No one is going to believe you. Not at first, anyway.
If you are ever in the same situation that Bob Peiser found himself in upon becoming president and CEO of Imperial Sugar Co. in
2002, Peiser says you shouldn’t expect to find a lot of allies within
the company ranks at the outset.
In early 2002, Imperial had just emerged from bankruptcy, bottoming out at the end of a several-year slide that began when
acquisitions the company had made in the late 1990s generated
excessive debt. The effect of the growing debt was magnified by a
downturn in the often-cyclical sugar industry.
By the time Peiser was hired, Imperial owed more than $300 million to its creditors.
“We probably could have survived one or the other, the debt or
the down cycle in the industry,” Peiser says. “But we had trouble
enduring both at the same time.”
Peiser was faced with the task of not only rescuing Imperial’s
finances, but instilling confidence in a work force that wasn’t
interested in believing anything upper management had to say.
“The company was in trouble for three or four years, so the people who came out of it were skeptical about whether there was a
future here,” he says. “There was also a skepticism about me, the
new boss with new ideas and a reputation for turnaround management. They were thinking of me as someone who was just
going to come in and cut a lot of jobs, fix the company, and sell
it. But that’s not what I am all about.”
What transpired in the ensuing few years tested every aspect of
Peiser’s leadership ability — his aptitude as a financial manager,
his ability to manage people and, above all, his ability to create a
new outlook for a sinking company by forming a new vision and
outlook.
Cutting back
Peiser says there is no good way to perform cutbacks when
you are trying to relieve your company of massive debt. Any way
you slice it, you are going to rock your company’s foundation
and upset employees.
He says the best thing you can do is be candid with your work
force. Developing a bunker mentality because you are afraid of
negative publicity will only make the situation worse.
Between 2002 and 2005, Peiser oversaw the sale or closing of
14 Imperial plants and factories, which came with a number of
layoffs.
Peiser says he went to every single plant to personally announce
the sale or closure.
“That’s not a particularly pleasant job,” he says. “But it’s important to not hide behind someone else to make that announcement.
You get more respect from the organization if you do it yourself.
“I can remember the day we closed the Sugar Land refinery,
right across the street (from headquarters). I was right across
the street making the announcement. I’m not sure everyone
would have done that, but people recognize that is a good thing
to do, and it makes you much more visible.”
Peiser says he believes in a strategy of “overemphasizing personal presence.” In the first couple of years of his tenure, Peiser
frequently traveled to Imperial facilities around the country for
face-to-face interaction with employees and managers.
There is no substitute for being there when it comes to building trust, especially when employees have been conditioned to
not trust management.
When Peiser traveled to factories, he was dealing with, in
essence, survivors. The people still employed by Imperial felt
guilty that their jobs stayed while the jobs of others were lost.
They were also wary of it happening again.
“The people that survive downsizing are distrustful and guilty,”
he says. “They might have lost someone who worked next door
to them. The first time you go through that, the openness of
communication is so vital, but you also have to recognize that
nobody is going to believe that this is the only time you’re going
to do this. Nobody believes that this is going to fix things.
“You just have to slog through it, and open yourself up to questions and doubts and be willing to talk about it.”
Peiser says only through frank, honest and repeated communication will employees start to see the big picture.
“They’ll start to recognize that the ones who are most vulnerable to losing their jobs are the ones that are not working hard
and not contributing,” he says. “So, the message is do your job
well, and you’ll have far less to worry about.”
Focusing on strengths
When a company has hit bottom, employees can tend to view
everything within the company as inherently bad. But Peiser says
most of the time, that’s not the case, and as the leader of the business, your job is to separate the flowers from the weeds.
From the outset, one of Peiser’s most important jobs was to
identify the positive aspects of Imperial Sugar, and then stress
those aspects to employees.
“From a confidence standpoint, it was important to stress that
we had some significant strengths within the company,” he says.
“We had and still have two very strong brands in the regions they
are sold in, and we have very strong relationships with our customers.”
The longevity of the Imperial Sugar and Dixie Crystals brands
throughout Texas and the Southeast was something Peiser
played up to emphasize his belief that the company was built on
a solid foundation, even if the previous couple of years suggested otherwise.
Peiser also wanted to harness the innovative power of
Imperial’s employees, which he couldn’t do as long as there was
widespread doubt and a pass-the-buck mentality throughout the
company.
Peiser turned the tide by making accountability a buzzword
throughout Imperial.
