Interview with Peter Grønlund, Chairman and CEO at Weco Travel International A/S.

Two managers were close to leaving. Managing a company at a long distance was difficult. The spreadsheet had given a false sense of security. A new sales strategy was implemented.

The travel industry took some hard beatings from the first stock exchange announcement when the financial crisis broke out in the autumn of 2008, and Weco-Travel was there when the beatings took place. The management was so bruised that they hired outside consultancy assistance contrary to all principles.

ResultPartner went to the Czech Republic and used Race®concept to turn the mood and the bleeding budget. The effect quickly appeared. The travel sellers were so good that new customers came in the middle of a time of crisis, and sales increased by 35 percent.

Peter Grønlund, a seasoned top executive in the travel industry, looks a little surprised himself when he tells about the results of Weco Travel’s department for business trips in the Czech Republic. He has been manager of various companies over the past 30 years, including CEO of SAS Cargo and Scandlines. Since 2007, he has been Chairman of Weco Travel – with head office in Copenhagen and offices in Hungary, Romania, Poland, Slovakia and the Czech Republic.

– We were hit immediately when the crisis began. 2008 and 2009 were extremely difficult years. Our office with 35 employees in the Czech Republic didn’t function satisfactorily.

They weren’t efficient in terms of sales and they weren’t at all motivated. The fact that the office had just been merged with another travel agent didn’t make things easier, says Peter Grønlund.

To him, it was clear – even all the way from Copenhagen – the people on the ground lacked the right sales tools. Nothing seemed to work.

– I questioned several of the employees, especially in the senior management.

It was obvious that the sales staff lacked coaching and training. After all, people were practically hired right off the street in the recent years.

The turnover was insufficient at Weco Travel in Prague. However, there had been plenty of business plans.

– A business plan typically applies for three years. For the first annual budget I provide a template which they can adjust. Practice is that it will be approved here from Copenhagen after which they will stick to it.

But the department in Prague didn’t live up to the agreed plan.

– No one will complain about different variations, but repeated violations of what is agreed are of course not an option. There was nothing wrong with the sales force either. It was large, but just not efficient. I typically visit the office in Prague 4 to 5 times a year, and in addition we are also holding several joint meetings in Denmark. So I did have opportunities to reverse the situation, but I couldn’t motivate them myself.

The relationship was a bit too strained for a quick rescue, as Peter Grønlund puts it.

He had no toolkit for a rescue mission and he was also 500 miles away from Prague in an office in Copenhagen.

– Being the CEO, I couldn’t be responsible for strategy, planning as well as execution.

As Danes, we are probably also more “directly on the ball.” The culture in the Czech Republic is different. Here, people can seem proud and a little square to us Danes. It required some special skills, teaching and tools to get to grips with them and at the same time rectify the things that didn’t work.

A skilled conductor

Peter Grønlund had to go to town.

– Here, it was just right to hire an outside consultant. This solution is normally the most exceptional in our industry, unless we are talking about the major players in the market.

We are extremely wary of using consultants, because we belong to a business segment with “low margin.” The low gross margin makes us economically vulnerable and unable to invest much in unforeseen services outside the budget.

– But I was facing a huge problem. Two managers were on the verge of leaving, and I was considering a total reorganization. So something efficient needed to happen.

The CEO contacted Lars Moeller from ResultPartner.

– I knew him from previous assignments in large companies where I had been manager.

Otherwise, I must honestly say that in this industry I hadn’t dared to use outside consultants.

Today, I note that the investment was right and that it has yielded a reasonable return.

Today, Weco Travel’s Czech office has once again come up to speed. The office counts 28 employees and tight assessments with key figures are performed each month. The attitude towards consultancy was, however, not in high revs before ResultPartner arrived at the Prague office.

– Consultants rarely provide rocket science. The knowledge they bring, they get from the organization they work for. So, they had put the violin, trumpet and clarinet together and get something out of it, so to speak. And that is what Lars Moeller does with his Race®concept. He is a skilled conductor.

– Much of the concept is self-evident. As is the case with most concepts. But the way it is used here, is not self-evident. We have come a long way, when we look at the situation today. We made a sales manager to really work as he should. He developed, so that made a big difference. As a manager, he increased revenue, his own efficiency and production. And at the same time he became able to and good at coaching the other employees.

The change of workflow looked in advance like a scenario of drastic interventions, but only two sales representatives were dismissed during the process.

– This was done without drama. Thanks to ResultPartner this happened on a very factual background. It gave an understanding and acceptance of the dismissals. The whole process became highly qualified. This might not have happened if we had just done it ourselves.

Soaring revenue

The results appeared faster than the employees themselves had imagined.

– Production, resources and performance management came into place, and it all happened very quickly. We lifted our revenue quite considerably. Sales increased from 226 million Czech Koruna in 2008 to 315 million in 2010. 

In 2009, Weco Travel’s Czech office had a deficit of 1.6 million. This was turned into a surplus of four million in 2010.

