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If a business is struggling but still viable, there are seven turnaround strategies that can be put into motion to help turn things around.
The first is crisis stabilisation – covered in the first blog of this seven-part series. This involves assessing and managing the finances, getting the business stable, and reintroducing predictability.
Once the business is stable, attention should quickly turn towards the business leaders.
Let’s start with the CEO
Alongside market causes, inadequate senior management is frequently cited as one of the top causes of small business corporate decline. Because of this, many, but not all, turnaround situations require a new chief executive officer (CEO).
It’s something you commonly see when failing big companies hit the news. The CEO is typically the first one out the door – whether they want to go or not.
This is because CEOs are the ones in charge of making the major corporate decisions and managing the company’s overall operations and resources. They’re also the point of communication between the directors and the operations.
When a business finds itself in crisis, they’re the person who was steering the ship leading up to the failure. This makes them accountable and suggests inadequate management.
Inadequate management could mean failings in areas such as strategic planning, poor decisions and financial management. It could also mean being resistant to change or being a cause of conflict negatively impacting the business.
Some argue that replacing the CEO isn’t a necessary move, but in our experience, it often is.
Identifying problem leaders and staff
As well as letting go of the CEO, you also need to look at other senior management and the rest of the workforce to identify underperformers and those resistant to change.
During a swift period of assessment, meetings with management and other staff should be made to determine their value to the business and what capacity they have. Through these discussions, it’s possible to draw out the details of the business’s struggles and put all problems on the table.
Once decisions have been made, they need to be communicated to those affected and all levels of the business, quickly and with clarity. It’s important that the reason for the change and the need for new results are explained.
Passing the buck of staff cuts
Making these sorts of leadership changes internally is inherently tricky. This is because leaders and managers are too close to the business – and each other.
Plus, they have a vested interest in keeping themselves employed – even if they’re the cause of some of the company’s issues.
Because of this, calling in an independent turnaround expert to make necessary leadership changes is a smart move. They can come in with fresh eyes to assess the senior management teams and make any tough decisions.
They also have no emotional ties to the business or people and can remain calm, confident and utterly determined and dispassionate when making cuts.
Building a new top team
Replacing the CEO and other senior management with new talent from outside the business can help inject fresh thinking into it and enable the company to focus on new strategies to lead the turnaround.
It also sends a strong message of confidence and change through the business and to external stakeholders – something is being done.
Once this leadership change has happened, the focus needs to turn to the task of building a top team. Once you’ve figured out everybody’s skillsets and capabilities, you can put them in the best position in the business – and identify new leaders.
You also need to build commitment across the workforce. It’s crucial that everyone is motivated at an early stage and on board with the new direction, goals and expectations.
The priority at this point is to prevent good people from leaving and start mobilising the organisation for the challenge ahead. Close monitoring and reviewing is essential.
Next step: Stakeholder support
With a new team and a motivated workforce in place, the next step in turnaround is to focus on gaining stakeholder support. Keen to learn more? Keep your eye out for the next blog in our seven-part turnaround strategies series.
If you have a client facing financial difficulties and needs to turn things around, contact us today to set up a meeting. We’re experts in leadership changes and in other turnaround strategies required to get them back on track.