“We started communicating a message that we are really strong
on accountability,” he says. “We talked about how everyone is
responsible for their jobs, to the extent that if I think there are
people who don’t take that seriously, we’re going to change those
people.”
Peiser wanted his work force — which currently numbers
about 850 — to concentrate on things it was capable of changing,
steering his employees away from the mentality of concentrating
on what they thought their peers or management weren’t doing
and focusing instead on what they were doing themselves.
It’s something that, once again, came down to Peiser’s persistent communication and having his actions fall in line with his
words. Even then, the change took years in his estimation.
“It took everyone a couple of years to realize I was serious on
both,” Peiser says. “I was going to change the people that needed
to be changed, and I was going to reward the people that are
good and deserve to be rewarded.”
Gathering new ideas
Another way Peiser created and strengthened a sense of
accountability was by enabling employees to take a more active
role in the company’s future. He wanted new ideas to well up from
within the company and lead to possible new directions for
Imperial.
Sugar isn’t an industry known for frequent innovation. It’s basically a commodity product that has been sold in the same paper
bags on supermarket shelves for years. In order for Imperial to get
a leg up on the competition, Peiser needed his employees to start
thinking with an innovative mindset.
He set up focus groups with a wide range of Imperial’s customers, from end consumers to retail stores to food manufacturers, in an effort to gather ideas.
He says allowing your company’s existing inertia to always drive
you, never questioning what can be done differently, is a road to
ruin. Everybody in your company should always look for ways to
do things better. That starts with looking at things from the perspective of those who use your products or services.
“It would be very dangerous if I made decisions based on what I
think is right and not listen to the customer,” he says. “So we spent
a lot of time with our customers.”
Peiser also brought in a number of experienced consumer product consultants. The interaction with the consultants and customers planted the seeds for the innovative culture he was looking
to grow.
From those meetings, eventually came a new line of sugar packaging and alternative sweeteners. It was a rare place for a sugar
company to venture, but Peiser says breaking the mold was crucial
for his company’s long-term health as it rebounded.
If you want to change the environment in and around your company, Peiser says patience is more than a virtue. It’s a necessity.
“Patience is really important,” he says. “A lot of what we were
doing was change, and change is hard. It’s still hard for us. While
we’ve attempted to promote our new products and make sure
there is visibility, it still takes a long time.
“You need patience, and you need to demonstrate your early
wins to your employees. It’s really important to show your population of associates that this really could work if given the time and
the ability to produce a quality product.”
The comeback trail
The progress for Imperial since the dark days of 2001 and
2002 has been incremental but quite noticeable. When Peiser
took over, the company had more than $300 million in debt, but
as of the end of June, it was virtually debt-free.
Imperial had its comeback interrupted with a downturn in
2005, but in fiscal 2006, it posted net income of $50 million on
revenue of $946 million.
For Peiser, the experience of the past five-plus years has reinforced some basic principles of turnaround management.
Principles he calls the “Six C’s.”
“Turnaround management involves communication, credibility, consistency of message, culture, courage and commitment,” Peiser says. “It’s very important to demonstrate a commitment to a path and making sure people understand that
you’re not going to sway from that path. We’ll learn from mistakes and do things differently, but we’re on a path to improve
the company in a certain way, and that’s what we’re going to
do.”
There isn’t a magic formula to salvaging a sinking company.
Mostly, he says, it centers on your ability to be an effective
communicator and seeing to it that your actions follow your
words.
“You’re really going to be bored with my philosophy on communication. It’s really just hammering away at it. I talk about
communication a lot but also credibility. I want to make sure
everyone knows they have access to me because I believe
being an effective leader really isn’t about doing everything. An
effective leader hires people who do things. They set a vision,
a strategy, and then they motivate.”
He says the only way to truly motivate employees is to make
sure they know you care, and you do that by being visible and
accessible.
“There are two ways communication works, and the first way
only works if the second way is done,” he says.
“The first way is to tell people, ‘I’m going to make sure I get
any e-mails you send me. It’s not going to go through an assistant. And if you call me, I’m going to answer the call, or I’m
going to call you back.’ But that won’t work unless the second
thing happens. And that means you have to do it. You have to
answer that e-mail and return that call, and do it relatively
quickly.
“Then the word gets around that not only are you asking for
e-mails and phone calls, but that it’s important to you to spend
the time to answer them. Then word gets around that you really are going to listen to people and answer them.”
HOW TO REACH: Imperial Sugar Co., www.imperialsugar.com