SUZANNE WILSON JOINS OIM

Osborne Interim Management is pleased to welcome Suzanne Wilson (BA - Econ) to the organization as a Principal.

Based in Calgary, Suzanne is a senior Human Resources professional with over 20 years of experience across a broad spectrum of disciplines. As Senior HR Director for two oil sands companies, she built a department from the ground up, developed compensation strategies, created recruitment plans for a high growth industry and created policies and procedures where none previously existed. As Director of Corporate Services she had taken responsibility for IT, corporate communication and administrative support functions. Experienced in transitioning companies from private to public. Adept at working with compensation committees and Boards of Directors. Suzanne is a builder of high performing teams with clear goals and accountabilities.

Of Suzanne joining the OIM team, Mark Olson, Managing Partner states: "We are thrilled Suzanne has agreed to take on the senior HR chair in our Calgary Osborne Interim Practice. Her skill set will be a tremendous asset to companies of all sizes in multiple sectors. Her experience in oil and gas in these somewhat turbulent times will be highly valued."

CASE STUDY: HUMAN RESOURCES - ENERGY

THE CLIENT
A mid size oil and gas company with head office in the US with Canadian operations.

THE CHALLENGE
The Human Resource department of the company had recently experienced significant turnover and the Director had been transferred to the Head office in the US. A new leader was placed into a managerial role reporting to a Director in Houston, but accountable to the local leadership. The challenge was to assist the outgoing leader with his exit and mentor the incoming manager and team to help them build a foundation for success, including new hires and new processes.

THE APPROACH
The initial approach was to spend time with the outgoing Director in two areas:  

• Hand off incompleted projects.
• Develop ongoing structure for the HR department.

Working with the incoming leader, important matters relating to the field employees and contractors of the company were addressed allowing the new manager to focus on the HR team and the path forward for HR. Considerable time was also spent mentoring team members on projects and processes.

THE RESULT
The new leader was able to address the day-to-day matters of HR and start working with the Canadian team on their strategic HR priorities. The Principal took on several large scale projects (which arose from a recent process and procedure audit) that would have taken the current team several months to complete with their current workload. These projects were completed in a few months, satisfying the company auditors.

The HR team, although still relatively new, was able to gain the respect and confidence of the Canadian leadership team and the field employees, improve processes and prepare for future success in all areas of the HR lifecycle.

CASE STUDY: EXECUTIVE MANAGEMENT - NOT-FOR-PROFIT

THE CLIENT
A mid-size not-for-profit charitable organization.

THE CHALLENGE
To provide leadership during the transition following the departure of a 23 year Executive Director.

THE APPROACH
Operating as Interim Executive Director for a period of five months, the Principal empowered and supported the staff to deliver services while providing assurance to the funders and stability to the administration.

THE RESULT
Staff retention was 100% and program funding actually increased during the period, and with the Principal’s assistance the organization found a dynamic new leader to take the reigns going forward.

DAMAGE FROM "A DIFFERENT DIRECTION"

Next time you decide to fire a senior executive or make a significant change in the operation of your organization, avoid stating the reason as “we’ve decided to go in a different direction”. You might think that’s a short, clear-cut and irrefutable explanation for making the change, but it seldom calms the departed and can send a ruinous message to your stakeholders, irrespective of whether the organization is competing in the private, not-for-profit or public sector.

I always like the sports analogies; if you’re a team does that mean a complete overhaul/re-build? Or are you just replacing the head coach because you don’t think he/she is getting enough out of the talent? One might lose season ticket holders, the other might increase sales.

If you’re a not-for-profit society does that mean there’s a void in leadership, or are you changing your programming? Funders will be nervous!

If you’re a consumer goods company, does that mean you’re ditching or dramatically altering the current product line? Maybe a good thing but in the meantime, customers are going elsewhere. In 2011, when then CEO Leo Apotheker of Hewlett Packard announced the company was getting out of PC computers they did terrific damage to their channel partners who thought they were abandoning hardware altogether. It’s taken years to rebuild that trust and business under Meg Whitman. Now they’re at the point where they can split the business units and create more shareholder value.

In executive dismissals, what is said behind closed doors is often covered under a cloak of confidentiality as the result of a non-disclosure agreement tied to a settlement. That of course only serves the purpose for which it is intended if both sides honour the pact. You could prosecute if the deposed executive takes to social media or commits an obvious breech, but you may never know about the over the phone and over the fence conversations that have a way of spreading like an oil spill. You’re taking the high road and you can’t understand the backlash.

Unless the dismissal is “for cause” it seldom changes the fate of the individual to say he/she was let go, but what’s the right “spin” publicly? When Canadian Pacific Railway ousted its CEO a few years ago in a very messy and public battle, it was very clear why .The winning shareholder group was validated as Hunter Harrison, ex of CN, proceeded to take the company to a new level of performance and profitability (some may argue at the expense of other metrics, but that’s another story).

Why not just say it like it is? We needed a change in leadership after this many years (in sports vernacular that’s called the players tuning out the coach). We are looking for more growth and innovation over this next period. We need to generate a greater return for shareholders. Whatever piece of straight talk fits.

