Prescription may involve new image, new culture, replacing staff stuck in old ways

Dobbins Pomerantz Anderson

When Paul Pomerantz took charge of the $28 million-revenue Drug Information Association in December 2009, he found an organization wedded to the past and in need of a new vision.

"The fact that the organization was struggling financially was a reflection of the economy but also of an aging business model and the fact that the organization had not kept current with changing technology, changing member preferences for learning and changing industry dynamics," he told CEO Update. [Pomerantz became CEO of the American Society of Anesthesiologists late last year.]

As he tried to turn the Horsham, Pa.-based DIA around, Pomerantz said he met resistance from the board and senior staff.

"They had six CEOs in six years. The staff was confident it could outlast any CEO," he said. "I had to play a little tougher than my normal style."

Tougher meant the entire existing seven-member executive staff was gone in two years.

"Some left voluntarily, others involuntarily," Pomerantz said.

Earlier he had turned around the $20 million-revenue American Society of Plastic Surgeons as executive vice president. In some ways, it was an easier task than at DIA in that the board supported change. But there too, the staff was not fully behind the new direction and was divided into separate "silos" that weren't working together.

Though there is more to Pomerantz' turnaround method than axing management, at ASPS he also had to push out two of his staff. "You have to make some tough decisions at the staff leadership level," he said.

Pomerantz grew membership at ASPS in part by introducing new programs. He said the turnaround was not complete at DIA when he was tapped for ASA, though he is credited with global expansion and creating new content.

Greg Fine, executive director of the $5 million-revenue Turnaround Management Association, praised Pomerantz' efforts. TMA, an individual membership organization, represents professionals involved in corporate turnarounds.
"He organized a cultural shift [at DIA]," Fine said. "His ability to come in and really shake up and reorganize and refocus management seems to be a major issue around turnarounds," he said.

American Composites Manufacturers Association Chief Staff Executive Tom Dobbins also remade staff when he joined in 2006. A quarter of the group's two dozen employees eventually left.

"People self-select," he said. "A number had been there a long time and saw a different culture and organization and saw it as a good time for them to move on," Dobbins said.

"Through turnover and changing the culture, we were able to break down the silos between the departments," he said.

The board did not consider the $3.6 million-revenue ACMA in need of turnaround when it hired Dobbins mainly to improve government relations, he said. The organization's deputy director was expected to manage day-to-day operations.

But Dobbins discovered irregularities he said were attributable to the deputy director, who quit two weeks into Dobbins' tenure. The deputy director's siblings both worked for the group, and employees had been reimbursed for personal travel. "The organization was not in as good financial shape as the board believed," he said.

His two-fold advice to other CEOs: Get the board behind you and get buy-in from staff.

"If the board doesn't bring you in to turn it around and you feel it needs that, get agreement from the board that there are major changes that need to be made," Dobbins said.

"Make sure you have clear communication with the staff that change is coming, that change is part of any organization and that you will be moving and making changes to the extent that you can," he said.

At the $5 million-revenue Vinyl Institute, which he joined in October 2011, Dick Doyle found an association in danger of losing one of its four major members, threatening its viability. A fifth had already left. The association, which represents vinyl resin producers, also had lost touch with the industry's large customer base: the makers of everything from PVC pipe to vinyl siding.

Dick Heinle, immediate past chairman of VI and the vice president and general manager of Formosa Plastics' vinyl business, said Doyle met with top executives at member companies and bolstered their view of the value of membership.

Now, Doyle said, two large resin producers are considering joining the association—including the one that left four years ago.

Doyle also improved relations with customer companies and built ties with other associations that represent VI's customers.

"We are putting a face on the overall vinyl industry," Doyle said. "The board asked me to raise the visibility of VI in the eyes of our customers. We've gone beyond that and we've engaged the customers with us."

The Vinyl Building Council had been a part of the $100 million-revenue American Chemistry Council, but is now with VI, he said.

"It took us eight months to earn the trust of company leadership," he said.

The VBC has 35 members and is growing, Doyle said. Getting smaller companies involved has been critical to VI's advocacy efforts on Capitol Hill and is a modest boost to association revenues.

Steve Anderson has rebuilt reserves, prioritized the mission and reduced staff to free financial resources at the $35 million-revenue National Association of Chain Drug Stores, which he has led since 2007. He also is credited with improving finances, increasing membership and boosting lobbying clout of National Restaurant Association prior to that.

"Make your tough decisions in the first year," he said. "The 100-day plan is too short."

"Coming into the NRA and NACDS, you don't just walk in your first day and say, ‘Gee there are issues that need to be addressed,'" he said.

"You don't want to take the job as CEO unless you can really understand what the issues are. I've been a candidate for jobs I haven't taken simply because I wasn't comfortable with [board] governance structure. Financial issues can be overcome. … But if you have an issue with governance, you have a problem."

Tony Civello, CEO of Kerr Drug and a former chairman of NACDS, said the group was not in need of a full-on turnaround, but that Anderson has done an "exemplary" job.

The group is more fiscally sound, Civello said, Anderson is tirelessly visible at all group functions, and government affairs has been revitalized, in part by Anderson's efforts to improve the industry image. "He has taken the bull by the horns and made necessary adjustments in staffing without hurting one ounce of the ability of the association to fulfill its responsibilities," Civello said.