There have been countless corporate turnarounds of industry giants championed by notable leaders. Some examples include General Electric under Jack Welch, Lee Iacocca at Ford, and Steve Jobs when he returned to Apple, to name a few. When a company’s survival is at stake, leadership is crucial. Typically, successful turnarounds are pioneered by executives who lead by example, are not afraid to roll up their sleeves, and can rally the troops toward the common goal of transforming the company. They assign the right managers with appropriate empowerment to drive the company’s mission. Most importantly, they offer a unique set of soft skills that help them provide an empathetic, humane touch and create an environment of collective growth.
Is a Consultant the Best Option?
When facing a corporate turnaround, some businesses look to outside consultants for a fresh set of eyes and expertise in identifying problems, increasing profits, decreasing costs, and improving cash flow. While a third party may have technical experience in transforming an organization, an outside specialist cannot truly understand the dynamics and synergies involved within an organization.
Often, the first recommendation from an outside consultant is to change the leadership team. But that may not be the best decision, especially if those executives were the ones who led the company to uncharted heights. Another consideration is how long it would take a new executive team to settle in and get to know the key players in the corporate structure. Rather than cleaning house from the top down, it might be more effective to leave the top management in place and invite more input from throughout the organization. Effective corporate turnarounds require participation from all levels—from the C-suite to the production floor to marketing to software developers. In fact, instead of using a consultant with no ties to the corporation, a better option may be to engage internal stakeholders and shareholders for new perspectives on what the problems are and how to turn around the organization.
Coporate Leadership Skills–Or Lack Thereof
Before making changes within the organization, it’s essential to determine the issues that brought the company to its current state. Some of these factors may be intangible, such as confusing messages from corporate leadership about the organization’s priorities. A narrative that changes regularly can contribute to decreased employee motivation, especially if putting out fires due to poor real-time decision-making becomes an everyday occurrence. An “on the fly” mentality makes it harder to establish a baseline when trying to rebuild.
Another common characteristic of failing companies is a crumbling culture. Perhaps employees could not and did not connect to the mission of the organization. Or maybe they feel underappreciated and undervalued for their contributions to the organization.
More tangible issues that can drag a business down may include too many non-core activities and legacy product lines that are no longer profitable or consistent with the current corporate image. For example, Jack Welch spent much of his 20-year tenure as General Electric’s CEO focused on getting the right people in the right places. By doing this, he increased employee buy-in and success, even as he took the company past its lightbulbs and appliances pedigree into industrial products and financial services. Welch had his critics, but revenues expanded, and share prices spiked. Multiple vehicle manufacturers have discontinued classic models and even entire product lines, such as Chrysler did in 2001 when it decided Plymouth was no longer profitable.
Characteristics of an Effective Turnaround Leader
Turnaround management is a challenging task that requires a unique set of skills to overcome challenges and drive organizational success. Turnaround leaders require an ability to think strategically, assess the strengths and weaknesses of a business, and formulate a plan for change. But most importantly, they need to possess powerful interpersonal skills that will build the relationships and confidence necessary to create change effectively and efficiently.
When change is afoot, empathy goes a long way with employees. Corporate turnarounds may involve moving people or divisions elsewhere, shutting down legacy lines, or laying off individuals or even entire teams. The best managers approach those situations with an empathic touch, showing compassion for the lives that may be disrupted. This approach leaves organizations with intact reputations that new candidates may remember when hiring is on the upswing again. Explaining the “why” behind moves made at every level as part of the turnaround is critical.
The other part of the equation, after getting buy-in that difficult changes were necessary, is driving the workplace toward a common goal or mission. The requires having a clear vision of what “success” truly is and communicating and embodying that mission with employees at every level. Leaders must be seen and fully engaged, not just checking in with regular edicts by e-mail.
Successful turnaround leaders exude optimism. If they don’t truly believe in what they are doing and how change will benefit the organization, the troops won’t follow suit. Optimism builds confidence. At a time when morale is typically low, it is essential to develop wide-reaching support from throughout and beyond the organization. Doing this creates a renewed sense of purpose and pride.
Mastering the Successful Turnaround
Struggling businesses fail all the time in every industry. Some are bailed out and sold at discounted prices to competitors who did not suffer the same fate. Others simply fade away, overtaken by companies with a superior workplace culture. Successful corporate turnarounds are notable as they are commanded by leaders who engage the entire workforce with empathy, compassion, and inspiration. What sets these leaders apart from others is their exemplary soft skills, intuition, superior technical ability, and the capability to be truly inspirational leaders.
About the Author:
Khushman Hans is an operations executive who has led cross functional teams in strategic quality control and productivity projects for multiple business units. His background includes process engineering, supply chain management, and continuous improvement for a number of national distribution and fulfilment centers. For more information, contact khushman@gmail.com.
