5 steps to a successful business turnaround | SmallBusinessExecutive

5 steps to a successful business turnaround

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By John Treace

Guest columnist

John Treace of JR Treace & Associates spent a decade helping to turn around struggling businesses.

I have taken part in many business turnarounds in my career, and time and again I have noticed the same problems: ineffective management, poorly defined culture, a weak team, lack of vision and the absence of a strategic plan. To turn around a struggling business, use the following steps. They apply to most departments within a company.

1. Assessing the Situation
First determine how the company arrived at its current state, whether it be bankruptcy or a minor crisis. When businesses fail, it is most often due to ineffective management. The people who created the problem in the first place will not know how to fix it, therefore providing them greater resources is a mistake: it wastes money and degrades employee morale. Also, failing businesses most often do not have good metrics to guide the business. Management should be able to clearly describe how the metrics it uses will predict future results.

Providing that the company?s products or services are competitive, the issues affecting the performance of a sales team can range from an ineffective sales process to low morale. I have never seen a ?bad? sales team, but I have seen plenty of lousy processes and low morale. Gain insight by getting close to the company?s sales force, sales processes and customers to determine why sales are not progressing to plan.

2. Defining a Winning Culture
Companies in need of a turnaround usually have ill-defined culture. Test this by asking salespeople to describe the company culture as they perceive it. In failing businesses, employees will not be forthcoming, and answers will vary from person to person. Especially when a company is charting rough waters, it is imperative that the sales team embrace a unified culture, one that will define success.

Core values define corporate culture, and companies without them tend to wander and underperform. ?Core values are like the Ten Commandments. They are simple action statements that describe 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, and employees should know that disciplinary action will follow their violation.

?Tell the bad news first, not last? was a core value we used at one company. If we were not able to make a customer delivery on time or if we expected to miss our sales forecast, we were expected to give fair warning to the customer or the CEO respectively. This core value became a cornerstone of this company?s customer service. Another core value was: ?Do the right thing for shareholders, customers and employees, and don?t take a position that favors one over another.?

3. Managing People
People are the most important component of any organization. When companies fail, it is almost always due to ineffective management. In a business turnaround, it is important to identify who stays and who goes. Powerful managers surround themselves with high performers.

Over the long term, who you hire is more important than who you fire. Look for a track record of success. Then assure them 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.

4. Creating a New Vision of the Future
When companies fail, employee morale and confidence is degraded, and many high performers will look for employment elsewhere. Most employees in these situations want their company to prosper, but they don?t know how to accomplish it. In these situations, it is imperative that a new vision for the company be formulated and effectively communicated to all employees.

When the new vision is communicated, expect employees to fall into three categories: those who embrace it with enthusiasm, those who sit on the fence to wait and see how things go and those who do not buy in but instead resist the change and are open and verbal in their opposition. The sooner management resolves these last two groups, the better. The fence-sitters and the resisters must quickly reverse their positions and enthusiastically support the new vision?or find employment elsewhere. The sooner management converts these groups, the better. Powerful companies embrace a vivid vision of the future and employ sales representatives who are confident in their management and in their employment with the company.

5. Developing a Strategic Plan
Once a turnaround-management team has defined the core values, culture and vision of the future, effective strategic planning can begin. The strategic planning process should include the top management members who will be charged with implementing the plan. The planning sessions should not be held in secrecy, because when workers find out, they will become suspicious as to why the meeting was held. No one likes secret meetings that may define his or her future, and salespeople are especially sensitive to this. After the plan is finished, inform employees promptly as to the outcome and how the plan affects their future. Powerful companies have solid strategic plans, and they effectively gain employee buy-in.

Pulling off a business turnaround takes an intimate understanding of a business, including its customers, products, sales process and employees. Powerful leaders and managers will clearly communicate the culture and vision to gain strong employee support. Since the turnaround process should be completed in a short time period, management should apply all the tools available, including third-party consultation.

With the proper tools and an understanding of these five steps, companies will be on the road to success.

John R. Treace, founder of JR Treace & Associates, a sales management consulting business, has spent more than 10 years specializing in the restructuring of sales departments of companies that were either bankrupt or failing. Treace is also the author of the new book, ?Nuts & Bolts of ?Sales Management: How to Build a High-Velocity Sales Organization.?

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Ann Meyer

By: Ann Meyer on September 22, 2011.

Posted by Ann Meyer on Sep 22nd, 2011 and filed under Columns. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

Source: http://www.smallbizchicago.com/2011/09/5-steps-to-a-successful-business-turnaround/

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