Companies today are facing more challenges than ever before. New technologies and markets, sophisticated competition, economic downturn and constantly changing top management are just a few of the headaches that many large companies need to deal with on a daily basis. Therefore, it shouldn’t be a surprise that this mixture of internal and external stress can lead to organisational breakdown. A first sign of a problem is usually not meeting departmental targets. However, when the interdepartmental integration starts dissolving, the organisation is really in trouble. This is also when a blaming culture surfaces leading to even further organisational degradation with diminished returns and a possible break up.

Not all companies experiencing same levels of organisational stress have difficulties. Some businesses seem to be able to adapt better to these circumstances than others. What puts them head and shoulders above the rest is their internal management systems and communication paths. These companies have invested time and effort in developing a structured approach to managing operations and ingrained it in the fabric of the organisation. This means that regardless of any changes taking place (be that new top management or financial crisis) their structure of management, coordination, collaboration and communication remains intact. In companies without ingrained management systems, the organisation relies on single people to move the business forward. If these get exchanged or experience too much stress then, the organisation crumbles as there is no one to push it forward or even to maintain status quo.

However, even in these situations all is not lost. It is possible to turn around a struggling organisation. It requires the commitment of top and middle management and a clearly set out goal. The process itself starts with the development of a basic corporate wide management & control system – a quick fix that opens communication channels within the organisation. It allows for the creation of an environment where operational control becomes business as usual. Secondly a more detailed development of departmental management systems takes place. It focuses on output and performance control with an interface to the global management system. Alongside the development of these, a behavioural change program is taking place in the form of management coaching. It helps the key people to understand what they have to do and why. The final step of a turnaround program is ensuring sustainability of the implemented changes. Many turnaround programs also include operational process improvements. These are an add-on that can propel the organisation further but are strictly speaking not necessary for a successful turnaround.

Unfortunately turnaround engagements are not a fire and forget type of engagement as often can be the case with typical improvement projects. They require directors and top managers to take an active role in the engagement thus breaking the pre-existing cultural habits. They also often uncover unpleasant facts that need to be resolved without assigning any blame to parties involved. However, if the top managements’ commitment, backing and involvement are in place, the success rate is near 100%.

By Peter Kristoffersson