Ep: 017 The Gritty Reality of Corporate Turnarounds : Lessons from a Corporate Fixer

0:01Welcome back, Bridge Builders, to another hard-hitting episode of Bread to Lead. I'm your host, Dr. Jake Taylor Jacobs, and today we're diving into the trenches of corporate turnarounds. Before we begin, for those who are new to the podcast, let me introduce myself. I'm what's known in the business world as a corporate fixer. What does that mean? I'm the person that companies call when they're in dire straits, when they're bleeding money, losing market share, facing potential collapse, maybe needing adjustment because what they used to do is not working as much or hit a ceiling. We've done everything that we can.

0:39We just don't know what else to do. My job is to come in and diagnose the problems, make tough decisions and implement strategies to turn things around. It's not pretty. It's not easy, but it's necessary work that can mean the difference between an organization's survival or its demise. Today, we're going to peel back the curtain on the realities of corporate turnarounds. While me personally, I have never been called to turn around a full hospital, us as a company, Sips Healthcare, very so often we're called to turn around central sterile processing departments, departments that just are having a hard time making things click to support the surgeons and the nurses that are in the OR.

1:31And for my personal career, turning around businesses, corporations, organizations outside of healthcare from places of demise or places of just stagnant growth has been the areas that we intertwine. But the information that we're going to share today, Again, like every episode is absolutely and will be universal and can absolutely be applied to not only the health care sector, but also any other sector that we believe or that we deem is important for what you are doing to be able to grow and build and develop an organization, department, business system, hospital system that would do amazing things.

2:17So if that's you, there's something here for you. But I want to start with the hard truth. Turnarounds are brutal. They're not for the faint of heart. If you're squeamish about making difficult decisions about potentially letting people go or about dismantling longstanding but ineffective processes, then turnaround work isn't for you. But if you're ready to roll up your sleeves and do what's necessary to save an organization, you may be someone who has the gumption or the gall to become a turnaround executive or specialist. And before we move forward, I kind of wanted to create a ranking. Right.

2:55I wanted my team to create a ranking on what would be the most important leadership skill set or leadership position when coming into an organization. top five from CFO, COO, CEO, division or department leaders or or corporate turnaround executive and data was able to pull out that the number one leadership role is a corporate turnaround executive. Why? The importance is the highest. The role is crucial for the survival and revival of struggling companies. They are responsible for making significant strategic decisions, often under immense pressure to stabilize and turn around a failing organization.

3:35Pay is the highest due to high stakes and expertise that's required. Corporate turnaround executives are typically compensated at the top of the leadership pay scale. The second on the leadership pay scale that's at the top or very high. The second is the CEO, the overall leader of the organization responsible for setting the strategic vision and ensuring the company's long term success. The pay for CEO typically are very high and generally amongst the highest paid of executives, especially in a large corporation. The third highest paying leadership role is chief financial officer. That's the person who's responsible for managing the company's financial health, including budgeting, forecasting, financial planning, you name it.

4:17OK, the pay is high. The compensation for CFOs is substantial, particularly in organizations where financial oversight is key to success. Number four, the fourth in position is the chief operating officer. High because the COO oversees daily operations within a company, ensuring that everything runs smoothly, smoothly and efficiently. The pay for a COO is high. They're compensated extremely well, though typically slightly less than the CEO or the CFO, depending on the company structure. And then the last but not least highest paying position in leadership is a division lead, department lead or business unit leader.

4:58OK, the importance is medium to high. The leaders of individual divisions, departments or business units are critical in executing on company structure. The pay is medium to high. Compensation can vary on the size and profitability of the division or the business unit that they manage. So if you're in a department like sterile processing, for an example, that is not a money earner for the company, you're on the profit side. So how well you run that organization, how much under budget you can keep that department and how well you can keep compounding profitable quarters, profitable months, profitable years on top of each other will show good management skills within that department's reach.

