People Behaviours in Turnaround Situations

Part 1

I have been involved in turnaround situations in Europe Middle East and Africa; I’m usually called in when businesses are in pretty bad shape. In the current climate I know that there is a fair share of turnaround situations and more to come. I have several success stories and as many bad ones and I thought that I could share with you some of my experiences.
A turnaround situation will only succeed if you recognise and admit that your business is declining and that you have to do something about it. And you have to do this early enough. You need to call in somebody with a fresh eye to look at your business and manage the crisis. That person will have first to engage you and your people in a crisis management and a radical change of culture. To do so he will need to understand the 3 categories of people that you always meet in a turnaround situation:1. The Drivers: Every time I have been involved in a turnaround situation I found a group of engaged, loyal, talented people who loved doing what they were good at but were frustrated by the lack of decision making and freedom to tackle the causes of the crisis. They remained loyal to the company hoping things would change. These people will be the key to your turnaround success and the first thing a turnaround leader needs to do is to identify some of them. They are easy to spot as they are eager to change and enthusiastic about new ideas.

2. The Opposers: These people would fight the smallest changes you would want to introduce every step of the way. They can do a lot of damage especially if they used to be decision makers, but fortunately they are normally a minority. Those people will be easy to spot as they are proud of the status quo and advertise that they know what is good for the company, that any of your proposed changes have been tried and did not work. The problem is to have a damage limitation strategy in place and avoid fighting them directly as they would love it. More than often you would unfortunately have very little choice but to fire them very quickly.

3. The Followers: Most people will watch what is going on and will go along with whatever seems easiest. They understand that something has to change and they look forward to things improving. They like being anonymous and are in a wait-and-see situation as they consider what you are trying to do as the “latest change initiative of the day”. The Drivers’ enthusiasm should be able to catch their attention and engage them in the change.

I will address the people behaviour in the turn around process next week in Part 2 of this article. If you are interested please check our blog next Friday. If your business is declining and you need help to turn it around, or if you would like more information please contact MA Consulting International on 0845 087 3288 or visit our website http://www.macintturnaround.com

Comments

The Resources for Turnround
I have just completed the first year of a successful turnround situation for a business in London and I believe that these successes require some very important ingredients to succeeed.
1) The board must recognise that changes are necessary and that change is the essential part of the recovery.
2) The company must be able to create the cashflow necessary to implement the changes.
3) The business has to review and change its objectives.
4) The staff must be sold the need for a review and buy in to the changes that are necessary with an emphasis on the consequences of not making changes.
5) Each change agreed i.e working practices, marketing, vehicle policies, supply chain policies should be carefully benchmarked to promote the successes of the changes both within the company personnel involved in that department change and to measure the overall level of recovery against the new targets set.
6) Probably the most important and yet intangible ingredient is the old favourite – getting people to communicate. Do not encourage emails as a prime means of communication when it needs an old fashioned face to face or at least a telephone call.

There is no doubt that an external independent consultant has a far greater chance to successfully turn round an ailing company for lots of reasons but even he or she must be able to get the full support of the company to make it work.

It is very satisfying to turn round a negative balance sheet and losses of £250k into a profit of £250k and a positive balance sheet in a year. Satisfying for the consultant and great relief to the shareholders and staff.

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