How Darron Anderson led Express Energy Services out of bankruptcy Featured

8:01pm EDT March 31, 2011
How Darron Anderson led Express Energy Services out of bankruptcy

Oct. 27, 2009, wasn’t the happiest of days for Darron Anderson.

It was the day his company, Express Energy Services, filed for Chapter 11 bankruptcy protection.

But for Anderson and the employees at Express Energy, it was far from the demise of the company; it was a rebirth of sorts. In just nine weeks, the company emerged from the reorganization prepared to do better than before.

“Emerging out of Chapter 11 on Jan. 1, 2010, I would say by the end of Q1, the Chapter 11 process was pretty far in our rearview mirror,” says Anderson, CEO of the $300 million oilfield services company. “I always tell people I have the greatest job in the world. Since taking over as CEO in the end of 2008 in a very, very depressed market and leading a company into a Chapter 11 process and successfully leading a company out of that process and now watching the company grow and flourish. It has been such a wonderful environment.”

A bankruptcy doesn’t create what most people would consider a wonderful work environment, but Anderson and his 1,475 employees survived the process and have gone on to good results.

Here’s what he learned along the way.

Communicate key messages

From 2004 to 2008, the energy, oil and gas industry enjoyed a stretch of very profitable years. In that same year, Express Energy Services was in the process of being acquired by an outside capital group. When the transaction took place, any additional debt was leveraged to complete the deal. That process, combined with the condition of the industry, is what put the company in Chapter 11.

“The business couldn’t support the new balance sheet and the industry had fallen off so drastically, there wasn’t going to be any help from the marketplace,” Anderson says. “It was pretty clear early on, even with the new owners, that Chapter 11 was the process that needed to be taken for the benefit of the organization and the people of the organization.

“From an internal standpoint … I think one of the best things we did was hiring a public relations firm that helped us craft messaging not only from an external standpoint but an internal message.”

While the natural inclination when times are bad may be to withhold information from employees, Anderson didn’t do that.

“We took the exact opposite approach,” he says. “We kept our employees up to speed from day one. We did that with phone communication, conference calls and site visits to let the employees know we were going through Chapter 11. We had to let them know what that meant to them personally, what it meant for their jobs and giving them the security that it was going to be business as usual. That ultimate communication we had with our employee base was one of the things that led for a successful emergence from Chapter 11, because our internal team was involved in the process and really supported the organization. That external communication and … internal communication were the keys for the success.”

Prioritize problems

When facing a problem as challenging as a reorganization, there will be a number of things calling for your attention. You need to figure out which ones should be dealt with first to give the company the best chance to succeed. For Anderson, one of his top priorities was to develop more of a team atmosphere.

“Express was a very entrepreneurial company,” Anderson says. “With an entrepreneurial company, you have a lot of individual initiative, individual attitudes, and one of the biggest issues was that Express should be about the company, not about the individuals.

“As an organization we had responsibilities to our employees, our vendors, our shareholders and to the public,” says Anderson. “As a result, there were a significant number of changes that occurred early on in the process. Some were painful changes, but we had to say, ‘Although we’re making short-term sacrifices, we know that they will set up the organization for the long run, and we are going to have a solid team that is 100 percent supportive of our organization and materializing our five-year strategic plan.’”

It is critical that executives of companies facing these types of issues communicate each step of the process to create a smoother transition.

“You have to talk to your people,” Anderson says. “You can’t accomplish everything overnight. That is something I personally struggled with, because I’m very driven, very competitive, and there are things that you want to change, things that you want to put in place and things that you know can bring great benefit to your organization. You have to listen to your team around you and as a group decide what are the priorities and remember whatever your horizon is, it’s not all going to be done overnight.

“You cannot overwhelm the organization. You cannot create too much change too fast. What you can do is listen to your organization, listen to your team members and turnaround and act upon what they have said and make sure it’s clearly visible that you have reacted and get their feedback to your reaction. What happens is, the organization realizes that they have a voice and that management is listening to them and management took action and they see a positive behavior. What it breeds is the next initiative or the next decision is that much easier and accepted and before you know it, it becomes an environment, it’s a culture. It’s a culture of getting feedback. It’s a culture of taking that feedback and making the best decision and putting things in action and seeing the success of that.”

Create a plan

Getting the right feedback is critical during a turnaround but making the right decisions and having a plan for action is even more important.

“We sat down as an executive leadership team, and the first thing we did was went out to our operation-level managers who have the most day-to-day interaction with most of our employee base,” Anderson says. “We asked them specific questions regarding what we do well as a company. What we can improve upon as a company? What are the issues you deal with on a day-to-day basis with your employees? What are the things your employees are coming to you with? We did a very detailed survey process, and we took in information and then spent the better part of a week just combing that information and really seeing what our organization had to say about our current condition.

“Then we looked back and said, ‘If this is where we are today as perceived by our organization, where do we want to be in five years?’ That really started to develop the strategy of our five-year plan. We took where we were and asked ourselves, ‘What do we all think the ideal Express looks like in five years?’”