5:42Now, on the OR side, the surgeon side, those that are on that space, that's where the money is made. That's where people are coming in. They're getting their revenue. Typically, you see the best high performing hospitals are usually the ones that do the most difficult surgeries. And that's just the truth. OK. And so if you're not in a revenue position within your organization, you're on what we call the profit side. That's what we call defense. If you are in any of the department or services that make the company run, that help them revenue. You're on the offensive side of the business, which requires different sets of skills.

6:16So when we're looking at what a corporate turnaround specialist is able to do, those are the things that we're going to discuss inside of this podcast. And it doesn't matter where you are, what industry that you're in, healthcare, technology, finance, every organization at some point in time, especially when you're winning or you're hiring, all types of people, maybe don't have a training, onboarding system, Maybe don't have a structure. People don't know the vision. There are a lot of reasons why a company can hit what we call plateau areas or hit danger zones where it's complete. Every year, it seems like it's trending down.

6:52This is usually when you will see turnaround specially come in and a in a in a turnaround executive or a corporate fixer has almost have to have a chameleon type of approach, Meaning whatever role of the C-suite, whether it's departmental leads at the bottom, mid-level leadership to mid-management leadership to executive leadership, that CRO, that chief risk officer, some like to call it, well, not the chief risk officer, the chief restructuring officer is sometimes what you would call a corporate executive, a turnaround executive or a corporate fixer. Their number one job you have to be able to know all things you have to be able to create new revenue lines You have to be able to restructure an entire organization.

7:36You have to be great at Building developing recruiting hiring and then you find these little specialties But as you all are growing in this bread to lead community as you are becoming better and better as a bridge builder This is why I tell you don't leave a position until you mastered it And a lot of people are leaving positions for promotions and for pay and kudos to you. If that's your journey, that is your journey. But if you're not mastering every single role that you're in and understanding why it's so important to the overall scope of the entire organization or the entire health system or the entire corporation that you're in, you're missing out on all of the extra gems and tools that you'll need as you continue to climb your way up.

8:18and you will start to see it. The more responsibility kind of sits on your shoulders as a leader, the more anxiety that you have, the more a fear of making decisions will let you know you may be out of what we call your comfort zone or your fly zone. You're too far and you have to readjust down and learn the skills that you need to be able to grow. Okay, so first, let's talk about the signs that a turnaround is needed. This is when you're gonna know that if your department, if your company, if your hospital system, if your business, if it needs a turnaround. One, declining financial performance.

8:51This is often the most obvious sign. If revenue are constantly falling or if you're operating in the red, it is a clear indication that something needs to change. Number two, the second reason you may need a full turnaround executive or specialist or fixer like us, fixer like myself to come in would be loss of market share. If your competitors are growing while you're shrinking, That's a huge red flag. And here's the biggest thing. A lot of people like to live on the success of the past and die because of their lack of execution for the future. And we can't get so caught up in doing the things only to do the things that that help you kind of just stay afloat, because these things won't allow for your company to thrive and exist long term.

9:37The third reason you'll need a turnaround, a fixer or a corporate fixer is you have high employer employee turnover. Good people leaving in droves is often a symptom of a deeper organizational issue. And usually within the space that we're in in health care, you will see hospital systems. They call upon us for interim leadership, interim support, interim staff, maybe some SPD turnaround specialists that bring us in for an interim period. but don't allow for enough time for us to actually fix the root of the issue, which is the cause of employee turnaround. And it usually has a lot to do with processes, hiring the wrong people, promoting the wrong people, not developing enough in the people that you're putting responsible over departments or over leads.

10:23These all have to matter. You can't just hire someone into a new role without making sure they fit the culture and the needs of the hospital system or the organization. The fourth reason when it comes to knowing that you need some type of turnaround is customer dissatisfaction in a hospital setting. This might manifest as declining patient satisfaction scores or increased complaints. If I'm looking at my hospital, if I'm looking at my department and the complaints are going up, can I tell you all something? Now, there are people that do complain. OK, we get that. There are people that just live their life complaining.

