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CEO builds team to turn around Bearing

By Zhang Ran (China Daily)
Updated: 2008-07-09 15:36

"In the past months, I've gone out for lunch or dinner with groups of 20 managers every week," said Ed Harbach, CEO of BearingPoint Inc. This is apparently the way he observes his staff and exchanges views with them.

Since Harbach took the No 1 position in the McLean-based consulting company last December, one senior vice-president and four top executives have left the company.

The company had a new chief operating officer (COO) as the No 2 soon after Harbach was promoted from that position to that of CEO. In May, the company also announced a new chief financial officer (CFO).

"It's normal. You have to get the right people and put them in the right position," said the new CEO, frank about the importance of building his own team.

The new CEO's first challenge is straightening out the company's troubled finances. Returning the company to proper financial health is his top priority.

The New York-listed BearingPoint hasn't posted a profit since 2005.

Harry You, the former CEO who had tried hard to revive investor confidence after accounting errors led to delays in financial results, had failed to cut costs and deliver.

In 2007, the company reported a loss of $363 million compared with a loss of $213 million in 2006.

"While last year's financial results were disappointing overall, we have a lot to build on. In 2008, we are focused on controlling costs, increasing cash flow and improving utilization of our talented workforce," said Harbach.

On May 12, BearingPoint reported its first-quarter financial results for the period ending March 31, 2008.

The firm reported a net loss of $23.2 million, or 10 cents per share, in the first quarter, compared with a net loss of $61.7 million, or 29 cents per share, in the same quarter a year ago.

This was the smallest quarterly loss BearingPoint has reported in seven quarters.

For 2008, Harbach says the company expects a net loss of $70 million and flat net revenue growth. "I'm hopeful you will see significant improvement."

The second challenge for Harbach is to win and retain talent.

Before joining BearingPoint in January 2007 as COO, Harbach worked for over 20 years at rival consultant Accenture Ltd. But the CEO says he sees no difference between his former and current employer.

"We are in the people industry and you always have to attract the best people and provide the best career path for them. Other consulting firms face the same issues as us."

For Harbach, consulting is a very simple industry.

"You have to remember it's not an industry where you can be the best in all things. The strategy has to vary from industry to industry. You can't have a single strategy for all."

Part of his work now is to help the company pick the particular industries in focus.

Most of BearingPoint's clients in China are State-owned enterprises from industries such as energy and finance. Other clients - around 40 percent - are multinational companies' Chinese operations. The firm also serves some private and local companies.

The company has 1,000 people in China, which means one out of 16 BearingPoint employees works with the China market and contributes to its global revenue.

"China is in a growth stage, but it does not mean we are depending on China or other emerging markets to solve all of our problems," Harbach said. The company will indeed keep investing in the country.

To the CEO, the only limitation is the demand. For Harbach, what is unique about China is that there are so many companies that are growing so fast.

"But these companies are in different stages of their market. For example, the Chinese financial service companies are doing leading-edge work. They have built very mature infrastructures. Yet in the energy sector and other heavier industries, where there are many large State-owned enterprises, companies are still making major investments in basic infrastructure," Harbach pointed out.

"There are hundreds and thousands of basic investments going on, but these companies are not yet focused on client satisfaction and customer improvement. They are still focused on infrastructure and consolidation."

Optimization, efficiency, and standardization are the three things Harbach thinks those companies should work on to improve.