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Change management to improve EBIT and company culture

While sales levels and your business’s Earnings Before Interest and Tax (EBIT) are good measures of success (or not), they should not be critiqued in isolation. For a small to medium sized business, achieving millions of dollars in sales and a ‘good’ Earnings Before Interest and Tax, does not necessarily mean your business is performing well, or as well as it could.

Take the example of a manufacturing and installation supplier to the construction sector we supported. The company came to us with a $12 million sales level running at 16% Earnings Before Interest and Tax. But they approached us outlining issues with business performance. They understood that the business could be performing better than it was. They required a consultant to take an experienced look at why this was not happening, and importantly, to implement change management to ensure that it did.

Our thorough business review led us to identify significant change requirements for the company’s shop floor management. Accountability and sustainability frameworks were required from the General Manager through to the Production Manager, Workshop Supervisor and Team Leaders. This needed the support of significant training and restructuring to enable shop floor day to day leadership to effectively manage and develop its people. It was also clear that there was a significantly high risk of product failure across production which needed to be mitigated.

While the company was aware that the business was underperforming, it needed support to determine how to achieve the required outcomes and the implementation of this. The experience to design and manage the required change programs were lacking, as was the process and specifics to successfully restructure. Key tried and tested methods, approaches and strategies, tailored to the specific requirements of this company, were applied.

Gibsons Senior Consultants have been supporting businesses with change management, organisational restructure, and training / development of personnel for 50 years.

Gibsons developed key criteria for success at each leadership level within production. With the knowledge of what was required, the leadership structure was addressed to ensure alignment and effectiveness with organisational structure. Human Resource processes were implemented throughout the business with a focus on production personnel. This was supported with training and development programs throughout all leadership levels within production.

Leadership accountability frameworks were established, aligning behaviours and processes, with expectations. These were linked with quality systems to ensure any non-conformance was raised and addressed as required. A Rewards and Recognition program was utilised to acknowledge high performance and behaviour. The change program was regularly reviewed by management, and its successes and results were frequently communicated to the production team.

Program establishment, implementation, and change took 18 months. Through that period, production efficiency and quality were sustained, and staff performance heightened. The leadership structure progressively improved over the change period with most leaders growing into their revised roles with exceptional results. Financial performance continued to improve and was sustained at or above target levels. Earnings Before Interest and Tax approached 20%, an increase of almost 8% over the 18-month period. Importantly, the culture and staff morale on the shop floor and within the business was greatly improved.

Change management is rarely an easy, straightforward process. Identifying a problem within your business can be simple, but knowing the best approach to make the required changes to move your business forward can be challenging.

This is more so the case when you are looking at personnel, leadership, and organisational structural changes, and introducing accountability policies and new reporting processes. Having an external advisor who can take an unbiased look at your business, determine recommendations, and support their implementation, can transform change management to a practical, systems focused process change. Find out how Gibsons can help you map out a better business for your company.

Let us take the following tasks off your list:

  • Strategic analysis and business plans.
  • Becoming an Employer of Choice.
  • Marketing and sales plans.
  • Brand development and promotion.
  • Business process modelling.
  • Improving systems and workflows.
  • Optimising organisational structure.
  • Pinpointing skills gaps and implementing training.
  • Reviewing financial performance.
  • Profitability improvement programs.
  • Managing organisational change.
  • Mentoring to develop executive leadership.
  • Business process modelling.
  • Mergers and acquisitions.
  • Technology strategy and implementation.