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You’re the Boss Blog: The Worst Two Weeks of My Business Life

July 18, 2013 by Leave a Comment
Creating Value

Are you getting the most out of your business?

In the spring of 1990, before e-mail, Twitter and instant messaging, if you were going to get information quickly it came by phone. This has led to a favorite saying, “You’re only one phone call from disaster.”

For me, my business disaster started with a phone call from a client of my food service company in Vermont. The client told me about an employee who had just become sick after eating some food from our vending machine. I didn’t believe it. We made 13,000 pieces of food a week and had been doing so for years. Never in all of that time had our food made anyone ill.

I continued on with my day and then the phone rang again. This was a second client calling to say that an employee had become sick. Now, I started to worry. This was not going to be a good day. When the third call came, I knew I had a problem.

These phone calls were a harbinger of a huge problem. It was the beginning of the worst two weeks in my business career. The problem was so bad that I knew that if we did not handle it well, we would be out of business.

Most food businesses do not survive a breakout of salmonella food-borne illness. That was what I was dealing with. This was a problem that was about to grow and involve all our operations in four cities in two states, covering more than 40 accounts.

I knew I had to do two things. First, I had to contact all of our clients that had food machines. Second, I had to call my insurance agent and get him on board with our plans quickly.

I knew these were the first two things I needed to do because our management team had thought about this issue during one of our strategic planning sessions. Every year we spent a couple of hours talking about the really bad things that could happen to our business. Our big three were an armed robbery in our facility or with a route driver; the death or serious injury of someone caused by one of our vehicles; or the biggie, a food-borne illness.

Unfortunately, we got the biggie, the food-borne illness. Those three phone calls started us down a road that we had thought about but never in a million years thought we would ever have to take.

Here is what happened. The commissary manager who ran our food production facility decided he was going to help us save some money. He decided that we could substitute ground turkey for ground beef. He never bothered to tell me. He just made the change.

The problem with using ground turkey is it needs to handled much more carefully than ground beef. In 1990, most of the ground turkey you could buy had salmonella in it. If you didn’t cook and handle it properly, you could get sick. We did not handle it properly and 27 people became ill.

After about four hours, more bad news came rolling in. The health department descended on our facility. We abruptly went from having a rating of 96 percent two weeks earlier to one in the low 30 percent range. This caused our food production facility to be closed down.

The local news media decided we were the top story of the day. We had reporters and television news trucks outside our warehouse, all wanting a story. If we could not provide them with some information, we knew they would have only one side of the story to report.

I had to get our insurance company on board and I needed to personally call all of the companies that we had supplied with infected food. I decided the first call had to be to our insurance agent, Peter Prescott from Cool Insuring Agency. Mr. Prescott turned out to be my personal star over the next two weeks. He personally took over all of the claims and spoke with anyone who had been infected and their families. He assured all of the people who became sick that they would be taken care of and insurance would cover it.

My job was to take responsibility for what our company had done. I called all of our clients and explained what had happened. I told them that this was our fault. We had handled the food improperly. I told our clients that we would make sure anyone who became sick would be dealt with fairly. I asked for our clients’ help in identifying anyone who could have become sick from the food we sold.

Our next step was to post notices at all our clients that we had sold tainted food. We asked that anyone who had become sick or thought they might have become sick to contact us. We did not try to duck our problem. We did not try to blame anyone else or justify our behavior. We had decided during our strategic planning sessions that being truthful was the only way to go.

While our nightmare went on I received several calls from friends in the industry. Bad news travels quickly and many friends called to offer support. There was only one problem with their support. They kept talking about damage control. That was the last thing in my mind. My thoughts kept going to how to communicate our problems and how to make sure that those who became sick were treated fairly.

As it turned out, my thought process was the correct one. We took responsibility for what happened. We communicated clearly about what the issues were. We asked for help in identifying those who might have become sick. We got our insurance company on board. I personally talked with all our food clients and kept talking with them during the crisis.

