Here’s something you’ve probably been suspecting for years that is not proven to be the case:
The boss has a huge effect on whether that business succeeds or fails in tough times, according to one of Australia’s leading business improvement specialists, Michael Fingland.
In a recent statement, Fingland, managing director of Vantage Performance, said what sets successful businesses apart from those that go under is how soon they seek external help (many leave it too late), and how receptive they are to specialist assistance.
He said this largely came down to the personality of the CEO or owner(s).
“It is very personality-driven – it’s so much more a part of success or failure than other factors,” said Fingland.
Why do troubled businesses seek help too late?
And Fingland would be one to know.
Since 2005, Vantage Performance has helped hundreds of SMEs and large companies to improve their performance and sustainability.
These businesses, mostly in the $5 million to $150 million turnover range, are from industries including manufacturing/engineering, mining services, construction, agriculture and retail.
Of the 12 per cent of clients Vantage has worked with who could not be rescued; the overwhelming reason was that they simply asked for help too late.
A recent survey by Vantage Performance of the bankers, lawyers and accountants who refer troubled clients found clients don’t seek help early due to:
- Self-belief – a genuine but often misguided and over-confident belief in their own ability to fix the problem (top response of 73 per cent of survey participants)
- Pride and ego (68 per cent)
- Denial and delusion (68 per cent)
Does the boss “have issues?”
Other issues, such as the cost of consultants, concerns over reputation if they call for external help and a general lack of awareness that such help exists, were much smaller factors than the three personality issues outlined above.
“CEO personality can be a huge factor, for better or for worse. If deluded self-belief and ego come into it, they often mess around trying to fix the problem themselves and their bank eventually forces them to take action – by then they’ve lost six to 12 months of time and the company is in much worse shape financially,” Fingland added.
“You hire experts to head up your sales team, operations and HR, so why do CEOs feel they can handle a crisis themselves without calling in experts who deal with this every day?”
“On the positive side, a CEO who seeks specialist help early, communicates clearly with his or her people and stakeholders, and is willing to take the hard decisions, is much more likely to maintain the support of their stakeholders and stabilise their business.”
Vantage Performance works with many fast growth companies facing cash flow issues because they don’t have the systems, capital and right people in place to deal with their rapid growth.
“For example, a mining services company we are working with called us in because they had grown from $2million turnover to $40million in less than.
Is your boss the Grinch?
“With the economy still struggling and expectations of a less than stellar Christmas period, if a business is under-performing, is it equipped to deal with further shocks to the system?,” Fingland said.
“The best thing directors can do is not leave it too late to get help,” he said.
There you have it. If your boss is dragging down the operation – or maybe you’re the boss who’s doing the dragging – the first step on the road to recovery is admitting there’s a problem.