Last time, we covered why shrinking is essential and why half-measures prolong the pain. Cuts must be real, deep, and courageous.
Now we’ll tackle the cultural side of turnarounds: communicating hard truths without sugarcoating, and protecting the few critical people who hold up the entire structure.
Problem #7: Sugar Coating
Communication is critically important. Ideally, the team needs to know there is a problem, that management recognizes the problem and has a plan to address it. The message should be, “We have problems, but we know what to do… We have a plan… It will be hard… But if we do this thing right the first time, we won’t need a second or third bite at the apple to fix things. We are finished with the medicine. We worked hard to anticipate the most realistic scenario for cuts and reorganization because we wanted to make the cuts once and get started rebuilding. As of today, we do not anticipate more reductions in the workforce, so you are the people who will help us solve the problems and return to profitability. The reality is we have done harder things in the past and, with your help, we will be successful with this, too.”
If you don’t make the initial cuts deep enough, the second order consequence will be additional cuts in the future. Everyone that is left after each round is sitting at their desk with a guillotine over their neck wondering, “Am I next?” Guess what those people are doing…Not working. They're looking for another job. As the leader, you need your retained employees to be really sad for about 24 hours and then get back to their jobs. A never-ending stream of successive restructuring undermines trust and ultimately results in a death spiral.
Problem #8: Protect the Pillars
It is inevitable there will be a serious impact of the culture of the organization when you initiate the turnaround. You have scared your team, and they are trying to sort out what it means for them. There will be breakage and people will leave that you wish would stay.
Most companies have three to five people that are really, really critical. These are the people I'm going to sit down with, one on one. I will tell them they're critical. I might tell them they're protected. I need to bring them inside the tent so they don’t make up a story and eject. They need to know they are critical to the turnaround process. I am asking them to help me. True critical players (these people might be the “bone” I referred to in #6) need to be massively reassured, because if they walk out, the dominoes start falling and the rebuilding gets exponentially more difficult.
Up Next: The street-fight reality of turnarounds, and why you need great advisors, great people, and great optics to land the plane. Read it here.