The combination of all of the things we did helped us stay in business. We did not lose a single client. We had an opportunity to walk our talk. We had unbelievable help from Mr. Prescott and Cool Insuring Agency. All of these things helped us learn seven lessons:

  • Telling the truth is always the best way to go.
  • Don’t hide from your problems. Bring them out in the open.
  • Ask for help and ask quickly when things go wrong.
  • Be responsible for what your company and you do. No excuses allowed.
  • Plan for the worst things that can happen. You never know when your nightmare might come true.
  • Learn from your mistakes and let those affected know what you have done to change.
  • Be transparent in what you are doing and what you are thinking.

I believe these seven things helped us stay in business. I think the most important step we took was to hold the situation-planning exercises. Having a salmonella breakout is not something I would recommend as a character-building exercise, but I had real proof that thinking about what could go wrong is an important step in keeping a company healthy.

What were the worst two weeks in your business life? What lessons did you learn?

Josh Patrick is a founder and principal at Stage 2 Planning Partners, where he works with private business owners on creating personal and business value.

Article source: http://boss.blogs.nytimes.com/2013/07/18/the-worst-two-weeks-of-my-business-life/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

Shell Chief to Leave Next Year

May 2, 2013 by Leave a Comment

Mr. Voser, 54, made the unexpected announcement as Shell reported first-quarter profit that reflected only a modest gain from a year earlier but still exceeded analysts’ expectations.

“After such an exciting executive career I feel it is time for a change in my lifestyle and I am looking forward to have more time available for my family and private life,” Mr. Voser said Thursday in a statement. One longtime associate said Mr. Voser had long privately expressed a wish to retire by age 55.

Although Shell’s chairman, Jorma Ollila, said the board would consider outside candidates to replace Mr. Voser, the company has a team of executives who might be contenders in what the industry assumed would be an orderly transition.

With 87,000 employees across the globe, and second only to Exxon Mobil in terms of production by Western oil companies, Shell would not be an easy company to change, in any case.

Mr. Voser, who began his business career at Shell in 1982, left in 2002 to become the chief financial officer of a struggling maker of industrial equipment, Asea Brown Boveri, in his native Switzerland, where he made his reputation by helping to lead a turnaround.

He returned to Shell in the wake of a scandal on the misreporting of reserves that had led to the departure of both the chief executive, Philip Watts, and chief financial officer, Judy Boynton. Mr. Voser started as chief financial officer and was promoted to chief executive in 2009 upon the retirement of Jeroen van der Veer.

One of the few blots on Mr. Voser’s record would be Shell’s high-profile exploration effort in Alaska, which has been plagued by accidents and other problems. Those difficulties have led Shell to suspend drilling until at least 2014.

Fellow executives and analysts say that Mr. Voser has pursued a strategy of ambitious projects meant to pay dividends for decades. In particular, he has built up the liquefied natural gas and related businesses to a point where they now account for close to 50 percent of Shell’s exploration and production earnings.

“I think Voser has done a good job for Shell,” said Iain Pyle, an analyst at Bernstein Research in London. “The company is left with a strong portfolio of projects and some large, long-term projects which should deliver strong stable cash flows for years to come.”

Shell showed evidence of its strength on Thursday when it reported net profit, adjusted for one-time items, of $7.5 billion, up 3 percent from a year earlier. The performance substantially beat analysts’ forecasts.

Revenue, at $113 billion, declined 6 percent, but financial analysts pay little heed to revenue figures in the oil industry, given the volatility of prices and the ebbs and flows of production.

One of the star performers was the new Pearl GTL plant in Qatar that turns gas into liquids, a technology that only a handful of companies have mastered.

Pearl was extremely expensive, costing around $20 billion. But it now looks like a smart bet because its products, like diesel, are linked to high oil prices, giving Shell and its Qatari hosts a hedge against any drop in prices for natural gas.

Pearl nearly reached full production at the end of last year, which added an extra 175,000 barrels per day in the quarter, Shell said. The plant has a capacity of 260,000 barrels a day.

Shell is considering putting a similar plant on the U.S. Gulf Coast, the company’s chief financial officer, Simon Henry, said Thursday.