From that process, Anderson and his team developed several key areas of focus, including financial performance, employee retention, safety performance, customers and how customers view the company.

“We asked ourselves, ‘What must we get done in the next 12 months? What must we get done in the next two to three years, and what do we need to get done within five years?’ That is so far from where this organization was two years ago — that was very short-term focused that the only metric was a financial metric. Now we have so many other metrics and we know that if we perform well in all these key elements of the business, the financial performance is going to be there.”

Unify the team

It is critical for companies that are going through change or restructuring to not send different messages to different areas of the business.

“If you’re going to have any change, you have to be unified,” Anderson says. “We spend a lot of time discussing, analyzing and critiquing different issues. We don’t always get immediate buy-in at the first meeting or even the second meeting. After everything has been discussed, it is very important that the leaders of your organization are delivering the same message, because you don’t want your employee base to get confused. You don’t want your employee base to think that they are expected to perform a certain way here, but if they go over there, they are expected to perform a different way. In doing that and delivering a common message and getting all of your employees bought in to it, now you can take out the message to your customer base.”

A turnaround creates a lot of change within a company, and it is imperative that employees are willing to follow new plans in order for a turnaround to be successful. There is no room for resistance.

“It’s very important to give the naysayers an opportunity to get on board and give them a full chance to make sure that they understand the message and direction,” Anderson says. “When you go through things like this and people just haven’t done it before, there’s always a lot of fear, and fear is going to bring on some level of resistance. You have to be patient with individuals and make sure that they have all the knowledge and the correct knowledge. A lot of times, the information they have been told or possibly heard is incorrect. It’s important that they understand what the facts are and what the truth is.”

But once you’ve gone through the education process and they have all the facts and have had an opportunity to ask any questions and are still choosing not to get on board, at that point, you have to make a decision.

“At that point in time you have to ask yourself, ‘Is it better for this person to remain in the organization with potential negativity or with hesitation?’ I would bet most CEOs would say that’s something that they cannot have is a person not fully supportive of the organization. Whatever short-term pain that may create, it’s better for the long term and it definitely pays off.”

Rebuild

Anderson and his team looked for new employees who had experience with companies that were doing the things Express wanted to strive to do following their turnaround. “Entrepreneurial companies tend to have a level of drive, a level of can-do attitude,” Anderson says. “We had to balance that with individuals who came up in larger organizations, more professionally managed organizations and system processing organizations. That was an element we were missing. We rounded out a management team that has different experiences from different types of companies because we want to keep that element of an entrepreneurial attitude but marry it with a more professionally managed company and that has been refreshing and provided success for us.

“Part of the integrating process is that you cannot be afraid to communicate what you think some of the opportunities for improvement are within the organization. It is very difficult to say, ‘We just came out of a Chapter 11, and we are the best company out there, don’t worry about that.’ You have to communicate to [new employees] what you think the issues were that led up to it, what improvement steps you’ve taken and what you could expect they could provide to help the organization meet its long-term goals. You have to tell them that there is going to be change in the company, and we’re bringing you in to help with that change. “

Make sure the individual agrees with your vision and understands that flexibility is key.

“We know where we want to get to, but in getting there, there may be different paths,” Anderson says. “As we bring on people, we want them to come on with their experiences and values that they’ve had previously. You have to have that strategy as a CEO and be able to lay out to a new prospective candidate and be willing to admit that the organization is not 100 percent perfect and be willing to admit that we want and we need your help. Be willing to admit that it’s going to be challenging because it’s change.”

HOW TO REACH: Express Energy Services, (713) 625-7400 or www.eeslp.com

The Anderson File

Darron Anderson, CEO, Express Energy Services

Born: Corpus Christi, Texas

Education: Graduated from the University of Texas with a degree in petroleum engineering. He worked for Chevron right out of college and also started his own business in 1998. Through those experiences and the people he met and learned from, he says that’s how he earned his “homemade” MBA.

What was your first job and what did you learn from it?

My very first job was mowing lawns in my neighborhood at the age of 13. That really taught me the satisfaction and joy of being an entrepreneur. It also taught me to have a good work ethic.

What is the best piece of business advice that you have received?

What doesn’t get measured doesn’t get managed. I’ve taken that adage and used it tangibly to make sure we measure things that we want managed but not just making sure we measure them but making sure we communicate them.

Who do you look up to or respect most in business?

Jim Woods, the former chairman and CEO of Baker Hughes. Mr. Woods was on the board of directors of the first company that I sold, and he has been a great mentor. You look at a company of the caliber and size that he ran and to be able to have him give you advice about how he looked at things was totally invaluable. He is the person I’ve learned the most from and have the highest respect for.”

If you could do something dangerous one time with no risk at all, what would it be and why?

I am not a racecar fan, but I would want to try driving a racecar in an actual race. It requires split-second decisions, you’re moving extremely fast, there’s a side of gut feeling, an amount of technical know-how and that would be an amazing experience.