 Sales in Weco Travel in the Czech Republic increased from 226 million Czech Koruna in 2008 to 315 million in 2010.

– These are good figures to look at today. In the beginning, people were very negative, but fortunately this changed quickly. The cure was called “no way back” combined with Lars Moeller’s way to enter into dialogue with the employees. He goes straight to the point of the task and it happens from day one. For example, he and the employees classified customers into highly detailed groups.

– Of course there have been conflicts along the way, but they have moved on nonetheless.

He was very quick at establishing a trusting relationship. And that is necessary. After all, everything happens in confidence with an outside consultant. It is important that the process takes place in an open and honest atmosphere, thus enabling the consultant to get to know the employees. People can feel comfortable around him. The situation becomes safer with an outside consultant, because he can’t fire or hire people. If I had come down there, it could quickly have got to seem more dangerous. Today, people are happy. They have achieved job satisfaction from this, and they have got some simple tools that anyone can figure out how to use after a period of time.

Weco Travel in the Czech Republic gained more new customers, a determined sales force, higher revenue and also a profit.

– Volume was added and we actually got a critical mass. The sales manager can really use his skills now. He made a turnaround in sales while he got all the others in the business back on track. He manages his staff in a much better way. The work wasn’t targeted before. Now, each individual sales representative knows exactly what customers he has and how many visits he must make.

The close follow-up was a key point for the success in Weco Travel’s office in the Czech Republic.

– ResultPartner created a regular goal contract with each of the employees involved.

Continuous follow-ups were made to ensure that they reached the set goals. This element combined with a bonus scheme meant that they could see the point of becoming better.

Kicking and clapping

The realization that people should be treated differently in order for things to work, was, according to the travel manager also an obvious element in the concept, since the workflow in the travel agency had to be changed.

– Lars Moeller knows how to deal with individuals. He treats people differently in the process and looks at the individual’s skills and the possibilities for change or improvement in each case. I’ve seen him over the years in different cultures, organizations and companies, for example in the Scandinavian airline company SAS.

– At Weco Travel in the Czech Republic he had to act in a much more fragmented environment. Here was a mix of contractors, self-taught and educated people.

He is also good at maneuvering in this field. Lars Moeller has been a consultant for many years, so he has been in direct contact with many different types. You won’t learn to run a business from it, but you get to know people really well and get them into some kind of process.

– Lars Moeller can succeed both in the low circles and in the high circles. He becomes neither arrogant nor stuck-up in one place or the other. These are good values ​​to possess. But he is the type that comes in and holds on. You could say that he is kicking and clapping at the same time. And it also seems effective.

Weco Travel has implemented Race®concept as a permanent part of the corporate culture.

– When a new sales representative is hired, the concept is applied. We would like to have it as an established culture in all countries where we are represented.

According to Peter Grønlund, the figures and improvements in the Czech Republic speak in favor of similar efforts at other locations. It is “likely” that Peter Grønlund will also use Race®concept in WecoTravel’s Hungary office and perhaps also in Poland and Romania.

The preliminary steps have already been taken.

– We’d love to introduce a number of improvements at these locations. We were also facing a reorganization of sales, but the timing isn’t right. This is due to the low-margin problem in an industry such as the travel industry, so we can’t do at this point in time. We haven’t recovered completely from the crisis yet, so costly measures are temporarily suspended, says Peter Grønlund.

Decentralized structure is a barrier

For ResultPartner, there was at least one obvious theme concerning the Weco Travel task in Prague, namely the difficulty of managing a decentralized group of companies in different countries.

The challenge became extra visible during a financial crisis. In the Czech Republic, much revenue was lost primarily in the business trip segment, but also in the event segment.

The decline was smaller on leisure and private trips.

– In the business segment, we talked about a dramatic decline. Companies needed to save money and more and more travel companies, including Weco Travel, had in recent years established such efficient online booking systems that companies were no longer as willing to use travel agencies when a flight had to be booked. The situation was critical and became Peter Grønlund’s motive for putting me on the assignment in Prague, says Lars Moeller from ResultPartner.

– We needed to make sure to increase revenue while making sure to expand the market. Weco Travel had lost revenue and market shares at the same time. They had it twice as hard because they – in addition to shrinking revenue – also lost ground to competitors at that point in time. I will not concern myself with an analysis of the cause, but simply note that it was necessary to gain new customers and increased sales of existing customers; all at the same time.

– The challenge for a group like Weco Travel with companies in several countries is well known. The contact between the head office and the different units is not functioning optimally. You are not exactly sitting opposite each other. And so begins a process of communication over email, telephone and commenting on various items. The Excel spreadsheet has gained its footing. A long way down the line, the spreadsheet becomes compensation for the lack of dialogue, because a decentralized structure obviously complicates a dialogue you can get something useful out of. A different culture and language differences make it easier. Therefore, the spreadsheets with all the budget figures enter the pitch, because everyone can understand figures.

