What Saves a Struggling Business? with Steve Swayne

In the first episode of The Value Agenda, Oliver Colling sits down with Kingsgate Chairman Steve Swayne to talk about what really determines whether a turnaround succeeds.

Steve has spent decades working inside distressed organisations across private equity, healthcare, manufacturing and retail. The conversation focuses on the practical realities of stabilising a business when pressure is building and time is short.

Three themes run through the discussion. The role people play in every turnaround. The importance of confronting reality early. And the way trust with stakeholders often determines how much room a leadership team has to act.

For leaders dealing with difficult situations, the episode offers a straightforward look at what actually helps organisations recover.

Highlights

• How turnaround professionals think about the stages of organisational distress
• Why people often become the decisive factor in recovery
• The importance of confronting difficult realities early
• Rebuilding trust with lenders, customers and employees
• Balancing financial urgency with human leadership
• Why external perspective often helps organisations see clearly
• The emotional pressure leaders face during crisis situations

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Transcript

SPEAKER_01 0:02

Welcome to the value agenda. When a business is in distress, everything feels urgent. But what's the one thing that really matters? Being able to identify and prioritize where the value lies quickly becomes the most important thing of all. I'm Oliver Colling, and my career has been built around helping businesses do just that. In each episode of the Value Agenda, we'll be interviewing experts who have a rare ability to look at a complex organization and identify where real value is hidden. I'm beginning the series by talking to the chair of Kingsgate, Steve Swain, who has more than 30 years of experience in business transformation. We're going to get into why he believes, ultimately, every organization's value walks in at the front door every day, and how focusing on just two or three critical things can stabilize a business in a matter of weeks. This is the value agenda. Let's get into it. I'm joined today by Steve Swain. For those who don't know you, would you like to just tell us a little bit about yourself?

SPEAKER_00 1:11

I'm Steve Swain, I'm chairman of Kingsgate and Dearden, and I've been involved in Turnaround since the mid-90s, originally as a as an independent executive, and then I set up the Kingsgate Group in the early noughties. I've been involved with uh the Turnaround community for a long time. I used to be the chairman of the Institute for Turnaround, which is the premier organization in that world. And I'm involved particularly with the health group. That's a particular area of focus of ours. For those who may not know that much about the world of turnaround, how would you define turnaround? Turnaround is usually defined as the actions needed to resurrect or restore value in a financially challenged organization. And that the entry point for that can can vary. So it can it's a curve. So it can at one extreme it's the full end of distress where the organization literally has a couple of weeks before it goes busts and can't afford the wages bill, to where there's just the beginning signs of distress, which is usually one or two years out from that extreme event. So there's a distress curve which most organisations go through, and the technique and approaches, although similar are different at those different stages, and it's an intervention, usually externally, of a group of people that changes the fortunes of that company, stabilizes the company, and then restores those their fortunes, repositions the company and grows it back to profitability and increases value. In the public sector, where there isn't necessarily an insolvency solution as there is in the private sector, although there are some in some sectors, it's about improving efficiency, it's about cost reduction, it's about improving output, it's about improving patient experiences, it's a number of other factors. But because there's not insolvency as such, always very rarely used, the techniques are slightly different, but the principles behind them are the same.

SPEAKER_01 3:35

So how did you get into turnaround?