From the executive’s perspective, the best professional athletes know when they need a change in scenery and systems to “spark” their game. They also tend to realize when they don’t have what it takes anymore to perform at a peak level and would rather go out on their terms than fight their replacement. Organizations need to be able to make the same call for the same reasons and be very clear about it. It usually ends up being the right approach for all concerned.

Mark Olson (click to see Mark’s profile)
Managing Partner & Principal


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All Interim Management Models Aren’t Created Equal
The Hidden Potential in Any Organization

A BUDGET THAT ACTUALLY DOES SOMETHING

My aim in this article is to stimulate some thought and, hopefully, discussion about the budget and how it can be a useful tool. The budget is the financial expression of the business plan. As such, most of the information and analysis will have been drawn up during the business planning process. Though the budget is summarily expressed financially, its makeup is derived from many measurable components. Do not lose sight of this.

Too often the budget is the domain of accountants with their arcane talk of models and their dreary, repetitive spreadsheets. Let’s get this straight right up front: accountants are a service group. They assemble the budget for the owners, management and operations. They later use it in their reporting service to management and operations. Ownership of the budget goes with ownership of the business plan.

I am going to approach this stimulation of thought by asking what requirements we have of a budget and what uses we put it to. If your budget satisfies the discussion below then it will serve you well. If it does not, then you need to work on it.

The Budget Proves Out the Financial Viability of the Business Plan
The business plan includes inputs from many facets of the organization. These might include new products, research, new assets, new directions and the ongoing business. The budget brings all pieces of the business plan together in the single language of money expressed on a timeline. Though often the business plan and the budget data are prepared close to concurrently, it is a useful exercise to consider how the organization holds together financially.

This is the point at which risks can be assessed by challenging the business plan assumptions. For example, what if revenue is 10% off by more and less? A change in assumption has a ripple effect throughout the organization. In the revenue example, if revenue is lower, it may mean that asset acquisition must be through external financing rather than out of profits, and the implications of this must be explored. Ask the question “What will this mean to us if it happens?” and explore the implications thoroughly.

Some notes on this:

• The process is more important than a deadline. Be thorough.

• You cannot do this unless the duration of your budget matches the duration of your business plan.

• Always assess risks even though they may have a low probability of occurring. The process can provide insight.

The Budget Quantifies Goals
The budget does not set goals. The business plan sets goals. The budget provides the measure of the attainment of those goals over the timeline of the budget.

There is a tendency to think of the budget as only a financial document. Yet the budget is the financial reflection of hard facts, eg. payroll is people working hours for a contracted rate of pay. The number of people and the hours they work are as important to the budget as the dollars.

The quantification of goals is often expressed as Key Performance Indicators (KPI). The budget must facilitate the quantification of the baseline for these.

The Budget Provides Discipline in Performance
The essential elements of a budget are a breakdown of expenditures and a timeline. For a department to meet its budget it must consider both elements and how it will achieve them. This provides a degree of structure and discipline to operations. Time and circumstances may render the budget a less effective tool for this but the baseline provided by the budget must receive consideration.

The Budget is a Component of Monthly Operational Reporting
Let’s start by dispelling the myth that a budget has less value over time. The budget was set as a baseline against which anticipated performance can be measured. The measure of variation from budget may become significant, however, a methodical analysis of the variances will still lead to a full understanding of operations, assist in ongoing forecasting and aid in subsequent business planning.

The standard reporting format is a statement of revenues and expenses for a time period, usually month and fiscal year to date, with the related budget and the variance between the actual and the budget. To this will be added in depth reporting on variances and a report on Key Performance Indicators.

The essence of this is the variance. The variance is the difference, positive or negative, that the actual result is from the component of the budget against which it is compared. A variance has the measure of its component (eg. dollar, unit, hour).

If you prepare a budget that does not fully document the components on which it was based you will not be able to analyze the variances in sufficient detail to effectively manage the organization.

Some notes on this:

• I have laid emphasis on the components. You must have systems in place to measure them. You cannot control what you cannot measure.

• Make sure you have meaningful statements at a department or project level so that line management may analyze their results and control their areas of responsibility.

• Formalize the reporting of variances and KPIs. Ensure that this is at a component level.

• Be methodical in the analysis of variances. Get to the root causes. This is a “call to action” at the operational level.

The Budget is the Base of the Forecast
I am a huge advocate of forecasting. Do it monthly or quarterly to suit your needs. Though it does not need to be as comprehensive a process, think in terms of strategy, business, budget. Have discipline.

Your first forecast was the budget. Document why your subsequent forecasts vary from it. Include the forecast and notes on it with your reporting package.

Conclusion
If you have critically reviewed the requirements of a budget and can honestly say that you are happy with yours then it will serve you well as an ongoing management tool.

Postscript
In my three articles on strategic plans, business plans and the budget I have tried to stimulate thought on their uses and preparation. Though I am an advocate of considering these three areas as philosophically different, I am aware that they generally blend together in practice. Though this is so, I advise that you do stand back and consider them separately and recognize the need for each area. We tend to do this annually but at least do the strategic plan when necessity dictates.

Roger Andrews (click to see Roger’s profile)
Principal


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