Managing a Turnaround: Leadership Requirements

It is not uncommon for new leaders to be hired or promoted with the expectation that they will turn things around for a business or operation. Turnarounds require leaders to make difficult decisions, “right the ship,” and make the business or operation successful again. It is critical for such leaders to recognize that the behaviors needed in these situations are very different from those used in a stable or growth-oriented environment. The personality and competencies of turnaround leaders should be well suited to navigating and taking on dramatic change in short periods of time, whether it is for a team, a strategic business unit, or an entire organization.

A turnaround usually involves reducing costs, such as by cutting staff or exiting non-core businesses and non-essential activities. In addition, most turnarounds require a sharpened focus on an organization’s core skills and products. Returning to what made the organization successful previously is usually the first step in restructuring for future success. New leaders in successful turnarounds often come from outside the company. As outsiders, they can bring a fresh perspective so legacy processes and allegiances do not undermine the rigorous decision-making that must be undertaken.

First and foremost, leaders of turnarounds must possess the courage to withstand criticism, the stomach to make personnel changes, the fortitude to stay the course, the head to stay above the chaos, and the vision to know when success has been achieved. These are extraordinary capabilities, and the job is not for the faint of heart. Second, new leaders must know that they will be standing alone at times, supported only by their manager. It is not unusual for people to be resistant to change. As a result, there is an inherent element of criticism or mistrust any time new leaders attempt to change existing conditions.

When undertaking a turnaround, leaders should consider the following actions.

Apply the right leadership traits.

• Be bold and transparent in declaring that changes will take place.
• Ask for support, but expect resistance.
• Be forceful yet empathic.
• Take charge and give direction.
• Emphasize working with a sense of urgency.

Create a change coalition.

• Identify quickly those you can rely on to execute the turnaround plan.
• Maintain a tight inner circle.
• Quickly deal with detractors or resistors.
• Be clear about expectations, roles, responsibilities, and decision-making authority.
• Be clear about maintaining veto authority.

Know what success will look like.

• Identify what must change for success.
• Create a vision using laser focus.
• Create concrete plans with short timeframes.
• Identify initiative owners of the plans and timelines.
• Make obvious changes quickly.
• Celebrate small victories to maintain morale.

Engage in war room execution.

• Hold daily meeting updates on progress made toward identified goals.
• Hold plan owners accountable for meeting milestones.
• Know when to get involved to accelerate issues and when to stand back (use this as an opportunity to identify and develop people).
• Revise the plan as necessary to meet the ultimate goal of saving the business.

Claim victory.

• Recognize when success has been attained.
• Celebrate the righting of the business or function.
• Begin returning to a more stable operating environment.
• Identify leaders to guide the next phase of the organization.

These leadership behaviors may come across as harsh or severe; however, when a business or function is on “life support,” there is little time for collaboration, reflection, or being overly empathic. It is a time for action, operating with a sense of urgency, and preventing distractions and low-value issues from interfering with a team’s singular focus on saving the business.

Turnarounds are among the most difficult leadership challenges. Leaders must have the willingness, courage, and fortitude for such a difficult task. If they do not, they are better off looking at other leadership possibilities. Not everyone can lead a turnaround, and many turnaround leaders cannot grow a business. Leaders in these situations must make sure the fit is the right one—both for them and for the organization.