SPEAKER_00 3:37

It's not something we talk about at school or at the Oh uh everybody I ask involved it by accident. So there isn't although the IFT is trying to improve that, there isn't really a career path unless you come up through the professional firms. I was asked to deal with a trouble organisation when I was an executive in the electronics industries in my m early probably mid-thirties, and thoroughly enjoyed that and then just carried on. I think some people from professional services and by that lawyers, accountants, the professional firms, they get involved in it professionally and then go on to to lead turnarounds as independents or with their firms. But there isn't really a career path. You've got to get involved with troubled organisations or troubled areas, and if you enjoy turning those around and restoring those to good fortune, then you've probably found your home. That's very interesting. And tell me a bit more about Kingsgate. Kingsgate, the Kingsgate Group's got three businesses. One, a private sector business, which we're going to talk about today. Secondly, we have a public sector business which does a lot of work in the NHS and in local government. And then we have a third business which is called Dearden, which does difficult-to-do HR, where the incumbent HR department can't or won't deal with a situation. So difficult trade union negotiations, removal of key individuals. We've also got involved in a regime change where the owner has decided that the board needs to be removed or significant parts of the board need to be changed and refreshed, and we then get involved in managing that process. So typically what prompts getting Kingsgate involved? In both sectors it's an event. So the event is poor financial performance. Often it's because the owner has tried various remedies before which have not been successful. So typically they've replaced the CEO, indeed the finance director, or both, maybe twice, and the trajectory hasn't changed in the and it's also true of the public sector. So we usually get spoken to either by the client directly or the owner to help stabilize the situation and to come up with a turnaround plan and most importantly execute that plan with the existing management team.

SPEAKER_01 6:25

So with over 20 years' experience with Kingsgate, what do you think of the highlights? Which turnarounds stand out as being ones that you most press?

SPEAKER_00 6:34

It's a really difficult thing because some have generated the most value, some have been really difficult. I think I think each turnaround often is unique. There's some commonality, which I'll talk a bit about later, but there's often unique in terms of the sector. We've even been involved in all sorts of sectors from universities to manufacturers to auto companies in the supply chain to retail, as I say, to the NHS, to schools, to universities. So across a whole range of sectors. So they've all been interesting and challenging, and the most satisfaction comes from when your assignment is finished, we've handed effectively the organisation back to the management team that we've helped to develop during the process, and they go on to success and great things. Or in the case of private equity, it leads to a successful sale because value is being resort. So those are the most rewarding. I'm glad to report that 75% of our interventions are successful. Some are not, unfortunately. And then there's other solutions. One of the things that differentiates us from others in the marketplace is we are not involved in insolvency. So our interest is with the management and the equity holders. We have no financial interest in insolvency. We have helped insolvency practitioners what once w once an insolvency process has is started and been introduced then to help with the organisation. But we have no f conflict or financial interest in insolvency. I think the answer to that is though those which is the majority of turnarounds we've been involved with are successful and we see them to grow and prosper and create value and create jobs and all those good things.

SPEAKER_01 8:45

And some really interesting things, and good to hear that 75% of Kingsgate's clients survive. Over that sort of 20-plus year experience. What's the biggest lesson you've learned about turnaround?

SPEAKER_00 8:58

Invariably it's the people. Distress is called, and there's loads of fancy metric Z scores and credit scores about which can predict the likelihood of a of an organisation being in distress. But essentially the root cause, and it can be market sector failure, over reliance on one customer, sort of a whole range of reasons. But in the end, it's about the people. And all your opportunities and challenges, walk in the front door and walk out the front door, and essentially it's a people exercise. So it's rapidly understanding the strong ones within the team, looking for the hidden heroes within the organisation, and helping those that are not helpful to the cause exit the organisation quickly, and getting a good team and supporting them and challenging them at the appropriate time and working with them, sleeves rolled up, to a successful conclusion. So the vast majority of the time turnaround is about people, and successful turnaround is getting the management team and the people clearly pointed in the right direction, doing the few things, especially initially, that will get you to the next stage and then to a successful turnaround.

SPEAKER_01 10:27

So how do you balance that having to deal with people against what's obviously often a very big financial imperative to turn things around?