10:59But for the most part in all complaints, there are some truths in there and you have to ask yourself are these truths so bad that it's actually causing and affecting patients that we're serving or customers that you're providing a service to. Is it truly affecting them? And in our world of central store processing, our job is to support the OR. I don't care what anyone is telling you. If you're in our industry, our job is to be a great support to the surgeon. the surgeon and the nurses in the OR provide support to the patient our job is to the surgeon so if the surgeon isn't happy if the nurses are not happy it is our job to say hey there's a high dissatisfaction score we're getting increased complaints versus saying they should do this they should do that as a leader and someone who wants to specialize in turning around departments you want to be somebody that people call when there's a fire burning not just when things are great.

11:58You want them to call you when you have to put your firefighter hat on because that provides greater opportunities for you to actually prove the value of your leadership skills. So in these spaces, this customer dissatisfaction, who is dissatisfied and are there justifications for that satisfaction, for that dissatisfaction? If there are, we got to fix it. Number five, the fifth reason that you will need a corporate fixer or someone to fix an issue or come in there and turn a full department around. It's outdated technology and processes. If you're still using systems or methods that rest on your industry, that the rest of your industry has moved on from, you're likely falling behind, okay?

12:40If you are still using systems or methods that the rest of your industry has moved on from, you are likely falling behind. And number six, lack of clear strategy or direction. If your organization seems to be drifting without a clear purpose or a goal, that's a problem. Without vision, the people shall perish. If I don't know where we're going as a department and if I don't know where we're going as a unit, if I don't know where we're going as a team, if I don't know where we're going as a hospital or even a hospital system, how can you galvanize people to want to give all of themselves to an organization that doesn't know how to give all of itself back to its people?

13:20These are the things that matter, okay? So now let's say that you've identified that your organization needs a turnaround. What would be next? Here's where the real works begin. The real work begins. It's easy to diagnose the problem. Every single person or quote unquote leader that I meet. They can easily diagnose the problem. And unfortunately, within organizations, everyone knows the problem. The issue is no one is effectively not only fixing the solution, but ensuring that it never comes back. I have a rule that I will always go by. True accountability happens through transparency. If we cannot be transparent about what we're doing, when we're doing it, how we're doing it and being effective with the things that we're doing so that they can be looked at transparently.

14:13Accountability is right around the corner if we can do that. If we cannot do that, if we cannot be transparent, then you cannot expect accountability. Because transparency and accountability go hand in hand. Go together like horse and carriage. This I'll tell you all the you can't have one without the other. I'm sorry. If you all are new to the podcast, I am absolutely crazy. I kind of have to be to enjoy being a turnaround or corporate fixer. I have to be. I have to be a little psycho in my pants. So you guys may be saying, hey, Dr. Jake, well, what brought you to Sips? Sips hit a plateau. Sips is the is is one of the pioneers.

15:03Of consult in the consulting space of central store processing, traveling. Sips is a pioneer. The issue is. what happens when other people are stealing your plans what happens when other people are developing and seeing what you've done and made different uh iterations to it so sibs brought me in one to be a fresh eye uh our new ceo our newest ceo donnie payne is a genius and donnie um in her infinite wisdom with our founder karen was like hey we need somebody that did not come from the healthcare space that can see things a little bit differently because coming from the private sector of business, we see so many new transitions and new changes of technology that systems like healthcare or government entities typically won't see.

15:47And it takes a long time to kind of curate and turn it around. So my job was to bring a new light and to reintroduce SIPs to the central sterile processing world in the way that it should be as the mother. I'm kidding. But when we talk about diagnosing this problem, the first thing I do when I step into a turnaround situation is to conduct a comprehensive diagnostic. This isn't just about looking at financial statements. It's about talking to employees at every level, observing operations firsthand, digging into every aspect of the organization. In a hospital setting, this might involve reviewing patient outcomes and satisfaction data, analyzing financial performance by department, assessing staff morale and turnover rates, evaluating the efficiency of key processes like patient intake, discharge and billing, examining the hospital's reputation in the community, assessing the state of the hospital's technology and equipment.

