People Behaviours in Turnaround Situations

Part 2In part 1 of this article I talked about the different characters you meet in a turn around situation, I am now addressing how you should involve them in the process.

In most turnaround situations lack of cash is the burning issue so you should concentrate your effort on solving this issue rather than getting into the most common turnaround mistake which is to try to change too much at once. The key to success is to start with a survival strategy and focus on short term specific goals. Your staff is exhausted, demotivated, and frustrated – they cannot engage in too many things The new team still has not proved itself and probably doesn’t understand the business or its problems very well yet (even if you think they do). If you try to do too much too soon you will loose the limited momentum you have.

I understand that you think “this guy does not see that we do not have time and we need to move quickly”, but if you overload your staff, especially the drivers, you will burn them out. And things won’t move faster, it will only impede you and you will waste this valuable time that I understand you do not have!

In a turnaround situation it is inevitable that you have to make people redundant. You have to give the full firing and hiring power to the “crisis manager” and its new team of drivers, as within 2 to 3 months you will need to engage in your first round of redundancies. If you have unions you should engage with them very early on and identify the union members that really want to save the company. Yes they do exist! By doing so you will get their full support. Now is time to identify the people responsible for the poor performances of the company, you can spot them easily – they are usually proud of their role as a pain in your neck. These “Opposers” are incompetent, nasty and fighting the change, and your drivers all the way. They certainly have supporters and loyal followers with them but they are not usually liked outside their small circle and most people are happy to see them go. Whilst you are firing people you have to start building momentum and reorganising the business.

By now you should have had some success, especially on the cash front, you know your drivers,you sat with them, individually, to understand the root causes of the crisis and what can be done in the short term to survive. You should be moving the drivers into key positions, and bringing new talents to start solving tougher problems.You should give the new team very specific short term goals to concentrate on the survival of the company.

Only at that stage are you in a position to formulate a real long-term strategy. Most consultants would recommend doing this first, but I found that is a big mistake. When the new team starts evaluating the issues facing the business and understand why it is in this bad situation it is impossible to define a long-term strategy. As an example, in my last assignment we recommended to start putting in place shared services amongst the three business units. It proved to be a wrong decision as we discovered later that the only way for the whole business to survive was to sell one of the business units. We then had to undo what we had already started in consolidating HR and Finance. In my experience the first year is a foundation year, used to extinguish fires and put in place systems and people that will be able to prevent those fires lighting up again and again, so formulating a long term strategy is not something you’re going to have the time or energy to do.

Putting in place the right processes and people will help you to identify unexpected successes and competences which in turn will help you in formulating a long-term strategy.You can count on your drivers to put in place processes, design new products, or re-design old products to fit the customers’ demand and create great value.

In a turnaround situation people seem to focus on the failure and cannot see the potential for success but when you are out of the fire fighting mode and move into the proactive mode then it is time to get your drivers together and build a strategy to move the company into sustainable growth and high margins.

You can then move back into the driver seat and say good bye to the crisis manager.

I hope you have found this helpful. Please let me know your comments.

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

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