Business turnaround of the European division of an American multinational.
Collinson Grant supported managers in restructuring and returning to profitability McKesson Inc’s European healthcare division.
McKesson Provider Technologies (MPT) is the technology arm of McKesson Inc, a multinational corporation with annual sales of more than $70 billion.
McKesson UK’s main business is providing outsourced IT services, particularly to different parts of the National Health Service. The British business was started by a US software company and grew by acquisition until MPT bought it in the late 1990s. Many of its managers and executive team had worked in the public sector. Despite a buoyant public sector and growth in IT contracts the company got into difficulty. Sales levelled out, contracts were poorly managed and costs were not reined in.
We helped MPT to restructure the business. The aim was to obtain better returns in an increasingly competitive market. Our initial emphasis was on helping the local managers to analyse the core streams of work, determine how tasks were allocated and assess the profitability of different business units. We used a structured analysis to generate reliable data. We then went on:
- to devise and put in place a plan to reduce costs quickly
- to retain and strengthen the ability to respond to new opportunities
- to manage the programme of redundancies
- to lead the negotiations with trades unions and consultation with employees, taking into account American financial rules and UK legislation
- to test the new organisational structure and help managers put it into place.
One complication was the complexity of the contracts of employment – a legacy of transferring employees from the health service. There were also a number of difficult performance issues to resolve that managers had failed to face up to. We achieved payroll savings of £3.8 million and finished the restructuring on time and within budget. With our aid, the business turned a budgeted loss of $7 million to a profit of $2 million in less than two years.
Jeremy Chandler – UK Managing Director
“I put up the charts that all the employees were familiar with and showed them the forecast loss. And then I clicked forward to show that actually we had made $2 million profit. That felt pretty good – one of the best days I’d had back in the UK. …. showing them all the results of their hard work. That was a break out the champagne day.”