SPEAKER_00 10:36

I think they're inexplicably linked, really, to be honest. So obviously there are different individuals within an organization that need to be on the top of their game. So obviously, the financial imperative usually for a turnaround, depending on where you are on the distress curve, is usually cash. So unless there is somebody within the finance team needs to be all over that and producing good quality cash flow forecasts, managing the creditors, managing the debtors, managing the working capital. And if that is not a skill within the organisation, that needs to be rapidly injected through external support, potentially Kingsgate, but that that is a key skill. The rest of the team also need to be on top of their game. So is some of the issues about product quality, are some of the issues operational? Are there more returns than there should be? Is there too much inventory? All those sort of things. And then the final one is sales and marketing. Do we have a good sales function? Is it an effective function? Is there a clear message? And then the marketing, is the USP of the product clear? Is the positioning correct? Has the market moved and and have the company responded correctly? And then I guess there's the strategic side of this about is the positioning of the company within the market it serves linked and supported by the internal organisation or not. So is everything pointing in in one direction? So you may have, for example, a great strategy and it might be a great USP, but you don't have the internal skills for whatever reason to deliver that. So depending on what the problem is, but it's usually a people issue. And that obviously starts with the board, but you need to rapidly move down from the board into the organisation and fix what needs to be fixed. And there's usually that's usually multifactorial, and that needs to be rapidly analysed, and you need to analyse and do because time is short to stabilize the situation. I think the other really important thing, which is a human, is trust. So is there trust within the organisation and is there trust within with the organisation's stakeholders, which is obviously a people-based thing. So this is about the the communication and transparency to the lenders, this is about communication transparency to the owners, and communication and transparency to the customers. And is that of good quality? Is that clear? Is that done on at an appropriate level? And are the organisation communicating? Because a lot of the stakeholder management, as it's called, part of turnaround is rebuilding trust. Because usually with a lender, an owner or customer, or or maybe other, maybe regulator, something's gone wrong. And that external agency doesn't trust the organisation, doesn't trust what it's being told. That leads to mistrust and infighting within the organisation. And that's what needs to be fixed. And getting people to understand trust is based on early and good communication and complete transparency. And sometimes that's quite a difficult thing to do because the organisation tends to in distress tends to hide things and tends not to be transparent. And that's one of the often one of the key areas to address first.

SPEAKER_01 14:23

That's really interesting, too, because I that just strikes me that often, in my experience, getting that high-level the executive, particularly if there's a sort of founder or an owner-manager in the business, getting one of my US colleagues explained it to me and said, You've got to try and convince them the kid's not going to Harvard, which is difficult for any parent to accept. So, how do you influence and persuade, particularly where you've got an owner-managed business, the management team that actually things aren't as good as they they think?

SPEAKER_00 14:50

There's a phrase a lot of turnaround professionals use, which I think is which is the first job is to help the leadership team to confront the brutal reality. Because unless you confront the brutal reality, then you can't help them make difficult decisions, or indeed make those decisions for them. So our first, and of course we're now talking about lots of situations depending on how we've been involved, but basically our first job is very quickly to make sure they understand what the reality is, what the time period is involved, and what the two or three qu quick things we need to do to stabilize the ship. And talk of strategy. There's a lot of people want to talk about nonsense, and you just need to focus on those two or three things over a few weeks with the management team. So at the end of the three weeks, the organisation's stabilised, it's got good information flow, and you've got a chance to then start the turnaround. But the stabilisation bit, which is really about cash management and gaining the trust of stakeholders and making sure that the executive team understands the severity of the situation, those are the three things that usually need to be fixed urgently within the first few weeks. And in that process, it's usually clear and I hate to use the these Americanisms, but which members of the team are on the bus and which members of the teams are not on the bus, and that obviously leads to obvious consequences. So that's the key thing. It's and the way you do that is obviously there's information. For some people, the brutal reality is so hard they really need to step out of the way. And they with an owner manager, it may be a conversation, you find this too difficult, this is your baby, you've you've put 30 years of your life, you are not going to help over the next six to twelve months, so you need to step out of the way or give them a particular job to do, they because they will get in the way. So it depends on the situation. If it's a a private equity-owned business, obviously that that confront the brutality is usually a quicker conversation and they usually get to where they need to get fairly quickly with owner manager businesses or with owner managers that have a significant stake, that often takes more time. But it has to happen because it's a precursor for a successful turnaround. Because if you don't accept what the reality is, then you can't solve it. It's when I say it like that, it's obvious. But when there's in the heat of a turnaround and you've got people ring suppliers ringing up wanting their payments, and it's all very tense, that's quite a difficult thing to do. And I think one of the key factors in that is external help, because an external personal team can provide objectivity, and as long as that individual has the gravitas and the trust of the leadership team, that can be done. If the leadership team don't trust the the individual individuals that are doing the intervention, it it can still be sorted, but it's much more difficult. So the best way is to gain rapid trust, make sure that they understand you're just telling them the objective truth and say that the reality is these are the limited number of options we have here. And it's difficult because once you've stabilised, sometimes people react to the stabilisation quite well, they recognise there's a crisis, and then they slip back into where they want to go, where often the answer is it's a profitable business within the overall business. So that means other parts of the business may be sold off, may need to be closed down or whatever. So you're trying to salvage that part of the business, which can add value and grow and remove, depending on how what that means, and that's often very difficult emotionally because there's often a sacred cow, which is often the problem because it's been given too long and it's just not gonna it's just not gonna happen. So it's those sort of conversations which can really only be done by an unbiased person that doesn't have any package.

