worth and satisfaction. Outside of business, success also comes from learning about life, self-development and helping your family achieve their goals.