Transition Sabbatical Tests Managers’ Leadership Capabilities

Situation

A successful, entrepreneurial business owner had grown his company through 20 years of hands-on involvement in almost every aspect of operations. After hiring new managers with strong experience in finance,
sales and operations, the company was stuck at a plateau in revenue and profit performance.

Challenges

• The owner’s presence unwittingly subdued his managers’ willingness to take initiative, make decisions and take appropriate risks.
• The owner was tired of managing but needed more time to reflect on new business opportunities and future responsibilities in the company.
• Would it be possible for the company to not only survive, but also thrive, while the owner left the business?

Response

Platinum Group was invited by the owner to develop a plan that would test the leadership capabilities of the management team while he took time away from the business to reflect and plan his next stage of business life. Using experience accumulated over recent years in similar cases, Platinum helped structure an owner’s transition sabbatical. Clear performance goals were defined, roles and responsibilities clarified, and a short list was made of things that managers could NOT do in the absence of the owner, such as change the name, sell the building or exit the existing business. A dashboard of performance metrics was established for monthly reporting. The owner left for a seven-month, transition sabbatical.

Results

The core business has performed better than historical levels through the first half of 2008. The management team now independently runs the business and makes all day-to-day operational decisions. They have developed a strong team connection and accountability for getting results. Despite a tough economy and some market uncertainty, the managers are firmly committed to delivering above-average results. The owner has traveled, explored new markets, and developed a conceptual business portfolio of six different businesses that are vertically integrated or related to the core business as it grows to $30 million and beyond. As the owner plans his return, he will move into a separate, new office and launch new business plans formed during his time away while the management team focuses on the core business.