SPEAKER_01 19:51

That's really interesting, Steve, because I think we're all used to seeing that sometimes I see it's this optimism bias that something will turn up, a bit like uh Mr. McCauber and Nicholas Nickleby, who are not quite often that won't turn up. So having to break that emotional attachment that executives have to whether it's a sales plan, whether it's particular parts of the operation, yeah, I can really see that makes a big difference.

SPEAKER_00 20:12

Yeah, that optimism bias I'm also involved in the start-up world, and without that optimism bias, it would never have happened in the first place, and you need that optimism bias when we s when you start embarking on the turnaround proper. But optimism bias needs to be also overlaid by wisdom, and sometimes it th the wisest path is just to give up on the particular thing or a particular area of the business, or indeed a particular individual, to save the overall business, and it's about coaching, mentoring, whatever word you want to use, is getting people into that space, and there isn't much time, so these aren't conversations that occur every two weeks, these is usually concertina into a few days, and you've got to get the individuals realizing what needs to be done.

SPEAKER_01 21:15

So, Steve, I think you act as mentor to various individuals in turnaround situations. What what does that look like, that mentoring relationship?

SPEAKER_00 21:22

So the first issue I think is often turnaround leaders. So what I'm talking about now is owners of businesses or chief executives that are in a turnaround or distress situation, often for the first time in their careers. And the first thing that often happens is they have are experiencing a level of stress they've never experienced before. And that's because of the fear of the consequences or the fear of consequences. consequence of what may happen. So it's about providing them a num providing with them a number of mental techniques allowing to reframe that situation and to help them build the resilience because because a turnaround is not a sprint. Once you go through the initial stabilisation period, turnarounds can take two or three years. I remember Archie Norman saying with Asda that that turnaround took seven years from beginning to end. So they these things can take a long time. So it's about building resilience, it's about dealing with the stress and the fear and it's about focus. So the other thing is focus. Usually in a turnaround situation there are a few things that will make the difference between success and not success. And there's lots of nice to-dos which can waste time and are probably quite interesting and distracting but they will not make the difference. So it's about being really focused. And the other thing is often about people management. So good CEOs will try to in normal times develop their people and to often put up with personality characteristics which in the what in if you look at the character as a whole are paid often this is often the the difficult individual that's a star performer. And it's basically in a turnaround situation you haven't got time for that you haven't got time to change people. So either people buy into what needs to happen over the next couple of months or they don't and it's a different style of people management. And also the other type of people management is spotting the individuals that have been often mavericks within the organisation who end up being the hidden heroes. So there are people within the organisation that you m th they may have not recognised as particularly able who suddenly come into their own. And I think the final thing is one's horizons. There's quite a lot of research in this though when you are stressed this often often happens to finance directors but also CEOs your horizons both your time horizons and your just your general demeanor is they really narrow. So there's g with a a bit of a classic example it's really stressful so the CEO just stays in his office literally head in hand thinking and doesn't engage with the organisation and of course the most important thing they can do is engage with the organisation. So even though they are scared and even though they are anxious the most important thing is to get the organisation focused on the few things that will make the difference and fight against that and that's quite difficult because the natural human reaction when the shitters hit the fan is to basically retreat into one's cave and in the old days of offices of you'd hear of CEOs come out of the office for a couple of days because they just didn't know what to do, what to say. So I mean exaggeration to make a point because people are on a continuum but the most important thing when there is a crisis is you're out there talking to people and what people really want to know is they want certainty. They want to know am I going to lose my job now you might not be able to give them complete certainty but you can at least give them the assurance that we have a plan we know what we're doing and there's a good chance of us being successful in that plan. That's the most important thing to communicate and so it's about getting them believing in the plan and then getting them out there to communicate. And then as things hopefully improve and as the turnaround gains momentum it's less and less. But it's dealing with the stresses and strains that an individual is subjected to where they probably haven't had before. And actually the people who suffer the most are the ones that have only achieved success. So you get people who are very successful in terms of education, joined a graduate program, success after success, suddenly in their late thirties early forties calamity and they're the ones for obvious reasons are the ones that are most in need of mentoring because they're the ones that have never known potential failure and it's the f and it's the fear of failure as opposed to the actual failure. So the thing that paralyzes people is fear of failure and it's about breaking that core that link between those two because of course you haven't failed yet you could fail but it's but it's breaking that link.

