Posted: 22 Aug, 2018
There has been a lot of talk in the press about companies failing to turnaround, such as House of Fraser that recently went into administration, or, in some instances, companies that state that they are restructuring, with a view of turning around their current financial position, such as Marks and Spencer. The headlines seem to focus on the retail sector, but turnaround happens in all areas.
Turnaround is often associated with the distressed market, when a company has signs of “failing”, but it shouldn’t be. Turnaround can also be associated with companies that, for example, see a change in the market place which may have an initial effect on their sales and turnover, and they want to do something about this before it impacts them. The key in both situations is that the company’s stakeholders need to ask for help as soon as possible from an organisation, company or individual who can assist in turning the company around.
What else should you be doing as a CEO/Managing Director or member of the board?
Story: Ensure your customers and employees understand the company’s story. Why are you creating change? It will likely be because you want to adapt or continue to grow by ensuring you have the cashflow and sales to do this. Keep the message clear and simple. Ensure that you get buy-in from your employees. Change is impossible without the team on board and in play. In some instances, consider having an employee representative on the management board.
Trajectory change: Ensure that everyone, from board members to employees, understand the need to act quickly and urgently. The initial changes that need to be implemented need to be seen as time critical in a company’s life, almost equivalent to a cardiac arrest. What do we need to do to get the company going and how do we move to the next steps?
Wins: Quick wins can be good initially but don’t get so caught up that you lose sight of the bigger wins that take a bit more time and effort.
People: Carry out a review and take the hard decision. Does your top team in management need to change? Where is the talent? Retain talent and don’t be shy about promoting people outside the box, particularly where they have ideas, enthusiasm and desire to succeed.
The above tips are things you can look to do when approaching a turnaround situation. However, to have a specialist advise you through the turnaround can help in making those difficult decisions and also help make better decisions quicker. At the TMA, we offer a place to learn more about the turnaround world and have a pool of experts that can help any business that might be looking to change direction but simply unsure of which way to point their sails.
Managing Director - Legatus Law
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