Turnaround Management
What is Turnaround Management?
Turnaround management is a process dedicated to corporate renewal. It consists of a multi-stage process frequently involving SWOT analysis, management review, process analysis, root cause analysis, activity based costing and situation analysis to determine not only why a company may be experiencing issues but also whether or not a business has sufficient potential to make it worth turning around. While the process is customarily utilized in distressed organizations, turnaround management can be beneficial in any situation where a change in direction, strategy, process, methods or culture must be achieved.
What steps are involved?
Situation Analysis
Goal: Determine the severity of the existing situation and decide whether or not it can be turned around.
Management Change
Goal: Ensure that a CEO and management structure exist that can successfully lead the turnaround.
Emergency Action
Goal: Do what is needed to gain control of the situation, particularly the cash flow and establish breakeven.
Business Restructuring
Goal: Create profitability through remaining operations.
Return to Normal
Goal: Institutionalize the changes in corporate culture to emphasize profitability, ROI, and return on assets employed.
Issues that may signal the need for a turnaround:
The following are a few of the most commonly discovered company traits that may signal operational issues and necessitate the need for some sort of a business turnaround.
-
Precarious or overly concentrated customer base
-
Unexpected Explosive Growth
-
Lack of Timely, Accurate financial information
-
Declining Market Share
-
Decreasing Profitability
-
High Employee Turnover
-
Over Diversification
-
Ineffective management style
-
Poor management communication to employees
-
Poor communication between levels, departments or divisions
-
Poor cash flow
-
Unhappy customers or vendors
-
Unhappy lenders or investors
-
Product or service quality issues