A constant battle for the entirety of any turnaround is maintaining momentum.
Enthusiasm for the turnaround and acceptance of the need for change can evaporate in the period between a team meeting and when everyone gets back from lunch!
Initial momentum progresses a turnaround from issues and ideas to a plan for ongoing actions. However, an initiative is always vulnerable to falling by the wayside due to the “comfort zone” of the day jobs of management and staff. It really can be much easier to stay with existing roles and responsibilities rather than deal with new tasks and the uncertainty of change.
Here are 8 suggestions for maintaining momentum in a turnaround:
1. Create a cash buffer in the business. Without a buffer, companies are prone to “lurching” from one cash crisis to another and never “having air” to focus on fixing the business.
2. Turnaround accountability must reside with senior management or to say it another way . turnarounds are best led and only really able to be completed by management.
3. Selective use of advisers, and in this regard:
a. Don’t try and outsource the entirety of a turnaround to advisers (see above!).
b. Advisers are initially best able to “add value” in crisis and stakeholder management situations and with respect to specific initiatives such as cash generation and financial restructuring.
c. If an adviser is to have a longer term role in the turnaround, they are best imbedded in the management team and with specific responsibilities and authority.
4. Measure and reward management performance in accordance with the turnaround plan. Specifically, include turnaround initiatives in KPIs and performance reviews for employees and incentivise remuneration levels based on the requirements of the turnaround ie money talks!
5. Establish an “affordable” debt amortisation program so that the purpose of the turnaround is not keeping your bankers happy. If debt reduces and therefore the influence of financiers diminishes, the turnaround then becomes about enhancing value for management and equity holders which is a much more positive and sustainable way to maintain momentum in the turnaround.
6. Keep external stakeholders updated to ensure their ongoing support. If these stakeholder lose visibility and trust then the support required to keep progressing a turnaround may not be available.
7. Stick to the turnaround plan until the turnaround is completed. This may appear self evident but when early success is achieved or a crisis passes, it is very tempting to forget the plan and the momentum of the turnaround is lost.
8. If you need new money, talk to the right debt/equity providers so as to not waste “blood and treasure” on stakeholders who are unlikely to be supportive. “Vet” and qualify the stakeholders early in the process and make sure there is an appetite for funding and investment as finding out too late in the process can kill the turnaround.
A final thing to mention is that turnaround plans are often borne from a crisis. In the words of Winston Churchill, “never let a good crisis go to waste”. A crisis is the best time to start a turnaround and hopefully you are able to maintain momentum from there.
If you would like a no obligation, confidential discussion about turnaround management and executive solutions, please contact me at firstname.lastname@example.org.