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Turnaround requires strategic focus, which often means revisiting and realigning existing strategy to improve the status quo – covered in our last blog. From this point, significant changes can be made internally to align with the new direction.
Winston Churchill once said, “To improve is to change…” – a quote just as relevant in business turnaround as it is in politics. By changing up how a company does things – how it operates – you can increase efficiencies and future success.
One of the most visible signs of a troubled company we see is people problems. Common symptoms of people problems include a confused organisational structure, a paralysed middle management, resistance to change and demoralized staff. This is where change should focus.
Organisational restructuring
A sound organisational structure that defines the different roles, how they interact, and how things get done to achieve business objectives is crucial to success. If it’s confused or doesn’t align with strategy, failure is more likely.
Some often-seen examples of poor organisational structure include:
- Steep hierarchy – Top management don’t interact with workers regularly. This can lead to a mismatch in understanding.
- Role confusion – If people don’t know what they’re doing, they won’t be as productive or may double up, wasting resources and profits.
- Procedural problems – Out of date or unclear procedural rules and guidelines can drastically reduce productivity.
- Silo working – If all parts of a company work separately and not towards the same goal, they will fail to meet it.
Organisational redesign begins with understanding what isn’t currently working well. Sometimes this is obvious; at other times the signs may be more subtle.
A revised structure that facilitates clear accountability and responsibility will make the implementation process much more straightforward. It’s also a powerful way to rapidly change the operations of an ailing business.
Key people changes
One of the big factors in business success is people.
People are the ones who drive production, innovation, sales and more. They are even more important than structure. That’s why when there are business problems, there are usually people problems.
Capable and motivated employees are critical to an effective turnaround. After all, they’re the ones who will have to implement whatever recovery plan is agreed on.
Making key people changes involves assessing employees in the organisation, particularly the management, and deciding who, if anybody should be changed. We covered leadership changes in detail in blog two of this series.
Signs of a poor performing employee include:
- Do the bare minimum
- Less productive than colleagues
- Make excuses
- Overly assertive
- Cause drama and friction
- Don’t get along with others
The type of people a business needs are those who conduct themselves well and have the experience, attitude and dedication to make the turnaround a success.
Improving communications
In blog three on stakeholder support, we talked about the importance of a communications plan in achieving stakeholder support. But communication doesn’t stop here. Improving how the business communicates internally day-to-day is also critical.
Past research has shown that businesses with highly effective internal communication practices enjoy 47 per cent higher returns than organisations with poor communication.
But as well as increasing your profits, improved communications can also increase employee engagement, build stronger teams, and boost the company’s competitiveness – factors critical in turnaround.
Some proven ways to improve communication include:
- Facilitate open dialogue (two-way-discussion)
- Invest in online project management tools
- Prioritise teambuilding events
- Use the right communication channels
- Make company goals and values visible
Building commitment and capabilities
Building commitment is crucial when it comes to people. For a turnaround plan to succeed, staff must be behind the plan and the revised business strategy.
Commitment means two things. Firstly, that they’re engaged with the business and their work. Secondly, they’re committed to seeing the company thrive.
Creating engaged workers and a high-commitment workplace isn’t necessarily straightforward. But if we were to summarise it, we would say it boils down to ensuring the business is communicating a compelling future vision, creating the right ‘open’ culture, driving performance and carving compelling career paths.
Alongside commitment, capabilities also need to be built. This means ensuring adequate training is in place to support the change program. In other words, that everyone has the skills they need to step up. It can also help boost commitment.
To help guide this change, a formal, written training plan that describes what training and assessment will be carried out is essential.
Changing employment T&C’s
Often a turnaround plan involves revisiting the company’s terms and conditions, such as hours, paid leave, notice of termination for all grades and staff. It’s important that any changes made align with the new direction and roles and are put out to staff for consultation.
An effective rewards system can play a major role in tackling the people problems of a business. Therefore, the entire organisation should be given strong incentives to implement the recovery plan, which means a change in the rewards system.
There are many different types of rewards businesses can offer their employees, from office perks to free parking spaces, lunches out and free tickets – all which work to some extent.
However, it seems obvious to us that people who feel they have a stake in the business, and who are financially motivated to implement a recovery plan successfully, are more likely to put in their best efforts than those who aren’t.
Next strategy: Critical process improvements
It’s human nature for people to resist change, but organisational change is critical to a successful turnaround. With your people realigned and committed, turnaround success is one step closer. Another key strategy is critical process improvements – covered in our next blog.
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 organisational change and the other turnaround strategies needed to get a business back on track.