1. Demands on Chief Restructuring Officers (CROs) are rising: their role is ever more international
2. Change management is becoming more important, leadership skills more relevant
3. Half of all chief restructurers call for a more directive management style
4. CRO communications are surprisingly candid: 84 percent prefer a good level of transparency in communications with internal stakeholders
5. 74 percent communicate the restructuring program to external stakeholders

Munich, May 19, 2016

The demands on Chief Restructuring Officers (CROs) are rising. For one thing, their role is ever more international, almost all major companies having activities outside the domestic market today. And for another, change management is now an increasingly significant element in restructuring projects. Communications and leadership skills for companies' chief restructurers are therefore more important than ever, according to the findings of a recent Roland Berger survey of Germany's top restructurers entitled "Chief restructuring officer – Coach or commander?".

"Companies' chief restructurers obviously need to have a sound grasp of the figures," said Sascha Haghani, Roland Berger's Managing Director Germany and Head of the Restructuring & Corporate Finance Competence Center. "But at the same time, they must be able to get people to buy into the restructuring concept. This means taking account of different stakeholder interests, allowing them to have their say and actively involving the various groups in the change process. To achieve this, CROs must have professional communications and leadership skills – and in light of increasing internationalization – successfully deploy them across cultural divides."

Chief restructurers adopt a directive leadership style

CROs need the leadership skills to pull off no mean feat: the task of getting their company and their people to make a psychological fresh start. An open dialog and a culture of employee integration are instrumental to the success of any restructuring process. So the Chief Restructuring Officer has to be capable of motivating people in a difficult situation.

However, asked about the best method of leadership in a crisis, 76 percent of respondents favored a directive style of leadership with clear top-down "command and control", believing that the CRO needs to be firmly in the saddle and come across as a decisive personality in order to be best placed to master the difficult tasks involved. Half of the survey respondents favored a small circle of decision-makers and 13 percent advocated at least an authoritative decision-making chain.

Only one in three chief restructurers are prepared to make decisions in their teams wherever possible. "Whether someone opts for a directive or a participative leadership style really depends on the seriousness of the situation they are facing," said Roland Berger Partner Falco Weidemeyer, himself a CRO, putting forward his interpretation of the findings. He believes that CROs are still being brought in relatively late in the game. "That is reflected in the findings. When the situation is already dramatic, resolute leadership is the only thing that can help rescue a company.

Change management and stakeholder management as key tasks

Chief restructurers' priorities have seen a fundamental shift. Whereas about two thirds of the experts interviewed for the 2015 survey considered liquidity management in the traditional sense to be the most important task for a CRO faced with corporate crisis, the figure was down to just 40 percent this year – no doubt in part a reflection of the advantageous financing conditions available on the market.

More important today are change management (53%) and stakeholder management (49%), which enable all of the affected groups to play their part in a company's successful turnaround. "This is a situation the CRO must handle with an approach that is significantly more multifaceted than pure authoritarian leadership," explained Falco Weidemeyer.

Communications are a key success factor

This is what makes transparent and consistent communications so crucial in restructuring. Openness and integrity are essential tools to a CRO in winning the trust of stakeholders and achieving consensus on key issues with many affected parties. In this context, 74 percent of survey respondents make the case for openly communicating the restructuring scenario to external stakeholders. And 84 percent advocate transparency in communications with internal stakeholders.

"At worst, a lack of communications can even overshadow a company's positive development," cautioned Falco Weidemeyer. "Investors, suppliers, customers and employees may lose their trust in the company and turn their backs on it – with devastating consequences. This is a mistake CROs need to avoid with professional communications."