- May 23, 2015
- Posted by: Javier González Montané
- Category: Turnaround
The first thing and probably one of the most important in turnaround is building the turnaround team. I mean dealing with people issue.
The external and internal turnaround teams
Normally in turnaround there are two teams. The external team that is a temporary project based team in order to facilitate and accelerate the turnaround process. This team must have experience in turnaround methodology and related disciplines like change management, cash flow improvement and so on.
The internal team is the company team executing and leading the changes. They must bring on board the rest of the staff. The internal team is at least as important as the external team. Without the support of the internal team, changes will fail in the implementation phase. In this post we are reviewing the turnaround internal team.
Organizational chart review
Mapping/Reviewing the organizational chart is a good exercise when the turnaround project start. This task will allows us to know who anyone is and what his/her role in the organization is. We are going to identify some “internal team members question marks.” I mean important team members that according to the organizational chart:
- They are bad organized and get into the chaos to their team. They used to make underperform the team.
- Those unorganized teams used to try to solve problems adding extra people to the team. So they used to be oversized.
- Centralized decisions used to show the inability to build strong teams and delegate decisions.
- Analyzing second level of the organizational chart, sometimes we could find a better staff than their bosses. We could find the people that really perform the job with the limitations imposed for the poor management that they have.
“Active” and “Radioactive” people
My friend and expert in turnaround Keith Wiedersheim calls thess active and radioactive people “squirrels” because they are people quite self-incentivized to get up in the organizational chart of the company. Thus, they used to have their professional development as one of their life priorities.
Those high motivated people in important positions of the firm can make success or fail the turnaround process. I used to identify two profiles for those people. The “active” people who are good managers and leaders who understand and support the turnaround process. They see the turnaround process as a professional opportunity. Then, we have the “radioactive” people that they do not understand or they do not want to accept the turnaround process.
Most of the time, “radioactive” people do not accept the changes because the turnaround process is reviewing the current situation, challenging people and status quo. They are willing to have more power playing the same “game” in which they feel comfortable but they are not well prepared to be challenged. Those people do not prepare for challenges and changes will realize soon that the turnaround rather than being a professional opportunity is a status quo threat. They will try to sabotage the turnaround talking with people close to them to get the opposition to the turnaround process. For those people every change will be a problem, and they will try to delay any action.
My recommendation is identifying quickly the “active” and “radioactive” people. Focus on “active” people to materialize quick wins. At the same time we can work “slowly” with radioactive people in order to communicate the new company direction and why. I mean given some time to get on board. I used to do this for three reasons: first, I believe that everybody merits an opportunity; second, it is faster to work with people that already know the firm that search for outside employees; and third, is quite unpleasant fire people. Unfortunately, my experience shows me that in the best case “radioactive” people can try to show you that they are on board but they are not. So they will take any opportunity to sabotage the project, even after the turnaround when the external team get out of the company.
Some organizations use the well known 360 degree feedback questionnaire once per year. In my experience the best 360 degree feedback is received Managing By Walking Around (MBWA). MBWA allows you to take a coffee, or having lunch, or just walking inside one department to see and talk about what is their point of view about the firm issues or improvement opportunities. Just when you get the trust of people and they are relaxed enough, you can get the true 360 degree feedback while 360 degree feedback questionnaires fail many times.
"Active" versus "Radioactive" People Profiles Review for Turnaround Teams
To avoid misunderstandings, we have to explain better the point of report the mistakes of other people. In some activities like turnaround, reporting mistakes is important in order to explain why we must change and being able to track the benefits of the implemented changes. When we are reporting mistakes, we do not add names because we used to focus in processes’ error rather than in people error.
Solving internal conflicts should be an essential task for managers. Nevertheless, it is amazing how many managers focus on managing their internal conflicts with other areas, with the mother company, and so on but they avoid getting involved in the internal conflicts of their teams. Many managers expect that conflicts are going to be solved peacefully and quickly between the parties. However, the word conflict means that the situation has been deteriorated importantly and the intervention of someone with authority is needed it.
Companies cannot allow internal fighting situations for getting more organizational power, blaming rather than solving problems, and so on. Those internal fightings reduce the productivity of the teams and create a bad workplace environment. If those conflicts are not managed quickly and properly, it will affect the company services and even the profitability. For instance, you could find people who know there are some issue with the invoicing process. But they do not act because they prefer showing that their invoicing colleagues are doing a bad job rather than supporting them and solving the issues.
Companies that need turnaround used to need new ideas, and organizational challenges. Decentralizing an organization challenge the status quo, promote some people to higher positions, and bring new people to the company. Well-implemented decentralization strategy used to raise firms’ agility, flexibility, responsiveness and creativity.
Some people could question decentralization for two reasons: first increase the salaries cost, and second control is more difficult. Inexperienced turnaround managers used to optimize part of the system like salaries costs rather the entire system. I mean many times expending a little bit more in salaries can bring important profits and accelerate the process to materialize those benefits. However, experience turnaround managers do not use to increase salaries cost importantly because they hire new people or make some promotions but at the same time they get out of the bus “radioactive” staff.
Old versus new blood
Turnaround is a transformational process. It is very difficult to transform a company or department without changes in the team. People used to listen to the “wake-up call” when they realize that the organizational chart is changing, some people leave their positions, other get more responsibilities, and new people with much energy and new ideas are arriving. One of the objectives of “new blood” is to reinforce the message that things are changing. Usually, new people in management positions are coming with a lot of energy and new ideas what can be a good “cocktail” mixed with some well-recognized company managers fully committed with the firm and the turnaround project.
We use many times “new blood” to decentralize the organization or to replace “radioactive” people.
One of the main reasons why many times the achievements of the turnaround process are not sustainable in the time are because the external turnaround team probably failed to build a strong internal team. The internal team has the mission to continue working in the new strategic direction defined in the turnaround project. So building a strong internal team should be one the main turnaround priorities.