Keith R Szewczyk

Healing from the Turnaround Scars

In Turnaround Management on February 5, 2011 at 7:42 pm

by: Keith R. Szewczyk

First step of any turnaround endeavor, the turnaround management team must determine if the company is able to strive and grow after the turnaround is successfully completed. Is there a growing market that the core products and services can regain and sustain profitability? Does the company have the key skill sets and core competencies to strive in the new or existing growing marketplace?

There are many different details on why a distressed company finds them self in trouble. One common fact is that the company is spending more than they are generating. Simple mathematics tells you that the company is digging a financial hole that there may be no return from unless you take drastic measures. A turnaround management team does just that, takes drastic measures.

These drastic measures lead to cost cutting, process change, and removal of underperformance. During a major turnaround activity a company suffers a tremendous amount of damage to their existing work force. People are creatures of habit, good or bad, and they do not react well to change. Despite well designed and implemented change management communication plans, the absolute reengineering of the way the company had operated in the past has a tremendous impact to the employee base that continuous communications of progress cannot heal alone.

The most critical asset to any company is the people. The people own the skill sets and the relationships within the industry that generate the value the company provides to its customers. Employee turnover creates a huge impact to the current operations and adds an additional risk to the turnaround success. Addressing this risk during the turnaround period coupled with a clear change management communications plan is what provides the healing power after the company rises from the turnaround.

Removal of underperforming employees is a must, but comes at a cost to the company. The key removals will address some of the bad habits that are linked to the reason why the company is in financial distress. The problem is that these employees are the leaders to the general resource pole. Once these leaders are removed from the company some of the followers are destined to follow and leave the company. Though turnover creates an impact it is not something to be distracted by as long as you have a strong plan to recover and grow new key employees that fit the new striving business model.

The following are some early actions that must occur during the turnaround period:

  • Establish process improvements: define new efficiencies with the current process and define clear roles and responsibilities that create accountability.
  • Define your top down list: a deep analysis of the current resource pole must be done and a list of your top talents must be identified.
  • Identify your change agents: define who they are and isolate them from the legacy issues and give them the new projects to pilot the new process improvements. Support, support, support!
  • Define training programs: it is critical to define training programs that allow new employees to start the process of growing and maintaining your core competencies. Training is a huge moral boost.
  • Know your derailers: identify your supporters, the on the fencers, and your possible derailers. Isolate your derailers and micromanage them until they turn or leave the company.

The following are the actions the must occur during the sustaining period or healing period:

  • Re-brand your company: actively get into the community and re-brand your newly striving company. Employee brand is critical and the continuous communication internal and external about the company is critical to generating a new reputation.
  • Focus on the employee: training, supporting associations, looking at your benefits and incentives, and generating positive messaging through management by walking are some great starting points.
  • Continue to hire new blood: new employees bring innovative thinking, new ways of doing things, new experiences, and most important they have zero baggage from the past when the company was distressed. Mixing these people with the current employee base is refreshing for the organization.

Healing from a major turnaround is tough, but a healthier financially striving company is management’s duty and responsibility to the people, the company shareholders and the community. For the employees that make it through the transformation, they will one day understand why the hard decisions were made, and when they are having fun again they will thank you!

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