The importance of a long-term outlook in a successful company turnaround
November 5th 2015 | Posted by phil scott
When a company finds itself in the midst of financial difficulty those in charge are responsible for making change happen. A turnaround is necessary and it needs to be strong, far-reaching and most importantly, effective.
There are many factors that contribute to a company entering a period of failure, both external and internal. On the outside; are sales falling; are customers buying more from your competitor than they are from you; are your products and services failing to keep up with what the market wants or needs? Within your company; are you overspending unnecessarily; are you running non-essential projects that are draining your resources; do you have skills gaps or shortages within your workforce that are costing you time and money?
When a company arrives at this point, whatever combination of factors has pushed it there, the turnaround process needs to begin immediately to save the organisation. In situations like this, there are often competing viewpoints from those executives leading the turnaround – should we focus on the long term goals or make short term, quick-win changes? What will bring the most success and the biggest impact – strategy or tactics? Guiding a struggling company smoothly through a turnaround is no easy task. It requires competent leadership, clear objectives and decisive action. While short-term actions may reap immediate rewards (such as increased cash flow), looking at the long-term picture and wider agenda is vital. It is possible to blend the two together and find the perfect balance to bring your company back to profitability.
Here at Executive Recruit we understand that this is a challenging time for any senior leader. However, this experience can benefit your professional learning, develop your skills and increase your knowledge in this area. Here are some points to consider to help the company maintain a long-term view:
Act with caution, but do not freeze! – Even if the financial situation is dire and you believe immediate action is needed, it is always best to spend time reviewing your plans. Companies need to ensure they have chosen the most suitable areas in which to cut back and have prioritised and ring-fenced those areas to keep. There is no point scrapping an activity in the short-term, only for the repercussions to be worse in the long-term. Balance is the key – make good long-term decisions, but keep the short-term momentum going.
Allow the plan to evolve – Sometimes it may be necessary to deviate from your original turnaround plan, so give yourself permission to do this. Situations can change – a project may not be progressing as needed, staff may move on, company products or services may need additional development. As important as planning is, don’t be afraid to review your strategy and tailor it to the situation as it progresses.
Assess skills gaps and shortages – A company turnaround can often highlight that a business needs to develop its workforce in order to deliver change. This could mean training and development of current staff or recruiting new talent who can successfully steer the company forward. Spending on executive recruitment in the short-term is an excellent example of the importance of taking the long-term view, as it is these new executives that can improve the company’s financial position in the long run.