Doctors who heal ailing companies

Crisis-seekers: A company in trouble is an intriguing and potentially rewarding challenge to the specialists who ride to the rescue.

February 03, 2002|By Paul Adams | Paul Adams,SUN STAFF

With spectacular business failures capturing headlines in recent weeks, attention has been focused on a small fraternity of white-knight executives whose specialty is fixing broken companies.

Some call them turnaround artists or crisis managers. Some prefer "chief restructuring officer," a relatively new title invented by bankruptcy lawyers and management consultants. Others parachute in under the more traditional banner of chief executive officer.

In practice, they are corporate thrill-seekers - a subculture of executives who thrive on crisis and the instant gratification that comes with measuring success in months, rather than years.

It's a high-pressure lifestyle that involves frequent travel and long hours in meetings with oftentimes hostile employees, bankers and investors. But for the elite, the payoff can reach well into the millions for what amounts to little more than a temp job.

At the top of the list are such names as Stephen F. Cooper, who was tapped last week to revamp disgraced energy trader Enron Corp., and Robert "Steve" Miller, who is trying to rescue Bethlehem Steel from an untimely demise at the hands of foreign competitors.

Other notables include James B. Adamson, recently recruited from the Advantica Restaurant Group to take the blues out of Kmart's famous blue-light specials, and Norman P. Blake Jr., who engineered the restructuring and sale of former Baltimore insurer USF&G Corp.

Deposit members of this crowd in a stable, thriving company and they'd soon tire of the routine.

"A lot of people are excited about the thrill of being on the edge of jeopardy," said Jeffrey Sonnenfeld, associate dean of the Yale School of Management, who has studied corporate executives. "They don't do well in a normal environment. If you don't help them move on when they're done, they'll create a crisis because that's all they know."

With the economy in recession, demand for turnaround experts has increased as companies big and small seek to restructure their way out of crisis. In December, Fortune magazine dubbed turnaround management the "job of the year."

The Chicago-based Turnaround Management Association released a survey last year showing that two-thirds of its member firms had to turn away business in part because of inadequate staffing. More than 700 professionals turned out for the organization's annual convention last fall, compared with 160 a year earlier, when the convention was held in Baltimore.

"If you're one of the stars of the business, you're in such demand right now that you're turning business down left and right," said Conor D. Reilly, a senior partner in New York-based law firm Gibson, Dunn & Crutcher.

Turnaround specialists typically come from one of two backgrounds. Some are financial wizards who got their start at big-name accounting or consulting firms and later launched a boutique turnaround practice. Others are traditional CEOs who unexpectedly found themselves at the helm of a failing company and managed to turn the situation around. In the process, they gained a reputation for handling crises and parlayed their name recognition into a lucrative cottage industry.

"Once you've done it once, then your phone will be ringing off the hook," said Justin Pettit, a senior partner with Stern, Stewart and Co., an international business consulting firm.

Chrysler bailout

That's exactly how it happened for Miller. The Bethlehem Steel executive helped engineer the bailout of Chrysler Corp., a landmark achievement that launched his career as a hired gun for troubled companies. After Chrysler, Miller was sought out by companies such as Morrison Knudsen, a construction firm, and Waste Management, the nation's largest trash hauler.

He was at a model train convention in Salt Lake City Sept. 20 when he got the call from a Bethlehem Steel board member. The assignment had immediate appeal.

"If there was a very well-run corporation that's doing just fine that needed a CEO for the next five years, I would not be interested. I would probably screw it up," Miller said. "It's much more interesting to take a desperate situation and see if I can fix it."

Like a lot of crisis managers, Miller fell into the specialty by accident and became hooked.

"To be able to take a situation that many people had written off for dead and bring it back to life and restore dignity and financial security to thousands of people is a very satisfying thing to look back on," said Miller, reflecting on the allure of crisis management.

But he admits that the worry keeps him up at night sometimes. And there are tense moments sitting across the table from angry and frustrated employees as they try to figure out what went wrong and how to fix it. Tapping into their loyalty to the company is one way Miller keeps things moving forward.

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