Sweet talker Featured

8:00pm EDT September 25, 2007

No one is going to believe you. Not at first, anyway.

If you are ever in the same situation that Bob Peiser found himself in upon becoming president and CEO of Imperial Sugar Co. in 2002, Peiser says you shouldn’t expect to find a lot of allies within the company ranks at the outset.

In early 2002, Imperial had just emerged from bankruptcy, bottoming out at the end of a several-year slide that began when acquisitions the company had made in the late 1990s generated excessive debt. The effect of the growing debt was magnified by a downturn in the often-cyclical sugar industry.

By the time Peiser was hired, Imperial owed more than $300 million to its creditors.

“We probably could have survived one or the other, the debt or the down cycle in the industry,” Peiser says. “But we had trouble enduring both at the same time.”

Peiser was faced with the task of not only rescuing Imperial’s finances, but instilling confidence in a work force that wasn’t interested in believing anything upper management had to say.

“The company was in trouble for three or four years, so the people who came out of it were skeptical about whether there was a future here,” he says. “There was also a skepticism about me, the new boss with new ideas and a reputation for turnaround management. They were thinking of me as someone who was just going to come in and cut a lot of jobs, fix the company, and sell it. But that’s not what I am all about.”

What transpired in the ensuing few years tested every aspect of Peiser’s leadership ability — his aptitude as a financial manager, his ability to manage people and, above all, his ability to create a new outlook for a sinking company by forming a new vision and outlook.

Cutting back

Peiser says there is no good way to perform cutbacks when you are trying to relieve your company of massive debt. Any way you slice it, you are going to rock your company’s foundation and upset employees.

He says the best thing you can do is be candid with your work force. Developing a bunker mentality because you are afraid of negative publicity will only make the situation worse.

Between 2002 and 2005, Peiser oversaw the sale or closing of 14 Imperial plants and factories, which came with a number of layoffs.

Peiser says he went to every single plant to personally announce the sale or closure.

“That’s not a particularly pleasant job,” he says. “But it’s important to not hide behind someone else to make that announcement. You get more respect from the organization if you do it yourself.

“I can remember the day we closed the Sugar Land refinery, right across the street (from headquarters). I was right across the street making the announcement. I’m not sure everyone would have done that, but people recognize that is a good thing to do, and it makes you much more visible.”

Peiser says he believes in a strategy of “overemphasizing personal presence.” In the first couple of years of his tenure, Peiser frequently traveled to Imperial facilities around the country for face-to-face interaction with employees and managers.

There is no substitute for being there when it comes to building trust, especially when employees have been conditioned to not trust management.

When Peiser traveled to factories, he was dealing with, in essence, survivors. The people still employed by Imperial felt guilty that their jobs stayed while the jobs of others were lost. They were also wary of it happening again.

“The people that survive downsizing are distrustful and guilty,” he says. “They might have lost someone who worked next door to them. The first time you go through that, the openness of communication is so vital, but you also have to recognize that nobody is going to believe that this is the only time you’re going to do this. Nobody believes that this is going to fix things.

“You just have to slog through it, and open yourself up to questions and doubts and be willing to talk about it.”

Peiser says only through frank, honest and repeated communication will employees start to see the big picture.

“They’ll start to recognize that the ones who are most vulnerable to losing their jobs are the ones that are not working hard and not contributing,” he says. “So, the message is do your job well, and you’ll have far less to worry about.”

Focusing on strengths

When a company has hit bottom, employees can tend to view everything within the company as inherently bad. But Peiser says most of the time, that’s not the case, and as the leader of the business, your job is to separate the flowers from the weeds.

From the outset, one of Peiser’s most important jobs was to identify the positive aspects of Imperial Sugar, and then stress those aspects to employees.

“From a confidence standpoint, it was important to stress that we had some significant strengths within the company,” he says. “We had and still have two very strong brands in the regions they are sold in, and we have very strong relationships with our customers.”

The longevity of the Imperial Sugar and Dixie Crystals brands throughout Texas and the Southeast was something Peiser played up to emphasize his belief that the company was built on a solid foundation, even if the previous couple of years suggested otherwise.

Peiser also wanted to harness the innovative power of Imperial’s employees, which he couldn’t do as long as there was widespread doubt and a pass-the-buck mentality throughout the company.

Peiser turned the tide by making accountability a buzzword throughout Imperial.

