Turnaround Strategies for Customer Centric Operations: Turn‐by‐Turn Directions on the Path to Recovery

Citation

Pârvulescu, S. and Avramescu, R. (2012), "Turnaround Strategies for Customer Centric Operations: Turn‐by‐Turn Directions on the Path to Recovery", International Journal of Conflict Management, Vol. 23 No. 3, pp. 335-338. https://doi.org/10.1108/10444061211249038

Turnaround Strategies is a practical book written by a management consultant for a very specific purpose: getting distressed companies that are on the verge of closing down out of the red, and back into profitable operations. That being said, Ileana Roman's work is firstly about managing people: leaders, followers, and the processes whereby they interact.

It is precisely because of this focus on social processes that the book speaks to conflict management. Certain chapters deal with workplace conflict explicitly (how to handle change‐resistant upper management), while others look at mediating factors of conflict (such as a corporate culture of consensual decision‐making which discourages productive conflict). While cash flow needs to be secured, the fundamental assumption is always that a company is made of people, and these people need the right type of conflict to avoid spats and to encourage bold risk‐taking.

Roman repeatedly drives home four points: have clearly‐defined goals, be a decisive and responsible leader, treat employees well, and never forget that the customer is the ultimate revenue source. Combined with a spreadsheet‐based data‐collection method to ensure accurate, up‐to‐date information, the author offers the hope that even companies that are due to shut down in six months can still pull themselves together.

The context of the turnaround is a high cost‐to‐revenue situation where inaction will lead to closure and bankruptcy within the next six to 12 months. “[T]he company has to want to survive, to fight for its life and to embrace change” p. 12, and this willingness to do what it takes is required at all times. The situation does not call for the faint of heart, the politically correct, or water‐cooler politicians, but rather the bold and decisive leader, who will reach pre‐assigned targets, and receive fat bonuses for exceeding them, but will also bear full responsibility for sub‐par performance.

The book's three‐part structure mirrors the sequence of the turnaround: first, assessment, planning and pre‐work; second, execution; and finally, stabilization. When the company first decides to restructure it must prepare the ground by critically assessing the situation. Chapter eight describes how to capture the voice of the employees through confidential interviews: they are the ones who, due to their hands‐on‐role, know where the problems are and may offer solutions. However, having workers share their thoughts only to do nothing about it is a costly mistake: they will be disappointed, demoralized, and less willing to share observations in the future.

Another challenge is to get the leadership on board with the restructuring plan. Chapters five (Key Leadership Education and Alignment) and seven (Internal Strategic Alliances) are all about getting 100 percent support from key stakeholders. One must assuage fears of change, deal with defensive behaviour, and ultimately sell the plan. High emotional intelligence and a gentle but firm touch is needed to make sure that people both understand the severity of the situation, and will not rebel on account of hurt egos. Fortunately, selling it is straightforward: “[t]he biggest motivators for this social group (leadership) are money and prestige: offer both as rewards, aggressively” p. 37.

A recurring theme is the author's disapproval of “group‐manage”, whereby decisions are made by a group of stakeholders, with an accent on consensus. Roman is very clear on this point: group‐manage ensures that “no one ends up having any accountability for anything, no one speaks their mind in a loud, clear, and fact‐based voice, everyone will avoid conflict even if it would be beneficial … group‐manage promotes mediocrity and strips functional leaders of their ability to make quick, crisp decisions, and apply them without delay”. The solution is simple: a clear hierarchy of responsibility, where the leader consults many, but decides alone.

When it comes to executing the turnaround, the accent is on revamping processes and accurately measuring the changes. Because of the very narrow timeframe of the turnaround, the firm can realistically only cut costs, either because the business cycle is at a low point and product demand is sluggish, or because investment in upgrades is too costly to presently undertake. Thus, layoffs (chapter 18) must be executed in a prompt and honest fashion, with good severance packages (to allow employee recalls, and to maintain employer reputation). Furthermore, existing operations need to be trimmed and quickly brought into profitability. Loss‐making units must either be shut down, restructured or outsourced, and staff from over‐performing sections brought on the restructuring team, to spread their knowledge. However, cost cutting must never hurt product quality. If quality suffers, and paying customers leave, restructuring is in vain.

Roman never ceases to stress the crucial role that accurate, up‐to‐date information must play in executive decision‐making. Employee interview results are catalogued in spreadsheets by type of problem, business unit, impact on operations, and timeline of problem. When it comes to layoffs, employees are evaluated by summing their rank across a number of criteria, such as productivity, quality of work, and attendance, with the lowest‐ranked workers getting the axe. This ensures both that the right people are retained, and that the company is protected from favouritism and lawsuits: everyone can see the strictly performance‐based criteria.

Another key aspect is the sequential breakdown of goals, duties, and results. At any time all members of the organization must know what they are aiming for, why they are aiming for it, and how much compensation they will receive by hitting the target. How they achieve it is up to them. This means that goals must be clearly (and numerically) defined, and responsibilities understood by every member of the turnaround team, so that changes can be tracked and understood, and employees fairly rewarded or punished.

As a guide to break‐neck restructuring under heavy pressure, Turnaround Strategies offers some good insights. Leadership must be empowered to make quick decisions without outside authorities second‐guessing them: the sagacity of the choice will be clear when financial returns are posted. Moreover, Roman constantly stresses the need to properly treat one's subordinates: honest, truthful, and inspiring leadership goes a long way towards motivating and retaining staff. Unfortunately, the book suffers from several shortcomings.

First, it is unclear who the audience is. While most chapters are method‐oriented and describe in detail how to undertake the restructuring process, in the introduction the author explicitly addresses CEOs, but thereafter periodically reminds the reader that “[a] key of the successful operational turnaround is the turnaround consultant” (p. 9). Whether this book is meant to train CEOs, consultants, or to encourage the former to hire the latter is somewhat murky.

Second, the work would benefit from greater depth. The case studies are fictitious scenarios in which things were going badly until the recommended strategies were applied, after which a quick turnaround to profitability was recorded. There are no citations, the bibliography is rather short, and the final third of the book tends to repeat what was previously stated. Combined with the simplicity the case studies, the work gives the impression that we are having casual a lunchtime conversation with a consultant.

Last, the book seems to engage in personal self‐promotion. Professional promotion for consultants is perhaps to be expected, but there is also what appears to be thinly‐veiled self‐promotion: most of the data‐analysis tools have brand names which strongly resemble the name of the author's own consulting firm.

In conclusion, while Turnaround Strategies offers intuitive and important insights into the structure of leadership and employee relations during hard times for a business, its lack of depth and not‐so‐subtle advertising make it perhaps not the best tool for someone trying to quickly get their company back on the road to profitability.