Mr. Voser has led an effort to build up Shell’s gas portfolio, particularly liquefied natural gas, which is made by supercooling gas into liquid form so that it can be transported, usually on ships. Shell expects global demand for L.N.G. to double by 2025 to the equivalent of about 4.5 billion barrels of oil per year.

This article has been revised to reflect the following correction:

Correction: May 2, 2013

An earlier version of this article misspelled the surname of the Royal Dutch Shell chairman. He is Jorma Ollila, not Olilla.

Article source: http://www.nytimes.com/2013/05/03/business/global/03iht-shell03.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

The Long Run: After Mitt Romney Deal, Company Showed Profits and Then Layoffs

November 13, 2011 by Leave a Comment

Mr. Romney’s company, Bain Capital, sent in a team of 10 turnaround experts from Boston to ferret out waste, motivate executives and study untapped markets.

By the time the Harvard M.B.A.’s from Bain were finished, sales at the medical company, Dade International, had more than doubled. The business acquired two of its rivals. And Mr. Romney’s firm collected $242 million, a return eight times its investment.

But an examination of the Dade deal shows the unintended human costs and messy financial consequences behind the brand of capitalism that Mr. Romney practiced for 15 years.

At Bain Capital’s direction, Dade quadrupled the money it owed creditors and vendors. It took steps that propelled the business toward bankruptcy. And in waves of layoffs, it cut loose 1,700 workers in the United States, including Brian and Christine Shoemaker, who lost their jobs at a plant in Westwood, Mass. Staggered, Mr. Shoemaker wondered, “How can the bean counters just come in here and say, Hey, it’s over?”

Mr. Romney’s career at Bain Capital, which he owned and ran as chief executive, is a cornerstone of his campaign for the Republican presidential nomination — a credential, he argues, that showcases the management skills and business acumen that America needs to revive a stalled economy. Creating jobs, Mr. Romney says, is exactly what he knows how to do.

The White House, though, is already preparing a less flattering portrayal, trying to frame Mr. Romney’s record at Bain as evidence that he would pursue slash and burn economics and that his business career thrived by enriching the elite at the expense of the working class.

From 1984 to 1999, Mr. Romney and his deputies made fortunes by investing in, acquiring and then selling about 150 companies. It was high-stakes work that shaped Mr. Romney’s values and views, taught him the art of salesmanship and negotiation and took him deep inside the boardrooms and factories of American business.

Because financial data for many of the acquisitions are not publicly available, it is difficult to fully tally the wins and losses, the jobs created and the jobs eliminated on Mr. Romney’s watch. But the experience with Dade, Bain’s biggest transaction at the time, shows how Bain managed its investments, structuring deals so it would be hard for Mr. Romney and his partners not to come out ahead.

Bain and a small group of investors bought Dade in 1994 with mostly borrowed money, limiting their risk. They extracted cash from the company at almost every turn — paying themselves nearly $100 million in fees, first for buying the company and then for helping to run it. Later, just after Mr. Romney stepped down from his role, Bain took $242 million out of the business in a transaction that, according to bankruptcy documents and several former Dade officials, weakened the company.

Even some people who benefited from that payday and found it reasonable at the time now question it. “You would have to say, looking back, that it was too large, because it pushed us into bankruptcy,” said Robert W. Brightfelt, a former Dade president who collected more than $1 million.

Bain Capital declined to comment specifically on the Dade acquisition, but cited a long history of improving companies’ performance in both “good and challenging economic conditions.” A campaign spokeswoman, Andrea Saul, defended Mr. Romney’s tenure at Bain, saying that “while not every business was successful, the firm had an excellent overall track record and created jobs with well-known companies.”

In recent years, Mr. Romney has acknowledged having second thoughts about some of the deals he drove, saying his post-Bain career in government had sensitized him to the consequences of his decisions as a businessman.

Kitty Bennett and Christopher Gregory contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=ff9f4da933ac217e297195b931ca0871

Filed Under: Business News Tagged With: , ,