SPEAKER_01 27:16

I think that's some fascinating insights there Steve and I recognise a lot of that because one thing that always strikes me is being in that executive position in the turnaround it's a very lonely place. Yeah. Particularly if you've got particularly activists say private equity or other investors who they are very much focused on the result of the outcome and sometimes that the effect on the executive team is is always second it's it's not really a big consideration. So I I really recognise that I mean I was just put in mind of one business I was working with where I was asking the CFO some difficult questions and he stood up and said look excuse me for a moment and I thought he was going to the gents or something like that and then I saw him in the car park outside got in his car and drove away. He did come back came back the next day and said look I just I couldn't take any more I know what the situation is I just had to get some space and walk away yeah so I think that element is so often underestimated particularly by investors who are hungry for change and hungry to make things think get things back on track.

SPEAKER_00 28:15

To be fair have not experienced it themselves. So so that's not that not always the case but often the case and it's really and I think in complex environments it becomes more difficult. So I'm now thinking of the NHS where there are multiple agendas and the finance agenda is only one of them. Indeed with PLCs where there's multiple agendas there's a whole stock market to get kept in and there's a whole regulatory issue as well. So they're important of course but nothing's important as saving the business and focusing on the few things that will make the difference and it's about challenging those. So that's often the case of stop doing things stop writing reports stop feeding the beast in if there's a sort of regulatory issue it's also or indeed delegating it or trying to do less whatever the solution is but you've got to spend the vast majority of your time on the things that would make the difference in the turnaround. So that's the key to this and of course it's never black and white because you see some things you just can't stop. If you're in a regulated business you can't stop feeding the beast to the regulator but you've either got to delegate that or do that in a different way because you've got to spend most of your time with your people delivering the turnaround.

SPEAKER_01 29:44

So if you were to be acting as a mentor to say let's say a CEO in a business which is going a turnaround what would that relationship look like?

SPEAKER_00 29:52

It's usually the way I start is critical friend so my interest is to see them succeed and my role is to be a critical friend and basically in in martial arts which is I'm quite involved with there's a term called a sensei and most people think uh a sensei is a coach and it's not actually what it means is someone who's been there before so the actual literal translation. So what I say to CEOs or owners of businesses it's not I'm smarter than you or or cleverer than you it's just that I've been this down this road many times before I know which paths to take I know where all the the the alligators are hiding I know this world so I'm a guide and I've just been there before and if you say or do something which I think won't help that process that journey I will say but in in a in a friendly way because my main purpose is to help you through this and and if you put it that way the majority not all but the majority of people will respond to that quite well because actually that's what they want. They want to talk to what happens if I lose my house or what happens and my my wife's just says just walk away or the finance director's not listening to me or the chairman's being completely unreasonable and he's it is not changing his behaviour and he expects all this done by next week and the week after and I need to need to I agree I need to focus with the team and that might mean I have to go and talk to the chairman for him. But it it can mean different things. It depends on the situation. The chairman might be his dad the family business who knows but it's the CFO might be his wife in a fa it depends on what the situation is. So it's just about managing helping them manage those dynamics and giving them some tools to get them through those critical first few months of the turnaround which is often about reframing and about looking at things in a slightly different way and trying to get them perspective and saying this is what I've seen other people do. This is I've got experience with this and this is what they did to solve that particular problem and and that's what you want you want experience you want some wisdom and you want some simple techniques that allow them to keep them focused and sane during that difficult period of their lives that's great Steve so if anybody does need to talk I think it's a really great idea because as I say it's such a lonely place. Oliver would you like to tell us a bit about yourself and your role within Kingsgate?

