Column: Business Revival

BUSINESS REVIVAL
The Road To Recovery

The sooner the new CEO is able to get the right team in place, the sooner the company will get out of its struggle for existence and be on the road to recovery.

By Pradip Chanda

Pradip Chanda, Turnaround Consultant

The turnaround process should start with vision and strategy. Right? Not necessarily. A sick company rarely has a clear vision, especially in the early days of rehabilitation. And resource constraints limit the new CEO's ability to have a vision for the future. The process of envisioning is rendered even more difficult if the CEO believes that circumstances demand a radical shift in the way the company defines its business.

At the same time, a firm is required to address immediate concerns-increasing output and sales, restoring dwindling margins and stopping further erosion of marketshare. This can only be achieved if short-term mission statements are defined.

The mission of any company is dynamic. This is more so in sick companies. During a turnaround process, the best practice is to break the task ahead into small and measurable steps, and then focus on progressing one step at a time.

Only after the first milestone is achieved will the company gain the confidence to aspire for further milestones.

Defining a mission is often the easy part. The difficult part is to get the rest of the company to buy into it. This is particularly true in a sick company where the managers are often sceptical about welcoming change of any degree.

Turnaround CEOs attend to people first, and to strategy later. They get the right people on the bus, make sure that everyone is on the right seats, and then figure out how to drive it.

Many turnaround specialists in the West prefer to replace the entire senior management team. This strategy has many advantages. It sends a powerful message down the line that dramatic change is on the cards. It removes potential internal critics who may resist change. It provides the CEO with the opportunity to bring in like-minded people on board.

In India, such a strategy is not advisable. To begin with, the turnaround CEO will need a team and he may not be able to attract the right people to join his company. The image of the sick company will severely limit the talent pool available to the chief executive. He will also be constrained by his inability to pay very high salaries to new inductees, without creating major dissent in the rest of the organisation.

He may be able to bring in one or two key people, but will have to largely depend on the talent and skills available within the company. This is not necessarily a despairing prospect. No company is totally bereft of knowledge and skill. The challenge is to find the people who can make a difference and place them in positions where they can be effective. Such people, when encouraged, will be to able to bring their experience to help the CEO understand critical issues better and find practical solutions.

However, the CEO must recognise that the knowledge and skill-levels of such personnel would probably be rusty. He will have to quickly identify suitable training needs and initiate regular training programmes. This will not only help him build a core team, but equip him with adequate knowledge- and skill-bases.

Contrary to popular belief, this practice is neither expensive nor a luxury in the early days of rehabilitation. Training sessions perform a number of vital functions. They send positive signals across the company, create a forum for introducing change, and most importantly, identify more candidates for inclusion in the core team.

The turnaround chief executive, however, should always have a wish-list of talent that he wants aboard his company and actively woo them to join. The sooner he is able to get the right team in place, the sooner the company will get out of a daily struggle for existence, and be on the road to full-fledged recovery.

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