The Right People are Fundamental to any Business Turnaround

Author: David Shedd

Your business turnaround is underway…

  • You have defined the problem.
  • You are working on the plan.
  • Now, you need the right people who are capable and want to implement the plan.

In every turnaround I worked on, the “wrong people” were let go, quickly but fairly and with dignity. In truth, they were below “B” players and should have been let go years earlier. They were the people who just did not get it. They were people who could not implement the plan. And they were the people who did not want to implement the plan.

Start near the top with senior managers. In all four turnarounds, the “lead elephants” were the first to be let go. In hindsight, this was not surprising because they were the ones who got the business in trouble in the first place. They were the ones most resistant to change.

In evaluating the right people to execute a turnaround, there are several things to consider.

  1. Attitude matters most. I would choose someone slightly less talented who cares and believes in the plan as well as the company, over a more talented colleague with the wrong attitude.
  2. Don’t be afraid to move good people with the right attitude into different positions. They may just bloom. Who would have thought but we had a salesman and an engineer each become excellent operations managers!
  3. Take every opportunity to trade up. Replacing non-performers with high performers is in the best interest of everybody and will save you countless hours and headaches.
  4. Don’t be afraid to cut to the bone. These are business turnarounds and the viability of the business is at stake. Without a viable business, no one has a job. Sometimes, even good people have to be let go so that others can remain working in a viable business.

So what does this mean for you as leaders of a business?

I am not naïve enough to think you are going to fire yourself. Instead, I suggest that you look at your top team.

  • Does your top management team have the collective “DNA” to get done what needs to be done?
  • Are each of your managers really the right people, with the right talents and personality, to do the right role that is now required of them?
  • Are each of your managers committed to the turnaround plan?

If not, then what are you going to do about it?

The first round of lay-offs or firing people is a shock to the company. But, done right, it will help introduce a measure of accountability into the culture where it has been lacking. Realize, however, that there will likely be a second round of lay-offs as you discover a number of people who might not want to be in this newly accountable and more demanding company.

One final anecdote from one of the companies we turned around.

After the first few weeks of rolling out the plan, one of the top managers came to give his resignation. He did not have another job at the time. But, he realized that he just did not have what it would take to work in a business environment where you are being held accountable to perform.

So, which of the following was our response to this person?

  1. We accepted the resignation, saving ourselves severance and other costs.
  2. We thanked him for his honesty. We told him that we would lay him off with the severance package we were offering all employees at that time. And we would help him to collect unemployment.

The answer, of course, was B.

Even in the midst of a turnaround and lay-offs, you need to do the right thing for the people on your team. And you need to be seen doing the right thing for the people on your team.

Dignity and respect matter.

David Shedd is an accomplished sales and operations executive with a track record encompassing manufacturing, distribution, specialty retail, and turnkey services. He was most recently a Division President with Airgas, a $5 billion producer, distributor and specialty retailer of industrial and medical gases, welding supplies, and safety products serving the life sciences, aerospace, manufacturing, food and consumer markets. Previously, David was a Division President with Oldcastle Precast, a $900 million manufacturer and installer of engineered concrete products. He earned a MBA in Finance and Multinational Management from The Wharton School, as well as a Bachelor degree in Mathematics from Williams College.