SPEAKER_01 32:53

Yes I'll tell you a bit about my career to start with because I've like many in the turnaround I've had a slightly odd career I think it probably fits into three parts. The first part I am an accountant by the way I'm a qualified accountant first part was in industry working across a number of different businesses and different sectors doing some financial roles but quite a few slightly odd roles so buying and selling businesses restructuring carve-outs it's all very interesting. I was also involved in a couple of corporate crises as well and merger integration that kind of work all of which got me really interested in that sort of change agenda things are out of the ordinary and that led on to the second part of my career which was in advisory and consulting roles initially on my own account and then I was recruited by KPMG and joined their financial management practice shortly after they'd sold their consulting business to Atos when they really weren't supposed to have a consulting business but started building one up from that point. And that was fascinating worked with a lot of really interesting businesses travelled to all sorts of different places across the world and learned an awful lot about what makes businesses tick. And then in 2008 I started Grant Thornton the accountant's financial management consulting business which with hindsight wasn't a great time to start a business. Although that was where we first met when you were one of my clients at Grant Thornton. So that's a very good point of starting at that time. But the reason that's relevant is there we nobody knew what was coming later on in 2008 with the financial crisis. And so a lot of the work that my team did was all about how to make businesses more effective and more efficient. Because you had investors quite a few banks private equity venture capital and also private individuals who had investments in businesses that they were hoping to sell at a profit very quickly. And of course after the credit crunch as it was called at the time nobody was buying businesses there was no credit available so what do you do? Do you pull the plug on your X million investment and some of the businesses we work with were three, four figure investments from banks or do you actually try and make it work and that's when I first got into that kind of turnaround operation efficiency, financial effectiveness type of work. And that led on to my what the third part. So for the last 10 years or so I've been working almost exclusively with companies who are private equity backed or who have got some interest in private equity either going through transactions or have been through transactions and then have integration work to do for example. And all of those have been businesses who have a problem which then led me a couple of years ago when you and I were reintroduced to talk about whether there must be great things that we can do with the Kingsgate brand to really extend that and do more in that particular private equity backed business space. So we've been working together for two years and I've been very busy and it's been a great experience but it's it's going back to one of the questions that that I've asked you before it's not the sort of thing that you prepare to do. You end up with being in difficult circumstances you do a good job you manage to turn a business around and then you become known for it and other people ask you to do it in different businesses. So that's really brought me to where we are today. So Kingsgate our private sector business has been around for a long time historically we've been focused more on operational turnaround which is I think a really valuable skill to have but I think increasingly the market is driven by a financial turnaround initially so typically the sorts of inquiries we're going to go we've got three to six months worth of cash left what can we do to actually put that right and the first thing is let's make sure that your cash flow is the right one that you're dealing from solid information. And quite often then that does go on to a bigger operational piece. But I think we've pivoted slightly to go with our finance first operations follows on. And I think as well given the experience that I've had we're now very much focused on private equity businesses who've got private equity connection of one kind or another and I think we're reaching a difficult time for private equity in that just simple things like interest rates have changed the cheap money that might have been around five years plus ago is no longer there. And so I think there has been a particularly in the UK mid-market there's been a bit of a maturing of the way that private equity looks at its investments. I think many have learned that firing the CEO and then replacing with somebody else doesn't actually work or it may work if you're very lucky. But actually more importantly what do you do? You deal with the underlying issues in a business put them right and that gets you back on track to whatever your original exit plan was.

