C-Level Management Coaching

Apr 11 2004
By: Doron York
Categories: Case Studies
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CS No. 041117 – Fortune 500 Corporation
A Fortune 500 Food Manufacturing Co located in Decatur Illinois.

The Engagement:

Coaching a senior level management team in turning the struggling division into a highly profitable business.

The Challenge:

This company had a $50 million revenue division manufacturing specialty products for use in food products and for industrial applications. The division was administered as part of a $1 billion commodity products division. Manufacturing consisted of seven small production plants scattered across 6 states in isolated locations. The division was generating a mediocre $500,000 in operating income on $50 million in sales and had been stagnant for years.

The Predictable Future:

  • No growth in sales or operating income for a period of years.
  • Lack of leadership in establishing the direction for the business.
  • Lack of capacity to launch new, high margin, specialty products.
  • A need for capital investment to address the lack of capacity.
  • A lack of communication between the manufacturing locations for capacity and talent allocation.
  • The division would be shut down or sold off piecemeal for lack of return on invested capital.

The Breakthrough Targets:

  • Identify and implement structural changes to the business and its management to improve profitability.
  • Address the capacity issues.
  • Establish a direction and management culture to allow the business to grow in the future.

The Action Plan:

  • Established a management structure to run the business as a specialty business rather than as a commodity business.
  • Modify the commodity division accounting system to break out the specialty division accounting separately, allowing the individual plant economic performance and product line profitability to be evaluated.
  • Established each plant as a free standing profit center.
  • Closed and sell one unprofitable plant.
  • Changed out two of seven plant managers to instill new life and fresh ideas into the plants.
  • Eliminated several unprofitable product lines which made capacity available.
  • Eliminated the need for capital investment by using the now available capacity for new, high margin products that were waiting on the capital investment.

The Breakthroughs:

Over a period of 18 months of executive coaching, the division moved to an annual operating income of $5 million/year, up from $500,000/year.

The business culture was changed from running a commodity division of high volume, low margin manufacturing to a specialty culture of low volume, high performance, and high margin products.

The plants now ran as free standing profit centers but functioned as a team to allocate both personnel and production capacity across the division to maximize the profitability of the specialty division as a whole.

  • About The Company
    PAAR & Company is a global enterprise that specializes in the impossible. We are in the business of coaching corporate leaders in advancing forward those areas that are making an immediate, relevant and positive impact on their leadership presence and that are highly critical to the sustainability of their enterprise.