Page 101 - Stakis Consolidated Teaching Note

Sir Lewis insisted in total control of Stakis, without any

interference. Sir Lewis did not know much about running

hotels, but as the new chairman, he did not have to. He

did however know how to run a board and knew that is
where the re-organisation would start and then on to

senior management level. Once Andros had left, Sir Lewis

new he would have to replace him with someone with
drive, directness, plain speaking and of course with

knowledge of the hotel business. This search took until

December 1991, when David Michels took the post of
chief executive. Michels had worked in the hotel industry

almost all his life and was the ideal man to drive forward,

Sir Lewis’s strategies and return some enthusiasm and

raise the employee’s moral.

In the ten-month gap before Michels appointment Sir

Lewis was not idle, he knew that cash flow had to

improve to give the banks any sort of confidence in Stakis
and the best way of doing so was to cut costs (Figure 19).

Sir Lewis realised that the divisional structure was

expensive, with each division possessing all the functional
capabilities, finance, HR, purchasing departments and

offices. Sir Lewis axed one third of the head office staff,

and almost one third of each of the divisions office staff

and moved what was left into one centralised out of the
city head office in East Kilbride. This brought savings of

around £2 million per year.
The next task, which would improve cash flow and reduce

debt was to assess the complete Stakis business portfolio
and decided what to keep and what had to go. This would