As the coronavirus pandemic forces many companies into financial crisis, executives around the world are figuring out how to get their teams out of quicksand and back on solid ground. Large-scale change is necessary, and now is the time to act.
However, before you begin the turnaround process, it’s important to develop a turnaround change management strategy to ensure your employees embrace the new direction of the business.
Diagnosing the Situation
Our turnaround management consulting services include discoveries, financial restructuring, cost reduction and revenue improvement opportunities.
What is a Business Turnaround?
A business turnaround is the application of fundamental change to reverse failing results, specifically sales and profits. It’s meant to transform a loss-making company and turn it into a profitable one.
While there are many factors that could lead to such a decline, the global COVID-19 outbreak is a prime example. Especially for those in the service industries, the sudden downturn in customer activity will have both short-term and long-term consequences.
To avoid filing for bankruptcy or closing their doors altogether, executives can initiate an end-to-end business turnaround, taking any steps necessary to save their business and set it up for future success.
When we perform turnaround management consulting, a few of our most common approaches include:
- Selling assets
- Closing or creating product lines
- Making workforce adjustments
- Developing new pricing structures
- Developing new strategic alliances
- Making new technology investments
- Refinancing debts for cash flow improvement
These financial restructuring services and operations management consulting give businesses time to turn around and emerge from a crisis stronger than before.
Why You Need Change Management Activities During Business Turnarounds
With so much attention focused on the turnaround itself, why should you focus on change management during this time? In short, you can’t afford not to.
Unless your entire workforce is aware of and on board with the extreme changes that are about to take place, their resistance could undermine your entire effort.
Change management is a structured process and set of tools that help manage the people side of change. Any time a new idea is introduced, or a process is changed, hesitation is natural. Yet, when this hesitation is allowed to hinder performance, it can put your company even more in the red.
A change management consultant can help guide your organization through a business turnaround by employing effective communication, managerial training, change reinforcement and other strategies designed to increase employee buy-in.
5 Tips for Effective Turnaround Change Management
How can you use proven change management techniques to guide your company through a business turnaround and encourage employees to embrace new growth strategies? Let’s take a look at five steps that can make all the difference:
1. Conduct a Readiness Assessment
Don’t just hold an all-hands meeting and deliver the same shocking news to everyone at once. Instead, take the time to plan your approach more thoughtfully.
Start by conducting a readiness assessment to gauge how willing your organization will be to embrace change. Taking into account your culture, individual employees and other factors, ask yourself these questions:
- What is the scale of this change?
- How many people does it affect?
- What are the values and backgrounds of those affected groups?
- Will the change be gradual or radical?
- How much change resistance should we expect?
2. Create a Change Management Plan
Research shows that only 7% of executives take the time to develop a change management plan, even before making major adjustments to their business. Then, they wonder why their employees are unwilling to adjust.
Your change management plan should define the activities and roles required to manage every aspect of the change process:
- Change impact assessment
- Change leaders
- Change champions
When defining the scope of change, it’s essential to:
- Identify areas of resistance
- Remember to include customers and suppliers
- Establish milestones
3. Communicate the Right Way
You have your plan in place, so you’re ready to share the message with the world, right?
You’ll need to ensure your change management plan includes a comprehensive communication plan. Consider the various modes of communication you can use, and determine which ones are most appropriate for your message.
Effective communication takes into account four variables, including:
- Who is communicating the message
- Who your audience is
- What you’re communicating
- When you communicate it
4. Ensure Executive and Employee Buy-in
The best-laid plans are fruitless without a motivated workforce behind them.
Before you can move forward with your business turnaround, you must convince your executives and employees why it’s necessary and how it will benefit them.
One of the most effective ways to do so? Make sure they feel as though the turnaround is being implemented with them, rather than done to them. If they feel as though they are pawns in a game over which they have no control, their resistance level is bound to skyrocket.
That said, it’s important to encourage employee engagement and invite employees to actively participate in the change process. As they learn to navigate the new normal, request regular feedback and make adjustments to demonstrate that you value their opinion.
5. Align People, Processes and Culture
A successful business turnaround depends mostly on the people involved. Those people must feel empowered through knowledge and training that make the change easier to accept.
Rather than forcing a major change on employees and expecting them to figure it out, equip them with the proper resources. Make sure the right people are in the right departments and are using the right tools.
For instance, if you introduce new pricing and margin management strategies, your accounting team should undergo robust training on new processes and technology.
Be realistic and expect that business process reengineering takes time. In some cases, you might be asking employees to completely abandon a system or procedure they’ve used their whole career – the shift can be jarring.
To ensure the change sticks, it’s important to establish a company culture that anticipates and encourages continuous improvement at every turn. Whether it’s an internal setback or a worldwide pandemic that forces your company into a turnaround, a resilient culture can buoy you through the storm.
To learn more about changing your organizational culture, check out our post, How to Change Your Organizational Culture.
The Status Quo is No Longer Enough
We are in a major downturn, so companies should be acutely aware that the status quo isn’t good enough anymore. What is clear is that what worked a year ago, or even a month ago, will be insufficient to gain or even maintain market share in this environment.
That said, when planning a business turnaround, you don’t have time to waste. That’s why it’s imperative to have a turnaround change management strategy in place.
For more information on how our change management consultants and business turnaround consultants can help your business survive, request a free consultation below.