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Taking Root 6052c3cf6e66f

How Recovery Takes Root

March 18, 2021
In a turnaround situation, positive dynamics are powerful.

Not long ago, I was contacted by a company in the middle of a desperate turnaround situation. I’ve known their senior management for years and, in a lot of respects, they’ve earned my genuine admiration. However, during detailed discussions with these C-level executives, I found myself experiencing a deep sense of frustration. It was clear that they’d run out of ideas and had been worn down by their recent financial difficulties. When you hear figures in charge express sentiments such as, “If one doesn’t think about it too much, it’s not so bad,” you know things are even worse than you’d first anticipated. Indeed, it was a sign of just how dire the situation had become that management would allow these vapid beliefs to gain currency within their organization.

There’s a crucial difference between positive and wishful thinking, although I often see business leaders confuse the two, sadly. While the former can be enormously beneficial to an organization and pave the way for genuine renewal, the latter is often disastrous—divorcing senior staff from reality and leading to ever more ruinous strategic decisions.

At another company, also in a turnaround situation, senior managers told me that it was impossible to plan anymore, given the rapid pace of change and the dizzying number of variables. As soon as they’d decided on any one course of action, it started to look misjudged and lack commercial relevancy, which meant that there was nothing else to do but go with the flow. Adding to the underlying chaos, senior management insisted on changing their plans again before the first set had even been implemented.

Of course, no one would doubt the immense challenges of doing business in the 21st century, but that only makes it more important that your operational flexibility is underpinned by solid commercial principles. Needless to say, the current pandemic has made these challenges even more acute, greatly accelerating levels of unpredictability for senior management and frontline employees alike; but they still have to be faced—and overcome—in order to ensure an organization’s  continuing viability. 

In the case of a major bank, its failure to cope has taken the form of truly woeful customer service. Even before the current crisis hit, the bank had been lacking clear direction under the flawed leadership of its longtime chairman, with its share price declining dramatically to just one-tenth of its all-time high. Now, faced with the added burden of COVID, its operational failings have become even more explicit. In recent months, customers’ emails have been roundly ignored--they’ve received no answer to their urgent queries. Sitting on the institution’s board are a number of leading investment bankers who you might expect to understand the fundamentals of customer retention. Yet this major organization continues to treat its customers with implicit contempt.

Turnaround is a huge challenge at the best of times, but even more so when a culture of apathy and resignation has permeated every strata of a once great company. What you often see within these ailing firms is a troubling focus on the past or the future. In the former instance, management tends to obsess over the good old days, seeking to recreate its former glories by using tactics that worked decades before, but which are no longer fit for purpose.

Either that, or attention shifts toward the next year or following quarter, leading to a flurry of plans aimed at the mid-term. Action lists are drafted and redrafted, meetings are convened and reconvened, and yet no actual steps are taken to address present-day failings. Instead, the emphasis is placed on internal reporting, forecasts and projections, at the expense of the here and now. 

Unsurprisingly, kicking the can further down the road often spells disaster for a company’s immediate fortunes. While the organization is busy auditing itself over and over in anticipation of a brighter tomorrow, its customer base continues to ebb away. Meanwhile, frontline staff find themselves severely hampered by a string of new directives—the result of an overbearing management style that only succeeds in confusing the situation. Little wonder that these employees succumb to apathy and fatalism in turn, and can see no further than their next paycheck. As frustration grows within an organization at the lack of effective leadership, a culture of resignation soon sinks in.

Generally speaking, employees want to effect positive change, and be granted the autonomy to make that happen, which is why these crippling measures have a devastating effect on team morale. Nothing bugs frontline staff more than superficial innovations which only add to their workload, blunting their effectiveness in the process. As with a company’s customer base, their patience and loyalty are both finite resources, which is why it can be a fatal for an organization if management continues to strip these things away. Negativity becomes the new norm, infiltrating the shop floor, office space, or call center; and once this toxic culture is firmly established, it’s incredibly difficult to root out. Indeed it requires a dramatic shift in managerial mindset—and a willingness to tackle the immediate challenges as a matter of priority—before you can hope to seriously improve the situation.

Staff must be empowered and granted enough agency to meet the customers’ needs, using all of their cumulative expertise (instead of being constrained by C-level executives who would see all of that experience go to waste). At the same time, the metrics on which they’re judged should be fewer in number, and clearly defined, so that staff members can focus all of their energies on achieving them. In this way, an upturn in their performance will result in a distinct sense of achievement, and their positive impact on the company’s fortunes can be acknowledged straightaway. 

Given the opportunity, and the proper recognition, frontline staff will go the extra mile and take growing satisfaction in their ability to serve customers, not only in the sales department, but right across the organization. Call centers become real problem-solvers, not only ticket-number-issuers. Making (and keeping) the customer happy is understood to be the number one goal and principal measure of operative performance. And as staffers once more take pride in their work, a corresponding upswing in customer satisfaction becomes inevitable. A virtuous cycle is put in place – in which both of these parties feel valued – serving to reinforce the sense of positivity and promote mutual goodwill. If you can set this cycle in motion, and give it all the added impetus it needs, it can become the driver for  sustained business growth, resulting in an impressive flow of sales, and can turn a stagnating company into a truly dynamic enterprise.  

Of course, this kind of turnaround never happens overnight--it’s built on the back of countless small victories and modest gains in group performance. But only by creating the right conditions for this positive culture to flourish can a company start to benefit from a renewed sense of momentum. That’s why no expense should be spared in empowering staff on the front line, even if that means loosening the purse strings and re-allocating more of the budget for just this purpose: an acknowledgement that future performance and profitability both depend on timely changes taking effect.

Whenever a business is in trouble, it’s a good moment to excel at the basics and take renewed pride in them. As a rule, management should wait until their organization is out of crisis mode before they launch elaborate new initiatives and spend time and energy on moonshots. You cannot reinvent the wheel when your own venture lacks fundamental stability. And there’s little point in obsessing over long-term shareholder value, and “the big picture,” unless you first address the difficult realities that confront you right now. Start with fulfilling orders on time, and otherwise meeting basic customer expectations, and then you can begin to put a premium on exceeding them. That’s how long years of gradual decline can be arrested within an organization and a new era of strong performance ushered in.

It can be a painful process, for sure—as  the truth is confronted by senior management—but the alternatives are even more agonizing and costly. And in my experience, few things are more satisfying than to witness a company-wide turnaround which takes its lead from improved sales-flow, driven by a satisfied customer base. With all of this in mind, it’s worth highlighting a few key moves that can help facilitate this priceless transition:

1.    Place less emphasis on elaborate planning

2.     Lighten up on internal reporting

3.     Focus on steps that can be taken straightaway

4.     Establish true accountability with easily graspable metrics

5.     Truly empower your staff to drive the turnaround

6.     Follow through on your core commitments

R. Paul Vuolle, CEO of Bellevue SME Advisors GmbH in Switzerland and Germany, works actively with small and medium (SME) size manufacturing companies in Europe in SCM/Outsourcing, logistics, turnaround and restructuring, market expansion, as well as succession planning and financing. He also frequently supports technology start- ups in building up their business. He is the author of Lead Now, Manage Later: The Straight Shooter's Guide to Business Success.

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