To Build Lasting Trust" within your
organization FREE by entering your
name and email below:
Business Turnaround: Returning To A Path of Profitability
By Bob Prosen
Don’t you love it when this happens:
You have a great idea, you gather all the resources needed to make it work, you implement your plan, and it’s a success!
You are a implementation and turnaround rock star!
But as time marches on things shift. And if you’re not completely in tune to those variances, it’s easy to look up and find your business plan completely off track.
But that’s Ok, every company gets off track. It happens.
The key is knowing how to figure out the problem so you can turn your business around quickly.
If you ignore the issues hoping they work themselves out, you can get yourself and the company in dire straits with no “good” way out. Right now, a number of companies such as Dollar Thrifty Automotive and Radio Shack are seriously off track, and it remains to be seen whether they’ll be able fix their problems.
Returning to a Path of Profitability After You’ve Fallen Off Course:
- Reaffirm Priorities: First and foremost, you want to reaffirm the organization’s top priorities. Make sure you have the right people in the right jobs, along with clear objectives and measurements for tracking performance.
Assign ownership and then require employees to focus on achieving those top priorities. Now is the time for sharp attention to the things that matter most. Don’t lose focus by taking on too many responsibilities. Do what you do best, and do it well!
- Communicate: To refocus everyone’s efforts, make sure you are communicating effectively. Be clear about what you’re asking people to do, and you’ll eliminate false starts. And please, make sure you derive objectives from deep thinking, not half-baked ideas!
When you communicate clearly and get commitments, progress will follow.
- Analyze: Do you have a measurement system to track progress on all of your top objectives? If not, you need one. Measurements act as an early-warning system allowing you to re-prioritize and take corrective action when things change.
Once you identify problems, make sure you uncover the root cause so you don’t waste resources resolving the same problems over and over again. This approach reduces costs and allows you to focus on what’s most important — sustained profitability.
A Successful Business Turnaround Starts by Asking Yourself the Following 10 Questions:
- Do we have the right strategy and top objectives, along with the support of the entire management team? Your strategy must provide clear direction that’s easily understood by employees, shareholders and customers alike. If there’s any uncertainty, everything else is at risk.
If your strategy isn’t producing sufficient profits, then you must either reduce your costs or develop a more profitable strategy. Either way, take action! Don’t sit around waiting to “get lucky.” Ford Motor Company didn’t wait for a government bailout. Instead, they took action and avoided bankruptcy.
- Are you surrounded by smarter people? Consider each of your direct reports. If given the choice, would you pick that person again to be on your team and in the same position? Each of your direct reports should be giving you ideas you never considered as possibilities. Use this criteria to build your team and watch what happens.
- Do you hold formal monthly operations review meetings? This is one of the most effective ways to instill accountability and consistently achieve the organization’s objectives. It’s the perfect forum to review results, remove roadblocks and ensure accountability. These meetings will be the best barometer in assessing the efforts of your business turnaround plan.
- Are people focused on achieving the organization’s top objectives? This doesn’t apply just to your leadership team! Everyone in the company should understand how their tasks help the company meet its objectives.
Word of caution: When you start asking people what they’re working on to achieve the organization’s top objectives, don’t be surprised if you’re met with blank stares. It’s common for people not to know the top objectives or how their actions support them. Just because it’s common, however, doesn’t make it right.
If there is a change you need to make, then do it immediately!
Communication is the key to making sure everyone’s on the same page.
Work closely with your team so they know how to effectively communicate, and then hold them accountable. People need to know you’re serious about this, so don’t waiver.
Visibly post the top objectives of your company so employees are reminded of them every day.
Also, make sure managers meet regularly with their own teams to review progress against objectives. This ensures the entire company is aligned with the turnaround plan.
- Are you effectively delegating? When your business is far off course, it’s time to get as involved as necessary until you’re confident the situation has been corrected. However, be discerning.
It is uncomfortable to be managed too closely and can cause employees to shut down or back away. Be aware of your style. If you’re too involved, back off.
Learn to delegate and let people do their jobs. But if you need to make a personnel change, do it. Cut the dead wood and don’t rationalize.
- Are you helping people prioritize? No one can do it all. Help your company triage initiatives, and put an end to unnecessary work.
- Are meetings effective? Meetings should be purposeful. People should be solving problems and talking about how to turn the company around. If they’re focused on complaints, excuses and extraneous issues, stop them in their tracks. Explain how to effectively conduct meetings focused on achieving results, then hold them accountable for immediate improvement.
- Are you asking people what they need to be successful? When you ask someone to do something, also ask if they need anything to make the deadline. If so, deal with it immediately. When people fail to meet objectives or deadlines, remind them meeting commitments builds trust.
Everyone’s behavior needs to be focused on the success of the team, not the success of the individual. Recognize individual performance and success in context with how it supports the company’s goals in achieving a successful business turnaround. Celebrate and reward top producers for their achievements.
- Are you watching for busy work? Pay attention to the output from accounting, human resources and information systems. Are they engaging in non-essential work and generating unnecessary reports, or are their activities supporting the company’s top objectives?
- Do you always have time to plan? Are you always running to keep up? Are you missing commitments because you’re in too many meetings? Are you reactive instead of proactive? Do you regularly take your vacation? Does everyone seem to come to you for answers?
The higher your position, the fewer decisions you need to make. If you’re involved in small decisions, you’re not working on the right things.
When you can answer “yes” to the 10 questions above, then you’re on the right path.
Executing a successful business turnaround plan takes commitment on the part of your entire leadership team. You can’t do it alone, or without the buy-in of your business team.
Wherever you are in your turnaround efforts, don’t be discouraged. Companies of all shapes and sizes wander off track from time to time. While it takes hard work and diligence to “right the ship,” profitability will be your reward.
image of objectives: businessihub.com
April 3, 2012
- The Do’s & Don’ts of Leadership For Higher Profitability
- Improving Business Performance: 5 Behaviors You MUST Avoid!
- Leadership Self Assessment – Are You the Leader You Think You Are?
- Boost Profits During Hard Times Through Rational, Cohesive Action
- How to Convert Your Business Plan Into Actionable Strategies