Thought Piece

For a large company with a public profile, the story could well go like this: leaks reach the media and give wider credence to the already circulating rumours that x thousand people could lose their jobs: and certain factories/sites will close: official confirmation proves the rumours to have been eerily accurate: flurry of media protest from union leaders committed to protecting jobs/services: counter media statements from management reassuring everyone that all will be well in the end.

As the media moves on to the next story, middle management is tasked with enforcing the actual redundancies. This can have a negative effect on both those who lose their livelihoods and those who have to take them away.

But it is possible to create an outcome where everyone, even those made redundant come out the other side, with morale and reputation intact, even enhanced. Any restructuring involves process planning even if you can't determine the outcome. A first principle must begin with communication — through a variety of channels, not just through the side entrance of a national newspaper. At one company we worked with, the first thing we did was install state-of-the-art Dyson airblade hand dryers in the washrooms.

This was a clear signal that this facility was not closing down but being made more efficient. Another novel way to speak to employees is to speak directly to them, not just to comply with employment law but to genuinely tell them the options that are under consideration. This can involve going through a range of scenarios and explaining what would determine which one would come to pass.

In one instance employees were told that the site would close unless substantial savings could be made. In this case, talking to the staff it became clear there was enthusiasm for the place to remain open and an acceptance that budgets had to be cut and radical changes made.

All kinds of efficiency improvements can be drawn up and executed better with inputs from those on the job and while this process is ongoing, you can go ahead with the required restructuring. We are often pleasantly surprised to find that people volunteer for redundancy. People realise the need for jobs to be restructured and some decide of their own volition that it is time to call it a day, especially when they see that their roles are likely to change. Another clear winner is to clearly lay out the process of defining new processes and targets. Again, those who feel they'd like to stay, begin to position themselves.

Banks are not charities. But they do calculate the lifetime value of the customer and they understand the reputational risk to themselves of the slash and burn exercises they are sometimes accused of.

That brings us to the role of the banks, so often the largest creditor and certainly the one with the most intimate knowledge of how a company is faring. We all love a stereotype and the heartless, faceless bank pulling the plug on sound businesses over a minor blip sits deep in the business consciousness. But not all banks fit this caricature. "We want to work with management of a business facing difficulties to help identify the issues and provide solutions to get them back on track," says a senior manager with a leading retail bank. "We can make the most impact when the problems are identified early. We are keen for management to be open with us."

Banks are not charities. But they do calculate the lifetime value of the customer and they understand the reputational risk to themselves of the slash and burn exercises they are sometimes accused of. Most solutions to business difficulties involve access to more funds and/or different products (hedging, leasing, factoring) and that all adds up to continued and profitable involvement for the bank.

A Repositioning Turnaround may mean divestment of a troublesome subsidiary. It may mean embarking on (yet another) cost-cutting exercise, including turning away revenue opportunities if they are not of a sufficiently high margin. It most certainly involves a first step of getting an impartial and pragmatic overview of what the problem actually is, from Turnaround Professionals who also know the kind of language with which to talk to banks. The moment you take this kind of decisive action, you're likely to discover that there's no crisis, no drama, only urgent action that must start now.

Peter Charles 2010