Social Services Agency
A storied nonprofit organization, approaching its 120th anniversary, was struggling. Management team strife was diluting the organization’s focus. The development strategy was in disarray. There was no plan to address persistent losses, and major funders were losing patience. The organization’s senior lender was on the verge of placing the company in workout. The board was frustrated. Staff was fearful. Key outside stakeholders were wary.
Absent a turnaround, one of the foundational players of a metropolitan social safety net would collapse, and potentially soon.
David Johnson was invited in to provide transformational leadership in the role of Interim COO.
Communication. Clear and honest communication is often the first casualty in a distressed organization. And reestablishing lines of communication was the top priority.
- Board. The organization’s board was advised on the general plan, weekly update reports were provided to the board, and weekly call was established with the board Chair.
- Lender. Representatives of the organization’s senior lender were contacted early in the process, when it was discovered that a covenant violation was inevitable. A constructive dialog was begun, and what could have been a contentious workout process was instead initiated in a collaborative spirit.
- Management. One on one interviews with every member of the organization’s management team (20 in all) were held in the initial weeks of the engagement. This provided invaluable insight into both the perceived state of the organization but also the strengths and weaknesses of the team.
- Staff. The pace and content of staff communication was increased dramatically. Townhalls at key locations were initiated for major announcements, and regular email updates maintained a steady stream of information. This also served the dual purpose of helping to create a sense of shared ownership in the turnaround plan once it was launched.
Leadership Transition. The incumbent CEO, with a tenure of 20+ years, no longer had the confidence of the board, employees, or major funders. Nonetheless, it was necessary to develop a plan to identify and on-board a replacement while also stabilizing the organization. In short order several executive search firms with strong nonprofit leadership practices were interviewed, and after screening process led by the board one was selected.
Turnaround Plan. A turnaround and restructuring plan was quickly developed and rolled out that featured 50% turnaround in the management team (a mix of new roles and new faces), a reinvestment in the development function, the elimination of programs with no reasonable path to financial viability, a major one-time grant from the organization’s largest funder, a restructuring of outstanding liabilities including new money capital to fund investment, and a budget for the upcoming fiscal year that focused on staff investment while maintaining an appropriate operating margin.
New Horizons. The turnaround and restructuring plan had been implemented, and after allowing time to validate that performance was tracking along the lines forecast, the objective results were in: the plan was working. The new management team was starting to gel, addressing challenges collaboratively and shaping their own vision for the organization, always keeping in mind the lessons of the turnaround. Following a well-designed search process, a new CEO candidate had been identified and a start date set. The organization was past the crisis stage, and it was time to depart.