SPEAKER_00 37:43

One of the big changes I've seen in the time I've turned around 10-15 years ago some turnai was done by individuals. So the White Knight in shining armour came across the hill, saved the day had all the skills and and a lot of clients including Brian equity I think are much more sophisticated in what they want and I think the gap that the Kingsgates filled which is between the individual practitioner and the and the larger accountancy firms is the power of the team because our argument is that not all the skills needed in a turnaround can possibly reside within one individual. And also it's not in our commercial interest to do five days a week or four days a week it's to provide the team that's needed for that particular job. And that team might be a cash modeler and financial expertise initially it might be a chair or Ned marketing person or a retail expert it might be some HR expertise. As the project evolves, because the project's needs will evolve and our sort of monthly pricing scheduling way of doing business so you can get rid of us after a month or hopefully we're doing a good job keep us on allows that sort of flexibility because the needs of a turnaround in day one and the needs of a turnaround in month three or month six are invariably different and we provide that. So I think it's really important that that a firm can provide all of that expertise and it's good quality expertise so it's senior people that have worked in those roles. It's not a bunch of youngsters. It's people who can actually do stuff on the ground and make a visible difference. And I think that's the gap we've tried to fill or and are filling that I've noticed in the marketplace because the marketplace has become more sophisticated not just private equity but a lot of other procurers of turnaround expertise want more and deserve more to be honest because it leads to a more successful outcome. And then the other key thing is I think there is no conflict of interest with us. So we have no financial interest in in in a organisation going bust and then doing that bit. And I think the other key thing with us is once it's finished and we're off. So we're not roaming around like Arabs in the desert and putting our tents and hanging around which some others do. Once the job's done we leave we move on to the next. So we do that that's very much our style we are in the turnaround change business and once the turnaround and the change bit is finished we're no longer needed and we leave and I think that that's another really important thing because I think some consultancies deliberately build dependency within the client which allows them to hang around basically and provide services and our job is to do the turnaround and help build the capability so we can leave and we can we so we are it's a different beast when you're recurring us than an individual or some of the other larger firms in the market.

SPEAKER_01 41:29

Yeah I think you're absolutely right Steve because it's I think you're right the m market has matured and recognises that now I'm a white middle aged man but your his historic stereotype of a turnaround person was a white middle aged man who probably with a red face he went in and was very angry and shouted everybody and fired everyone. Now I don't think that works anymore.

SPEAKER_00 41:49

Yeah.

SPEAKER_01 41:50

I think the dynamics within every modern workplace means that firstly people you're dealing with are not going to put up with that. And secondly picking up on on what the point you just made you're going to be very lucky if you find one individual who has got all the skills that experience that you need. It's statistically impossible.

SPEAKER_00 42:07

And I think the sort of shouty side of turnaround which Kingsgate's never been on we've never I've never believed that yet shouting at people probably works for a short period of time and some people do need shouting at to be honest but that's a fairly rare thing. What people respond to is an organisation that treats people with dignity and treats people well whether they're part of the turnaround story or not and they have to be exited from the organisation and I think that's what people look for and that's actually just much more successful. Essentially it's good leadership and and good leadership is not shouting at people whether that's in turnaround or in startups or growth companies is just poor leadership and we've never condoned that. Sometimes you need to have strong private conversations with individuals within a client because they are deliberately not getting it but that's done in private. And it certainly doesn't involve shouting but it's a forceful conversation because sometimes that's what people need and and occasionally that is needed. But it can't be your only tool in the toolbox.

SPEAKER_01 43:25

No I think that's right. And one of the things I like about the way that we do things is we do some quite difficult things but we do them with respect.

SPEAKER_00 43:33

Yeah.

