The wrong question

The decision as it arrived

The client was the private equity partner on the company’s board. Her firm had owned the business two years, and everyone around her had settled on the same answer. Replace the CEO.

The company places contract nurses and technicians into hospitals under multi-year agreements. Her firm had bought it expecting $16m of profit growth. The nurses went out on assignment as planned and the profit did not follow. After seven quarters the shortfall stood at $9m, and she called Ammentic before she signed.

The Read

Ammara interviewed the investors and the senior team separately and in confidence, asking each the same question. If this is not the CEO, what is it? Every answer was fluent, and each one pointed somewhere else.

So Ammara went to the contracts. She pulled the hourly rate the plan was built on and traced who had set it and when. She brought the room the rate, its author, its date, and seven quarters of profit beside it.

The Pressure Test

Ammara filled the seat the investors could not. People who had sold into hospitals while the hospitals were merging.

One had run a staffing business through four years of it. The rate had been right when it was written, he said, for customers who no longer existed. When three hospitals combine, the new system keeps the lowest rate in the file and renews that contract. The company was not losing money. It was honoring prices agreed when its customers were smaller.

The second agreed on the cause and disagreed on the cure. He had raised prices on a hospital system partway through a contract and lost 40% of the volume in one letter. Hold the largest account until renewal, he said, because the CEO carries the blame for the delay either way. They rebuilt the plan on corrected rates for contracts renewing inside 18 months, and the $9m gap closed to under $1m on paper.

The Action Brief

Change it. The plan was the problem and the CEO stays. Rebuild it on rates that match the customers the company sells to today, and hold the largest system until its renewal date. Take the corrected number to the board before the leadership question comes back.

Two conditions. The revised plan inside the quarter, and a date fixed now to return to the CEO question, so that if the answer is him it arrives on evidence rather than exhaustion.

The decision on the table was about a person. The problem was three years old and written into a contract.

Where it landed

At the debrief she said they kept him, and the corrected plan came in $6m below what her firm had expected when it bought the company. She reopened a plan she had approved, and the investors who pushed hardest for the change went back to working with a man they had been ready to remove.

Her own people supplied the explanations. Ammara took the rate underneath them to two operators who could say what it meant.