Wednesday, November 2, 2011

Turnaround tale

I'm blogging more or less live from the People Report Best Practices Conference. Here's the first installment for the kick-off afternoon session:

We’re literally 20 minutes into the first general session of the conference, and already we’ve heard a turnaround story that pushed the ROI on attendance into positive territory. It was John Bettin’s account of how The Palm survived during the economic downturn.

In early October of 2008, when the financial community plunged into near-ruin, fine-dining fell like a rock. About a week later, Bettin joined $85-a-head Palm as the first CEO to be recruited from outside the founders’ families. “At least I could claim [the collapse] it wasn’t my fault,” he cracked to the audience of about 300 chain execs.

The private owners of The Palm pulled him aside on Day One and said, point blank, forget about the usual transition into the job. We want you to focus on meeting our obligations to the banks.

Bettin plunged into the task. Given the direction of the economy and fine-dining sales, he realized right away that the venerable steak brand wasn’t going to meet its financial obligations. It was a life-or-death struggle, a crisis that required extraordinary measures.

One of the questions the situation raised was what to tell the Palm’s venerated staff, who could make or break a recovery with their attitudes. “We decided to be 100% transparent,” explained Bettin. “We let them know that we were in trouble, that we would be trying different things, that our plan might change daily.”

As the negative trends continued, the company had layoffs and salary cuts. “Be we also launched a recognition program with Tiffany pens that cost us $100,000 a year. We started a newsletter that cost us $40,000,” recounted Bettin.

The company wanted the employees to stay engaged and play a crucial role in the survival struggle, even as the bad news was communicated to them.

“Your grandmother told you, ‘Honesty is the best policy.’ I can alter that and say transparency is the only path if you want to succeed,” said Bettin. “We celebrated every day we were less negative than we had been.”

As a result, “we came out of it faster than a lot of people,” and same-store sales have remained positive, he said. “It’s not me, it’s not the leaders, it’s our 1,600 employees.”

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