Team Capital Guest Blog by Jose Roncal, author of The Truth Behind the Numbers in Financial Statements and whose last book was described by Donald Trump as a “great read.”
In a turnaround situation it’s human nature — especially for financial managers — to focus attention on “the numbers.” But time and again I’ve found that it’s just as important to assess and evaluate the people on the management team, to make sure they are up to the task, motivated and committed to success.
Breathing life into a moribund organization starts at the top. It’s particularly important for the company’s leadership to be “on the same page.” Karl Albrecht, in The Northbound Train, his book on setting strategic direction, put it this way: “You must have a vision for your success and a direction for getting there. You have to know what train you are going to ride.” All the thinking and planning involved is useless if the people in your organization are not on board.
In order for a turnaround to work, you simply cannot afford to have people who do not support it, who want to keep doing things the same way. Even doing a better job of what you have always done will not be enough. You need real breakthroughs, and high-energy people willing to do what it takes to make things happen.
A “best practice” approach: Visit with key members of the management team early on, to share your plans and vision for the future, and have an open, honest discussion about what the future holds in store. If you have someone who truly cannot get aboard — or is giving you “lip service,” — you must counsel them to change, or help them take a different train.
One very effective way to make sure everyone is on the same page is to conduct a 360-degree evaluation of the leadership group. The emphasis needs to be on leadership skills and how they work with each other and in teams. There are typically four parts to a classic 360: 1) self-appraisal, 2) superior appraisal, 3) subordinate appraisal and 4) peer feedback.
A 360 can be very rewarding, because it surfaces issues that might otherwise remain hidden, and identifies behaviors that need to change. It can also spotlight skillsets that are missing or need to be beefed up. Note: It is difficult to conduct with people who know each other, so it is best to bring in an experienced outside consultant with “people skills” who can serve as a facilitator and hold people accountable.
Early adopters: The 16% solution
When it comes to adapting to strategic changes or accepting new ways of doing things, the Rogers Innovation Adoption Curve applies. This is a natural, predictable and sometimes lengthy process. Simply put, roughly 16% of people will “get it,” about 68% will eventually go along, and about 16% or so will be laggards, so set in their ways they may never adapt.
The mistake some managers make when implementing a new initiative is to focus their attention and energy on the laggards, in an effort to convince them the idea is a good one. A much better strategy is to watch for those individuals whose eyes light up, who “get” what you are driving at — and recruit them to help sell your ideas to the middle-ground 68% who need more proof.
Note: You can see the same concept at work in organizations that run small pilot programs or beta tests in a single location or division, to get a quick “win” they can use as proof of concept. That helps get “buy in” from naysayers for anything from new products or technologies to new ways to handle accounts receivable.
Develop talent profiles
It’s one thing to fire someone who’s had their hand in the cookie jar, or who’s playing back-channel political games that sabotage what you are trying to do — they deserve to get the boot. But it can be gut-wrenching to let go of someone who just doesn’t “get” the direction you want to take the organization. In that case it’s best to be fair and help them find a situation that’s better suited to their needs.
Inventory the talent you have in the organization, trim away those who don’t fit, and focus on retaining those people you want to keep. Consider conducting “stay interviews” with those you want to retain, to identify what it will take to keep them happy. (In most cases it will be challenging work or more responsibility, not more money.)
Of course you are likely to find yourself with gaps to fill. It’s much better to hire the best, mentor them and motivate them to work to their highest capabilities. Because time is of the essence, it’s often best to work with an outside organization, such as a search firm, who can work quickly to find the type of employee you want on your team.
Take the time to develop a talent profile for each key position. It needs to go beyond the typical job description, to consider personal attributes and natural strengths, not just technical skills. Are they team players? Do you need an extrovert in the role? Are they entrepreneurial by nature? Detail oriented or an “idea person”? A good working definition of strength is “consistent near perfect performance of an activity,” according to Now, Discover Your Strengths, by Marcus Buckingham and Donald Clifton. Their research shows that achieving peak performance on the job requires that employees maximize their strengths and natural talents. Reading their book will give you a head start on building a better team.
In summary, to make sure your turnaround stays on track, put the right people on the train. If you need help with any of this, don’t hesitate to seek help from a conductor.
As you explain, the ‘people’ element is just as important, if not more so, than the numbers in developing and implementing a turnaround strategy. It is not uncommon for an entire strategy to come undone just because of a few ‘naysayers’ – we’ve seen it happen too often. Great article – hopefully it strikes a chord with some of those who are on the turnaround track.