Every true turnaround professional wants every turnaround effort to end successfully. Unfortunately, some efforts are better not begun and the turnaround fails “for the right reasons”. Those reasons include the client not having a core business; secondly, the turnaround professional was contacted so late that the business can’t be saved and thirdly, maybe for a variety of reasons, shouldn’t be saved. And while no one enjoys seeing good people lose their jobs, these cases leave little room for second guessing. More troubling are situations in which good people lose their jobs because a turnaround manager veers from the fundamentals and commits one or more of these seven, maybe eight deadly sins.

1) Taking charge slowly. The newly hired turnaround manager has to take charge immediately. They should not start off gently by holding countless meetings, visiting all twelve locations, making numerous plant tours, conferring/discussing the situation with everybody, reading reams of memos, appointing numerous task forces. You were called in – probably later than you should have been – to clean up an ugly situation. Every hour, every day, every week things are allowed to fester, things get worse. Take charge! The troops are looking for a new leader and you are him or her, so lead!

2) Neglecting to act decisively and immediately. Many of the things that need to be done are obvious. If there is a large dead animal (division) on your front lawn, one doesn’t need to hire a consultant to analyze how and why the animal (division) got there. Quickly get the animal (division) off of the lawn! The troops know about the obvious problems and are just waiting for someone to give the order. Hey Mr. /Ms. Leader, give the order!

It is a good idea to set up some initial guidelines for decisions that can be made on the different levels in the organization and let manager’s move on them right away. While a turnaround manager shouldn’t give too much leeway initially - not until it is determined who the “A Team” is – it can be helpful to give the managers some guidelines and daily have them, after 5 p.m., report what they did. This gives them a chance to show the turnaround manager how they think and how they are becoming emotionally and physically involved in the turnaround effort. It also allows the turnaround manager to develop a relationship with those who will do 98% of the things that have to be done.

3) Not cutting deeply enough the first time. One 20 percent cut is better than four 5 percent cuts. Employees are better off knowing who made the A Team sooner rather than later. Some - the author included - say that it might be better to cut a little too deep and rebuild later if necessary. The “little-at-a-time” technique might make the turnaround manager feel better but he or she wasn’t hired to feel better. Do what is necessary and tell the remaining people that they are the “A Team” and get back to work. History and experience tells us that you are going to lose some “A Team” members if you don’t.

If the turnaround manager is having a hard time determining who needs to stay and who needs to go, they should try this procedure as a starting point. Senior managers should write on the top of a piece of paper the top 10 or 20 things that have to get done every month in their department. On the left side of the paper they should write down the names of the people in their department. Then they should put a check by the names of the people who can accomplish these most important tasks.

These lists can help a turnaround manager identify people who are not necessarily needed and those who can accomplish several tasks. Although this process won’t answer all of the questions concerning which employees stay and which leave, it gives a turnaround manager a logical place to start making these decisions. The process also identifies the critical operational items that must be addressed.

4) Not acknowledging that the Income Statement has absolutely nothing to do with the Cash Flow Statement. Every turnaround professional has heard the saying, “cash is king?” Every event is either a cash in or a cash out event. A turnaround manager will be darn lucky if there is enough cash to pull off a turnaround. Having net income would be nice but means just about nothing initially. Think cash for cash is king!

The turnaround manager signs all checks initially, so it shouldn’t take but a few days to learn about the existing controls or the lack of them, who does things on the spur of the moment, who plans, who is reactive or who is proactive. This program can be loosened up/criteria changed after the turnaround manager sees a few of the disbursement requests, gets a sense of what is happening and feels more in control. This also makes the turnaround professional’s daily review of the cash flow statement/requests for funds more meaningful.

5) Failing to spread and share the pain and problems. To win the loyalty of those who do the day-to-day work, the turnaround manager should cut out the limos, first class airfare, fancy lunches and private clubs for a troubled company’s executives. If sparing an expense from the budget ax sends the wrong signal, the expense should be slashed. Will the executives who lose the perks complain? If they do, the turnaround manager was just provided a great hint on who maybe doesn’t belong on the team. These cuts actually help the total team come together.

Although the opportunity to do so depends on the nature of the business, a turnaround manager should show up in blue jeans to help complete an inventory on a Saturday morning. Such a manager might be amazed at what he or she learns and the tremendous amount of loyalty the gesture inspires in the troops. A turnaround manager needs them, and they should know the manager knows that.

6) Withholding the truth and the bad news. Most people want to know the bad news as soon as possible so they can deal with it. People in the office and on the shop floor are no different. No one should read about the bad news in the newspaper. The team should be the first to hear about it and in full detail. Employees should also be told about what might happen in the future.

A turnaround manager shouldn’t worry too much about the people reading the Wall Street Journal who care only about their investment. While they are important, worry more about the people who are working so very hard to turn the situation around.

7) Not communicating clearly and constantly to all of the stakeholders. Salaried employees, hourly employees, wholesalers, customers, unions, suppliers, bankers, stockholders, trade press, public press all need to know what is happening and what is possibly going to happen. Communications is not a bad or a silly word. Next to cash, it is probably the most important ingredient to a successful turnaround.

New Management
A turnaround manager must continue to run the business while deciding what else must be done immediately and what can wait. The turnaround manager must accept the fact and let those around him or her know that some things that “just had to be done” and “made sense” in the past might just not make sense at this time in the company’s history. But whatever is decided upon to be done, it gets done through people. Hardworking, scared people who do not want to fail and do not want the turnaround manager to fail.

The hardworking people who the turnaround manager is now working with have known for some time that their company was under performing. A turnaround manager should be especially mindful not to come onto the scene and act exactly like the managers who got the company into the trouble that it’s in (Sin #8). Not being a sinner is very avoidable.