Pradip Chanda, is a turnaround consultant based in Delhi. He is the author of The Second Coming--Creativity in Corporate Turnarounds

Chrysler corporation's revival in the early eighties remains one of the most talked about turnarounds, and not just because Lee Iacocca authored a bestseller. Iacocca's book did succeed in romanticising an otherwise drab subject. But let us not miss amidst all the hoopla the three critical phases-evaluation, cutting, and building-common to all turnarounds, that helped the Chrysler transformation.

	Going By The Book
	Pay Peanuts, Get Elephants
	Don't Lose Customer Focus

As most turnaround CEOs discover, the need for change is often painfully obvious to all long before the restructuring actually begins. The problem, in most cases, is created by the failure of managements to monitor their companies' vital organisational and financial signs.

One sure-fire indicator of a company's decline is the ad hoc creation of additional levels in its organisational structure. While most turnaround managers focus on reducing the workforce, they tend to ignore the insidious problem of swelling managerial ranks. This problem gets exacerbated when the ratio of staff to line positions starts tilting in the former's favour.

In the Chrysler restructuring, Iacocca was able to identify and eliminate as many as 8,500 financial staff positions, creating a more effective organisation. A more dramatic illustration is what Percy Barnevik was able to achieve in Asea Brown Boveri. Post merger, Barnevik restructured the head office to which 1,300 operating companies and 5,000 profit centres in 140 countries reported. The main office headcount was reduced to 171 from a pre-merger level of 6,000. That meant only one out of 110 headoffice jobs was retained. The process released a lot of talented people for core operations.

Administrative procedures are another vital sign. There is no denying that controls are a must in any organisation. But sometimes routine matters take up ridiculously high levels of a company's resources.

During the Reagan era, an ops analysis at the White House determined that buying a box of pins cost the US government $10, but if the secretary nipped around the corner, she could pick it up for 50 cents. Former Indian Prime Minister Rajiv Gandhi had something similar in mind when he lamented that only 15 paise out of each rupee spent on development reached the intended beneficiary.

I recall a former Army chief of staff recounting an anecdote. While posted in Delhi as a junior officer, he had sent in a written request for a footstool. He got a reply stating that no funds were allocated for procuring footstools for someone of his rank. Not the one to give up, the general sent another missive on his earlier request. The correspondence continued till the other side caved in and granted his request. The general had by then become so exasperated with the whole affair that he replied hotly: ''You keep the damn thing. The file containing our correspondence is thick enough for me to use as a footstool.''

There are plenty of similar anecdotes. In one of the MNCs I worked for, the marketing director had to exchange acrimonious memos with an overzealous accounts clerk, explaining why he ordered two cups of bed tea while on tour. The exchange did not stop there. Eventually, the personnel department had to step in to resolve the issue.

Such bureaucracy raises an interesting question. Is it the centralised authority vested in senior managers that creates problems or is it the powerless lot in between that creates artificial power bases?

The turnaround CEO cannot afford to get entangled in administrative webs. Restructuring the organisation to enable rooting out artificial power bases must get the highest priority. Eliminating staff jobs and relocating people in productive line functions will help him do just that. Both Iacocca and Barnevik will vouch for that.