For Weco Travel the situation was further complicated by the fact that the people at group level naturally wanted the same spreadsheet distributed to all the offices in the Eastern European countries. They prepared a spreadsheet so general that it could be used in Romania, Hungary, the Czech Republic, Poland and Slovakia.

– And the trend in the different countries was predictable. The resistance could for example sound like this: ooh… this doesn’t fit quite well for us down here in Slovakia.

And similar feedback was coming in from all the other countries as well.

The group has done something that is easy for the group itself, but the maneuvre doesn’t fit all countries. Country managers receive these various Excel files and raise their eyebrows and exhibits at best a condescending attitude.

For Lars Moeller, the task is to turn a false sense of security in the spreadsheet, i.e. the budget process, into a real confidence in the target process.

– The key word is right at hand: They must dare to let go of control and the whole spreadsheet exercise and let the country managers and their managers and employees themselves decide how they want to do it and what goals they want to set up.

– They have applied the wrong methods at the head office. Unfortunately, most do it this way. Sometimes, you can clearly sense these these head offices’ desperation over not being able to handle a country manager. In this case, Copenhagen could not manage the Czech office, but if you think you can manage a decentralized structure with semi-annual, industrious email traffic of spreadsheets then you are wrong.

– Another point about the decentralized structure is that the business analysis of sales and similar work usually takes place at the head office. Hence, the solution is of course also often established at the head office. This is a risky path. Distributing the process and letting them do carry it out in the various countries’ companies. At head offices, they need to stop being so wise and maintain that only here it is possible to perform the analyses and find the right solutions.

Excel spreadsheet as the only management tool

Basically, the head office only tried to manage the company in the Czech Republic in one way, namely by means of a pair of annual meetings and industrious exchange of Excel spreadsheets between the head office in Copenhagen and the company in the Czech Republic.

– It was clear to me that the head office had prepared some draft budgets, which were sent to Prague for confirmation by the company.

And then there was no way back for the employees in the Czech Republic. This is a classic situation. When a management looks at the company’s budget processes they sometimes mix up the task of formulating goals for the company. A budget process is handled primarily by accountants. What do the various items cost and so on? The process is actually based on the fact that you will try to predict how the company is going to develop. Typically, you do so by adding a safety margin on top in terms of costs.

– But budget processes and target processes are very different. A target process is about getting managers and employees to express their ambitions, and it has nothing to do with a budget. The characteristic features of a target process are to motivate managers and employees to consider their ambition and passion and what they are passionate about and want to succeed in. A budget on the other hand is a tool you use for trading.

The parties will all too easy end up pulling at each end of the budget, while a target process makes people get involved.

– Lots of managers often say to me: “We’re making budgets, because we think this is the right approach.” But people won’t all of a sudden become motivated by the fact that someone having done a lot of calculations. And this fact collides with the accountants’ mindset: “The more calculations we make, the more correct the result will be.”

Efforts produce results – not the budgets.

– Here we face a true classic and a serious discussion. It is the activities that produce results. When the senior management has tried such a target process and seen how much it gives, it will also move the head office’s trust next time, next year, when the plans will be made.

The situation can be compared to a family’s annual household budget.  The husband and wife can make all the necessary calculations and arrive at some fine budgets, but of course it is the stage of wishes and dreams that brings about the commitment.

– Unlike a budget process, a target process creates ownership of what has been decided.

In the case of Weco Travel, there was no ownership of budgets, as they were merely distributed from the head office. All power goes to the finance departments when not distinguishing between a target process and a budget process. It is a classic problem that the senior management is often mixing up the budget process with work on the strategic process. At ResultPartner, we have often encountered budgetary processes, which slow down execution, when we’ve worked with peoples’ ambitions.

False sense of security

The senior management’s confidence in the spreadsheet with budget figures is false.

People at the head office and in the accounting department must learn to find peace of mind in the activity level, and they must learn to realize that people don’t feel any ownership of a spreadsheet if they don’t get involved and come to understand what is important in order to improve the company’s figures.

A manager said to me: “What if they set goals that are lower than the budget?”

Actually, that rarely happens. People are willing to go far when they themselves will take ownership of the decisions. In a budget negotiation, both parties usually get disappointed, because they will both have to compromise. In a target process, you ask what people want to succeed in, what are their goals, dreams, etc. Here, there isn’t anyone to negotiate with.

– And then something happens. In the target process, people often say: “Holy shit. We need to move some large rocks. It would be great to achieve these goals.” When the same people talk to the head office, the chatter often ends in eternal, compromise-filled “Excel negotiations.”

It turned out that the manager in the Czech Republic was much more ambitious than the head office had anticipated in the budgets. And the senior management was almost worried about whether the goals could actually be met. ResultPartner ensured that they could.

– When the bar is set high, it also calls for a high level of activity. At ResultPartner we don’t concern ourselves with whether or not the goals are realistic. To us, it is an unimportant discussion when talking about the future. We weren’t surprised, and as the months came and went, the senior management could also see that ambitions were fulfilled. All it took was some outside people to manage and operate the target process, says Lars Moeller.

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