Turnaround specialist Kevin Clarke refuses to sugar-coat reality
When Kevin Clarke took over Catalyst Paper Corp. in June 2010, he had his work cut out for him. Western North America’s biggest specialty paper producer had been fighting a losing battle against a receding tide: since 2006 it had lost 1,800 employees—half its workforce; it had idled mills, cutting production by a third over the same period; it was in bitter talks with unions in an attempt to cut labour costs; and it was involved in lawsuits with four municipalities over taxes owed. And despite big writedowns, it was still losing money; the company lost $4.4 million in 2009 on $1.2 billion in sales.
Before he announced his resignation in April this year, Clarke saw the company close the final chapter of a massive restructuring under his leadership when it resumed trading on the TSX in January, shortly after emerging from court-approved protection from creditors. The reorganization included renegotiating wages for 1,500 employees, closing two mills, settling disputes with a handful of municipalities and transitioning out of declining paper markets.
As might be expected, Clarke attributes the company’s success to a team effort. He acknowledges, however, that as CEO his role was to ensure buy-in, from the executive suite down to the shop floor. “A lot of people had to compromise to get that done,” he explains. “Somebody’s always got to be the person who gets it done, and I had the privilege of being in that role for Catalyst.”
The biggest leadership lesson Clarke draws from the process is about communication: “It reconfirmed for me how important honest, robust, consistent, simple communication is, as much of it face-to-face as possible.”
His first priority upon taking the reins was to meet with all 1,800 employees, in groups of 150. His message was blunt: “I said, hey, this is going to happen: there’s a tsunami coming at us and we’ve got to deal with it.” The harsh message was tempered with respect for employees. “People work so they can send their kids to school, but that isn’t the only reason. They work for self-fulfilment; they work for a sense of pride. My philosophy is about giving them the authority to run their business—and letting them.”
Clarke adds that communication with the outside world is every bit as important. “We communicated to everybody about the bankruptcy, including every one of our customers,” he says. Catalyst didn’t lose any customers through the period of creditor protection, Clarke says, adding that Catalyst in fact gained market share.
His leadership would not be measured by speeches, but by a legacy of sound practices. “I’ve refocused the organization around making sure our communication continues to strengthen and improve,” he says. “We meet with as many employees as possible, and we have development plans for specific employees so that we have the next generation of employees ready.”