Turnaround Management is about business restructure and renewal. Often, a turnaround management strategy is employed when the business is under financial stress. However, it is not necessary to wait until the situation becomes too dire to commence a turnaround strategy. In fact it is preferable to commence the process before it could be too late.
To help understand how turnaround management works, below is an outline of the 5 step process involved. Having a good understanding of this process will make it easier to identify if and when, it should be applied.
Step 1 – Define & Analyse
During this stage the definition of performance problems within the business are clearly outlined. It is particularly important during this step that any areas of financial stress within the business are identified and a thorough analysis undertaken.
The objective of this is to arrest any further decline in the business while continuing to trade and avoid insolvency.
Step 2 – Scope & Strategy
Once the business has been stabilised, it is now time to commence a strategic planning process. The first part of this is to scope the strengths, weaknesses, opportunities and threats (SWOT analysis) of the business.
It is important during this stage to not only look internally (strengths and weaknesses) but to strategically analyse the external environment (opportunities and threats) as well.
From the SWOT analysis, the long term vision, mission and objectives for the business can be defined. Knowing where the business is heading then allows the development of a strategic plan.
Step 3 – Link & Action
Now it is time to take the strategic plan and develop an action plan. This is a list of actions and tasks complete with time frames that must be undertaken to ultimately achieve the business objectives.
The tasks are the daily, weekly and monthly activities to be done and with this strategic planning process, each one will be contributing to the overall mission.
Step 4 – Implement
This step is not just about implementing the action plan, but also ensuring coaching and support of all staff. Without this critical step, all the planning can go to waste.
It is important that employees are aligned with the overall vision for the business. This is achieved through communication, consultation and coaching on a regular basis.
Step 5 – Review
With all the planning and implementation in place, it is now time to conduct regular reviews. This ensures not only that continual improvement is achieved but also helps to identify any corrective actions that may be needed.
In effect, turnaround management is very similar to the strategic planning process; however the first step of identifying areas of stress in the business is critical. For any business where this stress is already occurring, applying the above process, in consultation with a turnaround management expert, will not only ensure the business turnaround but also the opportunity to improve and develop well into the future.