16:47Can I tell you something? The best place to go is not to go to a hospital, especially if you want to be a turnaround leader, especially if you want to be a turnaround leader or you want to be known for creating environments that are healthy for patients. The best hospital systems to go are not the ones that had everything. It's the ones that lack a lot of things because your impact can be seen a whole lot more. and staying there to see projects all the way through are important. When you're scaling and you're growing as a leader, your development and your track record is more important than a revenue or money you can make from a deal.

17:22Listen, if you want to be known as a turnaround leader, someone that can go into any space and turn it around, regardless of industry or regardless of department, regardless of sector, regardless of community, regardless of culture, you have to get good at mastering the minors. And then from mastering the minors, putting those things together and understanding that you seeing projects go through and become successful. Building your resume of success is far more important than jumping during career ladder moves because you'll end up in a leadership role, lacking the ability to execute because you didn't master every role.

18:04and you will put the hospital in a much worse situation because you wanted to just check the available opportunities that were out there, okay? So the goal is to do a 360 degree view. You may say, Dr. Jake, I am not that type of leader yet. I'm the lowest on the totem pole. I'm trying to work my way up. Let me tell you something. Never go into an environment where you know little about the place that you're going. Never, never. You wanna take a job? Ask them, can I do a walkthrough? you should know just as much of about the hospital or the company that you're working in, the department that you're in, as much as you can, as much as an executive can.

18:46You should know how many beds, you should know how many trays, you should know how many cases, you should know how many this. Why? Because a great leader knows that you cannot manage what you cannot measure. You may say, Dr. Jake, but that's not my road. If you want that to be your role, you have to start training now. No matter what role that I've ever been in, I've always tried my best to be the best leader for the organization, regardless of the space that I'm in. It doesn't mean that I always have had the opportunity to say what I feel, but I did want to gather the data. I looked at every opportunity of employment or opportunity of growth, buying a company, fixing it up.

19:24I wanted to ensure that I was just as aware of everything going around as I could. I wanted to be a part of the solution, not the problem. I wanted to hang with the people that create the solutions, not the people that complained about the problem. Because if you hang around with the people that complain about the problem, when you do get promoted, you will be the next problem to have. OK, if you want to be uncommon, you cannot hang with the commenters. Now, I'm not saying common as far as people, everyone not having importance. What I'm saying common, if if there's an issue in your department or in your company.

20:01But you're hanging with the people that's consistently complaining about the problems in the company and not creating the solution.

20:11You will end up becoming the problem when you want to implement a solution. So separating yourself and ensuring that you're thinking about organizational goals, if you're coming into a department that is terrible with instrumentation. How about you volunteer to take over that project? Because now you have that in your belt. Now you can make sure that profitability goes down. Now you'll be given more responsibility as a bread as a bridge builder in a bread to lead community. It is your job to build whatever bridge that you can to leadership at whatever capacity that you can. So, number one, I diagnose the problem.

20:49Number two, I try to stop the bleeding. Once you diagnose the problem, the next step is to take immediate action to stop the situation from getting worse. This often involves making some tough and unpopular decisions in hospital turnaround. this may include closing underperforming departments or services, reducing staff in overstaffed areas, renegotiating contracts with suppliers or insurance companies, implementing stricter financial controls, addressing any immediate patient safety concerns. In regular business, you do the same thing. You close down any products or services that are underperforming.

21:27We're spending too much money in an area that's not performing. It has to die. We immediately begin to reduce the staff, not top down. You begin to start reducing the staff based on who's the least productive for the role that they're in. It's important. Number three, renegotiating contracts with suppliers. We want to start renegotiating immediately. So as you begin to start seeing everything I'm talking about in business is the same that happens in health care. Everything that happens in health care is the same thing that's happening in business. If I want to, when we're talking about stricter financial controls, I want to start getting control of that lever.

