(Published in HR InSights, December 17, 2012)
The cold truth of turnaround management is that jobs are either being lost or reconfigured. There is no getting around this reality. The challenge then, is to execute staff restructuring. Whether one refers to it as reduction in force (RIF), downsizing or rightsizing, the process needs to be handled in a prudent and practical way, with minimal disruptions to the operations of the organisation.
In this transitional period, management, perhaps understandably, is often inclined to soft-pedal the possibility of staff restructuring lest morale plunges, employees take flight or productivity decreases. Furthermore, the possibility that a merger may be the restructuring option of choice can further heighten paranoia regarding staff pushback.
Whether the turnaround process comes as a result of a business’s employees, systems or processes, it’s important to remember that the process is only underway due to a failure in organisational effectiveness. The business may be on the verge of insolvency, losing its competitive edge or encountering a serious downturn in revenue generation. Therefore, the turnaround, by definition, must mean an end to business as usual.
The duty of a turnaround manager is to ensure the organisation remains solvent and effective during transitional periods, as well as making sure it is populated with the skill sets, competencies and perspectives to help enable the organisation to fulfill its goals and meet the needs and expectations of its customers. The challenge is to expedite and negotiate this process of change so that any decisions made, weather the tests of dissension or charges of wrongful termination.
The first order of business is to make the workforce aware of the challenges facing the organisation, along with the intended processes and the messages of the intervention. In every intervention I’ve conducted, I’ve found that employees respect candor and transparency. They may not like what they hear, but they respect it. My approach has been to acknowledge the anxiety that accompanies my presence as a turnaround manager and recognise that, although I can’t eliminate it, I will do all I can to mitigate it by means of open and constant communication.
With the knowledge of the possibilities that lie before them and the understanding that there are no guarantees of continued employment, they have choices – to stick with it through the process of change, to demonstrate that they are indispensable, to resist and face the consequences, or to abandon ship. The one choice that is unacceptable and subject to immediate termination is subversion; there can be zero tolerance for the toxic personality. Any personnel actions during this period require a credible and reasoned rationale.
Below are three essential steps which demonstrate the painful necessity of restructuring:
- Organisational assessment – During this process of discovery, intelligence is gathered to help inform future decision making. This period focuses on interviews with staff and surveys of employees to offer insights into the organisation’s culture, the efficiency of current structural arrangements and the quality of staff relationships and internal collaboration. This is a key opportunity to assess the organisation’s human capital.
- Strategy – The immediate focus of a turnaround is stabilisation – restoring financial stability, focusing on core lines of business and shedding those lines and associated personnel that are not core to organisational mission. With stabilisation, a conversation can ensue regarding future strategic direction and priorities. It is in this context that the transition team will define the skill sets, competencies and perspectives required to advance the organisation and determine to what extent the current staff complement and configuration is compatible with future strategic goals.
- Implementation – All the theory in the world will not conceal that as well organised as the restructuring process is intended to be, it is ultimately a messy and painful process. Leading up to the final staffing decisions, the turnaround manager will likely contend with a good share of minefields – not the least of which are the organisation’s ‘sacred cows’ and the subversives. In the end, having navigated these stormy seas, the turnaround manager’s challenge is to communicate the necessity of the restructuring decisions in an objective and dispassionate way, while demonstrating authentic empathy.
Turnaround and stabilisation require solvency, continuity and effectiveness to have primacy over the interests of the work force. If the mission is to be achieved and the expectations of the customer met, the right people in the right positions with the right standards of performance need to be involved. Were that the case in the first place, the necessity of the turnaround may have been obviated.