This is the first of two blog posts focused on turnarounds. The management tips in this blog post apply in any situation, but are particularly relevant for managers who need to improve struggling performance. These are best practices inspired by both our own experience, as well as the experience of other renowned management and turnaround experts. All of the quotes in this first post come from Steven Miller’s excellent book The turnaround kid: what I learned rescuing Americas most troubled companies.
With some inspiration from Marcus Lemonis (CNBC’s “The Profit”), we will focus this first post on people. The next post will cover product and process. We selected people as the first topic intentionally, as people need to come first if you want to succeed. Most problems and all solutions come from people, yet many new managers forget this and instead want to focus on products or process. However, the greatest managers find ways to connect with and empower their people to help them achieve great things.
Be calm, confident, and decisive
“Don’t study things to death. Most of the choices you need to make are clear, and decisiveness breeds confidence.” 1
For an incoming manager at a troubled organization, it may be tempting to spend lots of time analyzing the situation. While it is important to have a firm grasp of the specifics before making significant decisions, time is rarely a luxury for businesses facing major headwinds. An advantage for new managers is they lack the “baggage” associated with how things have been done before. This provides the opportunity to make positive changes during the early period of their tenure such as removing an obviously toxic employee.
“Practice calm realism. The key here is to stay balanced. Truth-telling can be scary, but if you let people know that there are solutions for most problems, they’ll be less discouraged.” 1
Quickly setting a calm, confident tone is critical to getting things back on track. Try to focus your confidence outward on your people and their ability to come together in this difficult time. If your confidence is genuine, your employees will sense this and it will increase their level of confidence, which is important to improve the situation. The confidence of your employees will increase even more as they see decisive actions being taken. The right style of communication will also support confidence building.
Be honest and keep your promises
Employees and customers may or may not be aware of the challenges the business is facing. If they don’t know yet, they will find out eventually. It is far better for them to learn about the organization’s problems from their leaders, than via rumors, or even worse, the press. While the exact nature and timing of communication will vary depending on the situation, your stakeholders need to hear the truth. Your candor about the challenges your business is facing will almost certainly generate fear. However, the vast majority of your stakeholders will appreciate your honesty. Communicating honestly, keeping your promises and acting with integrity will help generate goodwill. If there is enough goodwill, many stakeholders will be willing to share in the sacrifices required to improve performance. “There’s something deep inside each human soul that craves the basic fairness of evenly shared sacrifice and opportunities.”1 But it is important to remember that effective communication isn’t only about talking, it’s also about listening. Great leaders are always good listeners.
Listen, learn, and adjust
“Listen to your people. Consult everyone, from the boiler room at the plant to the executive suite so you become fully informed. Invite everyone to send e-mails, and answer them!” 1
Soliciting and carefully listening to feedback is key. While you will have to separate signal from noise, there is almost always something to be learned from any feedback. Seeking feedback from key customers is critical. They have placed their trust in you, and have been on the receiving end of your products or services. The feedback from your customers may serve as a painful but valuable reality check about your performance, or difficult changes in the marketplace. Pursue the painful feedback, as it is often the most valuable. Try to reach out the customers who have chosen to do business elsewhere. You can use their input and ideas to help make important decisions about the future. Another great source of feedback and ideas is your employees.
Your employees are fighting every day to keep your business relevant. You would be amazed by what you can learn from them. Some of the greatest CEOs of all time Jack Welch, Sam Walton and Herb Kellher all extolled the benefits of “management by walking around.” One senior executive we knew at a power generation site held a weekly drawing. The winner of the drawing got to have a one-on-one lunch with him. This weekly lunch helped him stay tuned into what was happening “on the ground” within his company. The employees also liked this practice because it provided them with a direct line of communication to their leader. During these lunches, he occasionally received some great ideas and suggestions. Nothing creates goodwill like making a positive change, no matter how small, based on a suggestion by an employee, especially when you acknowledge that employee for their idea. This helps make the employees stakeholders in the change, and creates a sense of shared ownership in the business. Another benefit of staying in touch with your people is that you can identify leadership candidates.
Empower leaders and change agents
“You don’t need all new players to make a team into a winner. Even at companies in crisis you’ll find lots of people who know their jobs and do them well. Try to hold on to them.” 1
Even the greatest managers need help from talented people. You may be tempted to replace all the senior managers with people you know and trust. While this is sometimes appropriate, there are often good people already in place. Their knowledge and experience will be valuable to you.
“Troubled companies typically harbor lots of competent people frustrated by poor leadership and organization. Find these ponies and use them to rebuild.” 1
A successful organization needs people who are willing to take on difficult assignments and help promote a change in course. Without the help of these key people, improvement will be impossible. However, the right people for these roles are not always those who fill management roles. Sometimes your greatest leaders and change agents will be hidden away. Getting out and interacting with the organization will help you find these people and empower them to have a greater, more positive impact on the organization, greatly improving your odds of success.
1Miller, R. S. (2009). The turnaround kid: what I learned rescuing Americas most troubled companies. New York: Collins.