Turnaround management is a specialized form of management that involves developing and implementing strategies and plans to rescue an organization that is in financial or operational distress. It is a process of directing and controlling efforts to stabilize and improve the performance of an organization, with the goal of returning it to a state of sustainability and success. Turnaround management typically involves identifying the root causes of the organization’s problems, developing a plan to address these issues, and implementing the necessary changes to improve performance. This may involve making changes to the organizational structure, processes, systems, or culture, as well as implementing cost-cutting measures or pursuing new growth opportunities.
Turnaround management is a challenging and complex process that requires strong leadership, clear communication, and a focus on achieving the desired outcomes. It is typically led by experienced executives or turnaround specialists who have the necessary skills and expertise to assess the organization’s problems and develop effective strategies for addressing them. Successful turnaround management requires a comprehensive understanding of the organization’s financial, operational, and strategic challenges, and it requires the ability to adapt and respond to changing circumstances in a dynamic and rapidly-evolving business environment. The following are illustrative examples.
Evaluation & Assessment
Generally speaking, turnaround management is a fast-paced process that doesn’t allow for an extended period of evaluation. However, there is often need of a quick swot analysis and/or root cause analysis. This is particularly true when management has been replaced due to failures or perceived inability to overcome status quo thinking such that new managers may be completely unfamiliar with the organization.
Triage is a process of quick decision making to address urgent problems. For example, a firm that is facing a liquidity problem may need to identify ways to immediately reduce expenses or raise cash.
The process of fixing problems. For example, an firm that has compliance violations that implements controls to comply to laws and regulations.
The process of reducing, mitigating or otherwise treating risk. For example, a firm that secures a line of credit in order to reduce refinancing and liquidity risk.
The process of managing relationships with stakeholders. In a turnaround, stakeholders such as employees, investors, creditors, partners, customers and communities are likely to be worried. Communicating your turnaround efforts can help to stabilize the situation. If negative events such as layoffs are anticipated, you may set expectations that this is coming.
Turnaround strategies are a special category of business strategy that are used to try to save an organization that will fail eventually without a change in direction. For example, a retrenchment whereby a firm exits businesses, abandons markets, eliminates business functions or scales back production.
Change management is the process of leading change that is likely to face issues and opposition. Turnaround strategy tends to challenge the status quo of a firm such that resistance to change can be expected. Change management finds ways to empower agents of change and to sideline opposition.
Where an organizational culture has failed to produce satisfactory results, turnaround managers may work to effect a culture change. For example, a telecom company that has demonstrated a poor customer service culture that establishes new norms and expectations regarding diligence, friendliness and respect for the customer.
Turnaround is by definition a high risk process that may fail such that turnaround managers may end up in a position where they are in charge of the process of shutting a business down.