“We started communicating a message that we are really strong on accountability,” he says. “We talked about how everyone is responsible for their jobs, to the extent that if I think there are people who don’t take that seriously, we’re going to change those people.”

Peiser wanted his work force — which currently numbers about 850 — to concentrate on things it was capable of changing, steering his employees away from the mentality of concentrating on what they thought their peers or management weren’t doing and focusing instead on what they were doing themselves.

It’s something that, once again, came down to Peiser’s persistent communication and having his actions fall in line with his words. Even then, the change took years in his estimation.

“It took everyone a couple of years to realize I was serious on both,” Peiser says. “I was going to change the people that needed to be changed, and I was going to reward the people that are good and deserve to be rewarded.”

Gathering new ideas

Another way Peiser created and strengthened a sense of accountability was by enabling employees to take a more active role in the company’s future. He wanted new ideas to well up from within the company and lead to possible new directions for Imperial.

Sugar isn’t an industry known for frequent innovation. It’s basically a commodity product that has been sold in the same paper bags on supermarket shelves for years. In order for Imperial to get a leg up on the competition, Peiser needed his employees to start thinking with an innovative mindset.

He set up focus groups with a wide range of Imperial’s customers, from end consumers to retail stores to food manufacturers, in an effort to gather ideas.

He says allowing your company’s existing inertia to always drive you, never questioning what can be done differently, is a road to ruin. Everybody in your company should always look for ways to do things better. That starts with looking at things from the perspective of those who use your products or services.

“It would be very dangerous if I made decisions based on what I think is right and not listen to the customer,” he says. “So we spent a lot of time with our customers.”

Peiser also brought in a number of experienced consumer product consultants. The interaction with the consultants and customers planted the seeds for the innovative culture he was looking to grow.

From those meetings, eventually came a new line of sugar packaging and alternative sweeteners. It was a rare place for a sugar company to venture, but Peiser says breaking the mold was crucial for his company’s long-term health as it rebounded.

If you want to change the environment in and around your company, Peiser says patience is more than a virtue. It’s a necessity.

“Patience is really important,” he says. “A lot of what we were doing was change, and change is hard. It’s still hard for us. While we’ve attempted to promote our new products and make sure there is visibility, it still takes a long time.

“You need patience, and you need to demonstrate your early wins to your employees. It’s really important to show your population of associates that this really could work if given the time and the ability to produce a quality product.”

The comeback trail

The progress for Imperial since the dark days of 2001 and 2002 has been incremental but quite noticeable. When Peiser took over, the company had more than $300 million in debt, but as of the end of June, it was virtually debt-free.

Imperial had its comeback interrupted with a downturn in 2005, but in fiscal 2006, it posted net income of $50 million on revenue of $946 million.

For Peiser, the experience of the past five-plus years has reinforced some basic principles of turnaround management. Principles he calls the “Six C’s.”

“Turnaround management involves communication, credibility, consistency of message, culture, courage and commitment,” Peiser says. “It’s very important to demonstrate a commitment to a path and making sure people understand that you’re not going to sway from that path. We’ll learn from mistakes and do things differently, but we’re on a path to improve the company in a certain way, and that’s what we’re going to do.”

There isn’t a magic formula to salvaging a sinking company. Mostly, he says, it centers on your ability to be an effective communicator and seeing to it that your actions follow your words.

“You’re really going to be bored with my philosophy on communication. It’s really just hammering away at it. I talk about communication a lot but also credibility. I want to make sure everyone knows they have access to me because I believe being an effective leader really isn’t about doing everything. An effective leader hires people who do things. They set a vision, a strategy, and then they motivate.”

He says the only way to truly motivate employees is to make sure they know you care, and you do that by being visible and accessible.

“There are two ways communication works, and the first way only works if the second way is done,” he says.

“The first way is to tell people, ‘I’m going to make sure I get any e-mails you send me. It’s not going to go through an assistant. And if you call me, I’m going to answer the call, or I’m going to call you back.’ But that won’t work unless the second thing happens. And that means you have to do it. You have to answer that e-mail and return that call, and do it relatively quickly.

“Then the word gets around that not only are you asking for e-mails and phone calls, but that it’s important to you to spend the time to answer them. Then word gets around that you really are going to listen to people and answer them.”

HOW TO REACH: Imperial Sugar Co., www.imperialsugar.com