I have taken part in many business turnarounds in my career, and time and again I noticed the same problems, regardless of whether the reason for the turnaround was a relatively minor situation or a reorganization after bankruptcy. Here are the ten steps that need to happen during any major business adjustment and some of the pitfalls to avoid along the way.
1. Assess the situation. Before a successful business turnaround can be implemented, it is crucial to understand what got the company where it is now. Providing that the company’s products or services are competitive, the issues affecting the performance of a sales team can range from poor management to an ineffective sales process to low morale, which is caused by any number of factors. Insight can be gained by getting close to the company’s sales force, sales processes, and customers to determine why sales are not progressing to plan.
2. Hire consultants. Ineffective management teams often say they need greater funding to correct the sagging business, but throwing money at a problem does not work. Those who created the problem in the first place will not know how to fix it, so providing them greater resources is a mistake: it wastes money and degrades employee morale.
3. Measure performance. Metrics should not only tell company leaders where they have been but should also be used to gauge future performance. Management should be able to clearly describe how the metrics it uses will predict future results.
4. Define a winning culture. Companies in need of a turnaround usually have an ill-defined corporate culture. When a company is charting rough waters, it is imperative that the sales team embrace a unified culture, one that will define success.
5. Know your core values. At the heart of culture are the core values a company embraces. Core values are like the Ten Commandments. They are simple action statements that define the principles the company believes in, not fuzzy declarations that can be interpreted at the whim of management. They should be published and posted throughout the company. Employees should understand the corporate commitment to them, and that disciplinary action will follow their violation.
6. Manage your most valuable resource with care. People are the most important component of any organization. Powerful investment groups don’t invest in companies; they invest in people. In a business turnaround, it is important to identify who stays in his or her current position and who must find a position elsewhere. However, most failing ventures have poor methods of measuring individual results, so care must be taken in this selection process. Making this determination is critical; powerful managers surround themselves with high performers.
7. Identify high performers. In the long-term, it isn’t so much who you fire as who you hire. To retain high performing employees, you must ensure that they can trust management’s word, that management has their best interests at heart, and that management is committed to distinction in all that they do. High performers want to be on a winning team, and if they think management can’t accomplish this they will look for employment elsewhere.
8. Do damage control.