TQ Restructuring

You have led comprehensive re­struc­turing and trans­formation programmes in renowned companies. What role do communi­cations play in those situations?

In trans­formation or re­struc­turing processes, communi­cations are a strategic leader­ship task. Success­ful communi­cations describe the problem, explain the objective, show the path for getting there in a com­pre­hensible and transparent manner, build trust with all stake­holders, minimise uncertainties and motivate all involved parties to continue on the chosen path despite all the challenges that may arise along the way. This applies equally to internal and external communi­cations.

You have often worn two hats in your work, acting as CFO and labour director at the same time. Your task in these functions is to gain the trust of banks, analysts and investors, and at the same time persuade trade unions, works councils and employees of the necessity to make some­times severe cuts. What is important in such a scenario?

When re­struc­turing a business, the different stake­holders are asked to accept cuts or make sacrifices – trusting that this will improve the situation the company is in. It is important that the cuts are balanced in terms of the share of risk the various stake­holders take and that this is communi­cated in a transparent fashion. Wearing those two hats in such situations means ensuring that financial stability and job security go hand in hand and are not mutually exclusive.

The forecasts for various sectors in Germany are not looking good. Success­ful restructuring and trans­formation communi­cations have always opened up new perspectives. How credible is this in times when companies are increasingly fighting for their very survival?

In addition to an honest evaluation of the current situation, successful trans­formation communi­cations also include conveying the objective and a comprehensible description of the path for getting there. What have we achieved already, what do we still need to do to reach our objective? That creates trust and increases motivation.

The current crises are so deep and befall companies so quickly that it is necessary to take some initial action to adapt to the situation before a target can be worked out and relevant measures can be implemented. More time is needed to find and implement a success­ful strategy in the first place. The result is that we need to work much harder to gain trust and increase motivation to over­come the crisis. Particularly within the company facts and figures are not enough to succeed. We must get through to the people with their expectations and needs.

Every day, the papers are full of news about major job cuts. How does that fit in with the shortage in skilled labour?

This is a very complex issue. Personnel costs make up a considerable chunk of the over­all costs for companies and are thus a key leverage point in any trans­formation programme. Also, the skills required are increasingly deviating from those that are available in many companies, for example in digi­tal­isation. On the other hand, many companies are parting ways with employees who have experienced crises in the past due to their age. However, that experience could be a key asset that is urgently needed in times like these. After all, diversity also includes the right mix of older and younger employees, of experienced people and others who bring in a fresh perspective. I also believe that the labour market will undergo another considerable change if the crises turn out to be as severe as they look like right now. I fear we are seeing the beginning of a long-term economic crisis.

Managers often feel they are stuck between a rock and a hard place. They may be affected by the re­struc­turing processes them­selves, but they are also asked to act as drivers for change. Some may neglect their leader­ship responsibilities somewhat, others – often those you want to keep in the company – are leaving. What can be done against this lethargy or brain drain?

We have already talked about how good communi­cation can build trust, reduce un­certainty and motivate all affected parties to continue on their path to change, despite all the challenges they are facing along the way. That applies particularly to managers, who often feel caught between the lines. The better the explanations, the better the chances to beat lethargy and brain drain. In addition to an intensive leader­ship dialogue, targeted incentives can also be a suitable instrument to use in those cir­cum­stances.

Taking the perspective of a top executive in a multi­national corporation, how do you currently see Germany as a location for business – and what can companies, political decision makers and the social partners do to stop the downward spiral that many people feel we are in?

I think the competitive­ness and future viability of many businesses, in particular in key industries in Germany, is at considerable risk because, in addition to structural challenges, we are also struggling with “homemade” problems like excessive red tape, a lack of flexibility and over­regulation. The environ­mental trans­formation of industry, which is absoultely desirable, of course, will take longer in those circumstances and should be addressed in a less ideological manner because other­wise it will accelerate existing crises even more.

Marcus A. Wassenberg has acted as a CFO and labour director in many renowned companies, for example at Rolls-Royce Power Systems AG and Heidelberger Druckmaschinen AG. He is currently working as a consultant for restructuring projects in the automotive industry.

Photo: Marcus A. Wassenberg