SPEAKER_01 43:34

So one of our clients in the last 18 months was a sporting organisation a given body and we led a restructuring and a compulsory redundancy programme. And it was hard it was very difficult for the consultation groups that were involved because there were around about 100 people being involved in consultation. But I think every single one of them involved in the feedback we had was they felt the process Was fair. Yeah. And I think that's important for two reasons. Firstly, for those who go through the process and don't have a satisfactory outcome or one they don't like, if they feel they've been treated fairly, I think that's all we can ask. But as importantly, for those who are left to see that their colleagues and the organisation has treated their colleagues with respect means that those who you do want to retain and do want to grow with a business see that and have more of an attachment to the way that the business is run.

SPEAKER_00 44:29

Yeah, I remember an old mentor of mine said to me, the way an organisation judges its culture is not as a leader how you treat them, it's how you treat people who leave the organisation. Because people don't really listen to what you say, they follow what you do. And if you treat leavers however they've managed to leave the organisation, whether voluntary or involuntary, that you've done it in a dignified and a fair way, then that organisation, the culture will be s fundamentally a good culture, because what you're doing is modelling to them what fair and good and how we do stuff around here. And I think that's a good thing. And you often get in organisations, and we find this with our HR business, that an organisation says we have culture X, but if you look at the behaviours, it's relatively easy within a few weeks to say, but you're saying our culture is X, but your behaviours are Y. And without making value judgment on either of those cultures, you've got to behave as you say you can behave and do as you have on the inscriptions on the wall or whatever. They're meaningless. In fact they're actually disadvantageous if the leadership do exactly the opposite thing. No, that's right. That's right. Culture change is is something we tend to get involved with more in the latter stages of the turnaround, or if we are brought in at the beginning of the distress curve, so where there's potentially a two-year runway before something seriously untoward happens. As the turnarounds gain momentum, we've gained trust with our key stakeholders, cash is under control, we can see how we can get to profitability, then cultural change then needs to be brought in as part of the process properly. Obviously, it's always there. But and culture change all and I'm I'm never really comfortable with the word cun culture change. A cultural change or culture to me means how do we do stuff around here? So if I'm going to a company, it's how do they do things? How do they have meetings? How do they hire people? How do they fire people? How do they deliver projects? How do they deal with customer complaints? Are they transparent? That is the culture. And so it's how they do things and how we do things. How do we deal with difficult issues we don't want to know about, or or we have a somebody says something that actually is probably true but we don't want to hear it. How do you deal with that situation? So that those are the things that in my mind determine culture is how you do things.

SPEAKER_01 47:29

I think I'd add another one to that as well. Emotion. Yeah. Because often, particularly in a stress situation, what I I find is that one of the things that we can do is bring a bit of calm to because everybody gets very emotional, particularly senior leaders often. Yes. And the danger is that they start taking decisions using emotion alone. Yes. Whereas I think what we can do is, as part of that sort of broader cultural piece, so let's actually understand what the data, the evidence is showing us, let's have a quantitative assessment as well as that emotional qualitative assessment, and we can agree on what the right thing to do is. Because I've seen, particularly when we get involved more on the very distressed side, that emotional arguments went through, and emotion I don't think is ever a great basis for taking decisions.

SPEAKER_00 48:17

No, I agree with you. And I think the and of course there is a sweet spot there because I've seen other organisations rapidly move to paralysis by analysis. So to do too much analysis and try to gather more evidence than humanly possible and use that as a reason to delay the right decision. So there is a sweet spot between those two things, more so I'd say in the public sector, of make or ensuring that they understand decisions have to be made without perfect evidence. There's never perfect evidence, and lots of organisations use the gathering of evidence as a delaying tactic to make the decision that needs to be made.

SPEAKER_01 49:07

Thanks, Steve, and thanks for sharing all your experience. Some really interesting things there. That's all for this episode of the Value Agenda. I hope this conversation has helped you think about where the real value is in your business. If you'd like to continue the conversation, you can find me and the team on LinkedIn or visit us at kingsgate.uk.com to find out more about what we do. And if you found this episode valuable, please do subscribe, rate, and leave a review wherever you listen to your podcasts. It genuinely helps other leaders find the show. Thanks for listening. I'll see you next time on the Value Agenda.