22:06Where's the money going out? Why is it going out? Let's tighten it up. Let's tighten it up until we can figure out where the leaks are. What do you do when you're trying to fix a leak? First, I need to turn the water off Analyze with my hands, with my eyes With whatever tools I have To see if I can fill for the hole If I can't, I will slow leak it And find where the hole is If it's not there, I turn it off And I tape off another area I slow leak it until I find the area where there's a problem I turn off the water And then I fix that problem Then I let it flow again A lot of people don't like to turn off those financial controls Because we don't like, you know, to tell people what needs to be done But in honest, the great leaders know how to cut it off and you have to sometimes cut it off to turn it on.

22:54And the last thing that we look at when we when we talk about stopping the bleeding is addressing any immediate customer or patient concerns. What are the immediate patient or customer concerns that are absolutely affecting our growth as a company? These actions are often extremely painful, but they're necessary to create a stable foundation for the turnaround. The third thing that I do is now I develop a turnaround strategy with the immediate crisis addressed. It's time to develop a longer a long term strategy for turning the organization around. This strategy should address the root causes of the organization's problem, not just the symptom.

23:36This will include one investing in new technology to improve efficiency and customer and patient care. Number two, implementing new qualities control measure, new quality control measures. What this means is simply this. How can I ensure that the product that we're putting out is actually as quality as we say, as we are saying, claiming or marketing that it is? Let me ensure that I have these quality control measures. The best position to be is that everyone in their position performs a bit of quality control before they pass it. The interim thing to do is to hire quality control technicians, quality control specialists, quality control professionals that can be the third party until it's ingrained in the culture of the company or the culture of the department that everyone seeks quality before leaving.

24:31Number three, in my step three, the third part is we begin developing new service lines to diversify revenue streams. Develop new service lines Okay, so what does this mean in leadership? The first thing i'm looking to do is how can I develop a new service line? That doesn't take a lot of the resources of the current company And how can we test it out and roll it out and get attention to it? So that we can begin pumping new money and new flow into the company Remember if you're doing a turnaround that means something that is being done is not done effectively So if I'm looking at the hospital system, they may be known for doing one type of surgery.

25:10When the market is seeing an influx in another type of surgery, adding a new service line, moving these surgeons to be able to do this if they are capable and seeing that the revenue line can actually continue. You may say, Dr. Jake, what if I'm in a position that we can't just add new or diversify revenue streams because we're in the side of profit, like you said? Well, being on the side of profit is very simple, especially when I'm in the SPD world. If I am if I'm hearing that turnaround is around a new CEOs in place as as as a leader in central store processing, you want to have your ear on what surgeons and what their specialties are, what surgeons the executives are bringing in.

25:51What are their specialties and ensure that your department will be ready for whatever those new service lines are. The later the longer it takes you to revolve around that change The longer is going the more it's going to affect your department very simple If you want to be a leader that is known and want to be kept around long term You have to be a leader that is open to change. I have a saying that says when facts change So do I what do you mean? Dr. Jake is very simple if we've been doing something one way But I get new information that lets me know that the thing or the way that we've been doing is not the most efficient, not the most effective, not the most profitable and won't get us to our desired result on time or at the pace that we want.

26:38When those facts change, I immediately change my thought process immediately. Who the company was or what our identity was prior to the new facts will determine how I move forward. Leaders that are not capable of that or see organizations that fail will see the new fact, acknowledge its truth and still fight against it because of comfort of old times. It's very important that we understand that if I'm in the position, say, central sterile processing, I'm hearing that new doctors are coming on board to the hospital as a leader. You want to be doing all the research that you can on that new surgeon, on that new leader coming in to figure out what they're known for bringing to an organization and ensuring that all the in-services are done within your department to prepare for the influx or influx of new surgeons or new surgeries.

27:33and see the surgeons that are leaving what areas of your business that were probably in the department that were a lot of your time if those surgeons are leaving and bringing a new surgeon that specializes in a new line of business more than other you have to be able to adjust your department to that okay um turnaround will be creating new partnerships with local health care providers to expand your reach, implementing a leadership development programs to build a stronger management team. Listen, let me tell you something. I cannot tell you any more than I tell you on every single episode. The power of investing in leadership development is not a commodity.