Contemporary management requires Turnaround Management expects, who are seasoned captains to steer ships in stormy high sea conditions.
After this great economic melt down , the next phase requires CORPORATES TURNAROUND experts.
Turnaround management professionals will be in great demand. Again the Transformation leadership will play the most important role to generate confidence in the mind of the stake holders.
In such corporate crisis, the leadership elements of the business captain are to be displayed with high degree of business acumen and managing skill sets.
With poor balance sheet and negative net worth, strong and prudent leadership will be the only panacea for these organization. Strategic vision in terms of utilizing very scares factors of productions and properly allocating these inputs will be the real acid test for the turnaround business leader.
These under performing corporations has to be revitalized , rejuvenated and it requires a well thought after balanced turnaround management process.
According to Shamsud D. Chowdhury und occurs when ”a firm perseveres through an existence threatening performance decline; end the threat with combination of strategies, systems ,skills and capabilities; and achieves sustainable performance recovery. The obverse of performance recovery is failure and death.”
The above definition of Corporate Turnaround has the very in depth meaning and self explanatory.
According to Chowdhury there are four stages which requires to be monitored very carefully. And the stages are as follows.
1st Stage: Decline, 2nd Stage: Response Initiations,3rd Stage: Transition and the 4th Stage: Outcome.
At the 1st Stage the firm’s performance reaches its nadir the stock market and the balance sheet reflects it.
Then the 2nd stage ,swiftness of the change management comes in , the sense of urgency and corrective actions has to be initiated.
3rd Stage : the turnaround management mechanism, the transition process and the most complex and difficult stage. This is the stage when the turnaround experts experiments with different strategies, structures, cultures and technology. Sometimes ruthless smart sizing and downsizing happens in this stage .
The 4th stage is the outcome stage, outcome of all the management activities undertaken during the 3rd stage is realized. The outcome can be a success or failure.
Turnaround experts help to get in to break even as quickly as possible reduce the gestation time to profitability from a loss situation.
Governments should come forward with all fiscal measure to bail out these loss making organizations. Internal corporate governance will play an important role.
Turnaround management is a subset of Change management rather at an accelerated space. It's easier said than done , in past IBM, Chrysler,Nissan,GM all these corporations has been bailed out from deeper crisis, so nothing to worry about, again a big challenge for the management professionals.
The Original article is below for your ready reference.
FindArticles - Turnarounds: A stage theory perspective
Canadian Journal of Administrative Sciences, Sep 2002, by Shamsud D Chowdhurry