“One must distinguish between productive and non-productive costs.”
From factory warehouse to interim CEO – Christer Brovinius has extensive experience as a change manager, but always with a “down to earth” attitude. With a background from Lindab Group, Air Duct Systems, Schindler and Husqvarna, he has been through many difficult situations where he had to make tough decisions.
In 2015, Christer was engaged as interim CEO of HTC Floor Systems’ German sales company via Nordic Interim. The company had several years of poor growth and lost money – would the business be shut down or would it succeed in a turn-around? With full mandate, he was expected to either save the company or shut it down within a year. We talked to Christer to hear his most important lessons and advice on how to handle a business and employees when you are in the middle of a critical situation.
When a business is in a critical situation and you need to save the company, the first idea that comes into mind is to cut costs. What is your advice on how to do this and plan for a sustainable recovery long-term?
“In general – for all types of crises, recession, industry- or business-specific – it is important not to panic and only look at costs in absolute terms. Often the mistake is made to get rid of the most expensive employees, but it is very important to distinguish between productive and non-productive costs. If a person generates a lot of business and covers his/her costs – then the person should not be dismissed. It is very easy to take out costs, but it is short-term thinking when you tend to cut away too much and in the wrong places. Once the situation has stabilized, the company might not have the necessary resources. Distinguish between wants and needs, do you want to have, or do you need to have? In a large group, this message is very important in order to stop any unnecessary investments.”
You ran a successful turn-around for HTC Floor Systems in Germany. What were the main success factors?
“The company had an extremely high staff turnover and lacked local customer service and local warehouses. I started by securing key personnel who were critical to the business and we managed to rehire the person who had earlier been responsible for customer service. We laid off those who were not performing and made sure that we had a good organization with committed and loyal employees. In my opinion, securing key personnel is the first most important measure.”
Trying to save the company – what was your biggest concern?
“My biggest concern was not to gain acceptance among the employees. At first, when I spoke English it was difficult; it was only when I switched to speaking German that they fully accepted me. The first week I met as many co-workers as I could, the rest I called by phone. It was important to me that they would not panic as most of them did not know how bad the situation was. Communication and being honest and transparent is incredibly important. I showed the numbers and figures to make them understand the seriousness. Everyone got the opportunity to contribute.”
How did your employees react to the situation?
“We started with redundancies immediately and of course it led to great concern and some people got angry. You must listen to them, understand them and help them. Again, my advice is to communicate clearly and regularly. Even if you don’t have any new information, you should check in and listen to how people are feeling.”
How do you maintain the motivation of those who remain?
“Involve your co-workers and ask for help. The boss doesn’t know everything and is not supposed to know everything either. Use the expertise available to make your staff feel that they are contributing and are important to the company’s survival.”
How should you think in order to keep as many employees as possible while lowering your costs?
“In some cases, employees must go down in salary and working time. In one of my assignments, the employees had to go down in working hours to 60% and the state went in and paid 20% of their salaries. Unfortunately, staff are the easiest way to cut costs but don’t forget to look at those that are productive and most important to the business. You can also look at outsourcing solutions, e.g., wages. Also, review the corporate structure; are there unprofitable branches or departments that can be closed?”
As the revenue drops rapidly – what did you do?
“We talked to the customers and negotiated where possible. It’s not easy, as the customers know you’re in a tough place and they push the prices. Important was also to invoice at the same time as we delivered, we needed to raise money directly in order to get a positive cash-flow. In times like these, a piece of advice is to try to go “plus minus zero” and be aware of how the break-even point moves when revenue drops. The revenue side is more complicated than the cost side, I think, since there are problems at all levels in the supply chain, suppliers, with customers and others. In the current crisis due to the Covid-19, we see an incredible innovation and creativity that we can learn a lot from. Is it a question of changing your business? Can we reach a new target group? Can we review our product range and broaden our target market to related industries?”
Finally, who is Christer Brovinius?
“I come from a blue-collar background, and grew up just outside of Helsingborg. After school, I played in a band that was quite successful and I worked part-time at a factory warehouse. It was an important experience and I think it has taught me to be able to talk to people at all levels. When I was 26, I started studying economics in Lund with the goal of finding a fun job and, after all the years at the factory, a workplace that was clean! In 1997 I moved to Switzerland for a role as Controller with Lindab at their machine division, and after four years, I was asked to become CEO, which I happily accepted. We still live in Switzerland, but for several years I now work as an interim manager. The advantage of working interim, I think, is that I can avoid internal politics and can concentrate on the mission. Interim Management is good for those companies that are now pulling the brakes and must think about their costs, as an interim does not involve any fixed cost.”