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Amell Identifies Major Inhibitors to Change and Growth in Corporate America

Business Wire News Releases
Published: 06/25/09 05:56 PM EDT

Released By: Catalyst Group, LLC

Challenging conventional wisdom of corporate management practices in a recession, executives and investors with sizable stakes in technology, manufacturing, and financial services today cited the leading inhibitors to job and economic growth in the United States.Hans B. Amell, Founder and CEO of Catalyst Group, LLC, led group discussions and informal surveys in May and June 2009 with CEOs, Limited Partners, managers of private equity firms, and senior investment bankers offering decades of corporate management experience.

Catalyst, a New Jersey-based firm with executive teams in Europe, engages with Boards of Directors and CEOs of American and European corporations to quickly realign their assets and achieve profitability.

“Given the increasingly dynamic marketplace and the pervasiveness of this recession, most executives and Board Members are re-thinking traditional management practices, distinguishing financial restructuring from operational restructuring. Disastrous across-the-board budget cuts, employee layoffs, retreats from foreign markets, suspensions of new product and service offerings, and other knee-jerk reactions, do not have to be as heart-wrenching and destructive if you just put in some solid thinking before implementing change,” said Amell.“In the process of stepping back to re-examine their own business practices, many corporate leaders see not only the usual hurdles but also some creative opportunities to improve performance and save jobs.”

Speaking at an executive roundtable at investment bank Morgan Joseph & Co. Inc., Amell summarized his experience in developing effective tools for implementing change and boldly outlined his vision on how to navigate companies effectively in troubled waters:

Top Inhibitors to Growth in the U.S.

Annual Budgeting Across Enterprises: The annual budgeting process typically occupies four-to-twelve weeks of all managers’ time in a company, requiring numerous meetings and reports. The result is a rigid 12-month budget projection of expenses and revenues that is already out of alignment by the time budgets are approved. Some leaders, like those at EMC Corporation (EMC), adopt rolling budgets, virtually closing their books every quarter.

“You have to be nimble enough to respond quickly to unexpected changes,” said Michael Ruettgers, former Chairman of EMC. “Our six-quarter rolling budget process allows us to constantly adjust our budget allocations to meet changes in the market [and]… the regular and detailed sharing of information allows us to effectively look at our P&Ls on a monthly basis and make business decisions on the fly.”

Finance Departments Driving Companies in a Recession: The function of CFOs is to provide measurements and, especially during turbulent times, only accurate measurements lie in the past, not in the future. However, strong CEOs and Board Members must navigate their company by looking ahead. For public companies, markets and the media place a great deal of weight on quarterly reports in assessing overall corporate performance. Corporate leaders often feel they are limited to only three-month windows where they can take bold action to reorganize their operations. Too often, do we see companies resigning to CFOs’ backward-looking emphasis and losing forward vision.

Glorification of MBAs and Attorneys as Executives, Rather Than Engineers: Business leadership ought to be a greater part of the engineering curriculum in American universities, creating more opportunities for engineers to be considered for CEO positions. In most companies, a greater number of engineers results in a greater number of patents and a more vivacious culture of innovation and production.

U.S. Legal Environment[1]: America is the only member of the Organization for Economic Cooperation and Development (OECD) that does not have a “loser pays” provision in civil litigation. Countless studies cite the imbalance this creates by creating incentives for plaintiffs and for creating a class of attorneys who chase ambulances. Job creators and American society in general are harmed every day by this skewed system.

America is also the only OECD country without a requirement that civil punishment relates to the plaintiff’s injury. The result is that 20-200% higher insurance premiums burden American corporations. We have 70% of the world’s attorneys and 20 times more lawsuits per capita than any other OECD country.

U.S. Tax Environment: Every jurisdiction providing lower corporate taxes realizes more economic growth, more jobs, and a stronger tax base. Consider the successes in Sweden, Puerto Rico, Delaware, and Texas. If it were part of the U.S., Sweden would only be the 10th largest state – with 9 million people, roughly the same population as North Carolina – yet Sweden is home to some of the largest manufacturing companies, like IKEA, Volvo, Ericsson, Electrolux, H&M clothing, global construction firm Skanska, and many more.

Federal and state tax incentives to manufacture in the U.S. will encourage more corporations to retain U.S. operations and create more jobs. “Even still, America has every reason to be optimistic and I expect that the U.S. will lead the world out of this recession,” continued Amell. “America has only 5% of the world’s population, yet it represents about 50% of almost every industry. America has the world’s greatest entrepreneurial culture, the greatest diversity, the best experts in most technologies, the greatest spirit, offers the greatest access to capital, and is home to some of the largest corporations in the world. Today, there is tremendous opportunity in America.”

[1] "Occupational Employment Statistics." U.S. Bureau of Labor Statistics. 2002. Web.9 Jun 2009. http://www.bls.gov/oes/2001/oes231011.htm. U.S. Courts. 2008. Web.9 Jun 2009. http://www.uscourts.gov/.

About Hans Amell

Serving as a corporate Change Agent, Hans founded Catalyst Group, LLC over 20 years ago, specializing in restructuring, carve outs, corporate turnarounds, consolidations, rapid corporate divestures, product launches, and other corporate initiatives. Hans began his career at McKinsey-Scandinavia. He earned a BA/MBA in Marketing and Organizational Behavior from the University of Stockholm and Uppsala and from Harvard Business School completed Harvard’s ISMP program for non-American MBAs. Hans held executive positions at Ericsson, Honeywell-Allied Signal, Dun & Bradstreet, and Unisys.

Contacts:

Cadence Communications Schuyler Laird, +1-212-233-2212 slaird@cadencepr.com

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