Before joining the Randolph Sterling team, I worked for a turnaround management firm, helping distressed manufacturing and distribution companies. Many of these companies had a high level of distress, presenting special strategic management challenges. In some situations, a company may have even been either in or near bankruptcy when the turnaround consultants at our firm were brought in to devise and execute a plan of corporate renewal.

Our firm was usually referred by or hired by a bank that the distressed company had an outstanding loan to. When we began working with a new company, the first thing our team would do is create a turnaround strategy. In order to do this they had to identify the root cause or causes of the crisis. Some examples of these crises are poor strategic choices or poor execution of a good strategy, insufficient resources, and high operating costs or high fixed costs that decrease flexibility.

While each case is unique, the turnaround process frequently involves the following stages:

1. Initial Call to Action – Turnaround consultants are called in to manage the turnaround of the company.
2. Analyze the Situation – A situation analysis is performed by the turnaround management consultants to evaluate the chance of the company’s survival. Assuming the firm is worth turning around, some major changes may take place such as a change of top management, accounting practices, complete reformation of strategy, etc.
3. Emergency Action Plan – Decrease in departments and reduction of staff is usually made in order to achieve positive cash flow as soon as possible.
4. Business Restructuring – Once positive cash flow is achieved, the strategic plan is implemented, improving continuing operations. The management team can now begin to focus on achieving sustained profitability.
5. Return to Normal – The positive end result is that the company becomes profitable and the changes are internalized, while employees regain confidence as they help grow and restructure the business.

As you can imagine this creates much structural change within a company and only the strong survive. In order to help lead a distressed business out of the ruins, our turnaround consultants needed to keep the strongest employees at the distressed company behind them. These are the employee’s that are willing to take on the recommended changes and implement them as quickly as possible. Understanding efficient change management requires the ability to identify the signs of oncoming organizational change, which can in turn help better prepare for the change and implement policies that will keep the company on a positive growth path.

After working with a turnaround management company for many years, oddly enough, I began to work for a change management company. Only then did I understand the power of change and how it affects businesses, as well as those individuals working for the businesses. Regardless of the company’s age, size, or industry, change is a common thread and we must pay attention to it at all times. Companies who handle change well can be confident they will thrive, while those that do not may struggle to survive this fast paced world of change.

The concept of change management is familiar to business owners, managers, and most staff, but the true definition, and how successful they are at it, will vary dramatically depending on the nature of the business, the change the company is encountering, the people who are involved, and how involved those people truly want to be in the success of the change within their company.