by Peter Stevens, TMA UK President, SME Capital
The Turnaround Management Association is the only organisation dedicated to people working in all aspects of business turnaround and renewal, both in the UK and globally.
Our primary focus in the UK is to provide members with regular events that furnish them with technical and market update information related to the world of turnaround and business renewal. Members are a mix of individuals and corporates that operate in the space. They can be lawyers, accountants, valuers, financiers or individuals who take roles to help businesses through a process that they may not have encountered before. Our members are not normally registered insolvency practitioners.
In the last few years our membership has grown as we have increased both the number of events, but also the geographical coverage. We have active committees in Manchester, Birmingham, Leeds, Reading, Bristol and the Gatwick area. These hold events locally focused on content relevant to their location. We also have active committees putting on events for NextGen (under-35) members, and a Network of Women. All of this added up to more than 50 events this year attended by over 2,500 members and other interested parties.
Being part of a global network also offers members the chance to connect with over 10,000 members and organisations across the globe and to attend their events.
What is turnaround? The dictionary defines it as a positive change or an improvement. But business turnaround doesn’t always mean a company is in difficulty – at least not yet. But no business can afford to simply carry on without embracing change at some point, and it is vital that businesses are able to adjust to changing market conditions.
The challenges facing high street retail is but the latest example of an industry that is having to rapidly adjust to the changing habits of customers. And the massive increase in consumer awareness of environmental issues will undoubtedly present a challenge for any and all businesses. Only those that recognise the threats and opportunities challenges such at these present will survive and thrive.
Change should be a constant for most businesses, but not all companies have the necessary skillset or mindset to manage this. So, while the best managers recognise both their strengths and their weaknesses and build an appropriate team to balance these, this is not always the case.
The role of turnaround in business
Why is turnaround needed? A failing, or inefficient business can quickly run into financial difficulty. But equally, a focus on changing specific areas within a business can lead to dramatic improvements.
Success can sometimes be hard to measure but can also lead to dramatic results.
What makes a good turnaround professional?
In my experience they come in all shapes and sizes, but here are a few of the common characteristics:
• Relentless attention to detail
• The ability to see both the big-picture objective, and the steps needed to get there
• Excellent interpersonal skills – they are often faced with managing change where a reluctant or nervous workforce needs to be convinced the plans are sensible
• Flexibility of thought and action – in a fast-moving turnaround, new facts can emerge, or additional problems appear that need to be dealt with quickly and effectively
• Good communications skills. There will frequently be multiple stakeholders to keep informed and more or less happy. Being able to get a message across clearly and concisely can be a real art, especially when jobs are at risk, and situations can become very emotional
Turnaround comes in many shapes and sizes. I was personally involved in one case that gives a flavour of what can be achieved. The buyer, a large multinational business, purchased what was regarded as an underperforming asset – namely, a large oil refinery. The business was deemed “non-core” by its previous owner, which had led to maintenance schedules being stretched and investment restricted, and over a five-year period the site became increasingly unprofitable.
The purchasers saw the potential and managed to buy the asset at a substantial discount – hardly surprising given the previous ownership regime – and set about restoring its fortunes. They installed an individual with a good experience and understanding of this highly technical industry. His background was important in gaining the credibility of the facility’s disillusioned workforce. But it was not the most critical factor in achieving success.
The plan was simple: restore the fortunes of the facility by focusing on the basics, and the early adoption of zero tolerance of poor work practices. Health and safety were vital, and restoring discipline was welcomed – but working closely with the unions was vital, as the facility had around 1,200 employees, most of whom were unionised. Putting health and safety back at the centre of the business was a good early “win”, leading to positive engagement from the unions.
Fixing the little problems was another postitive step. It wasn’t quite as simple as a lick of paint, but fixing numerous small issues gradually created a better environment. Within two years the site – a large industrial complex spread across more than 400 acres – began to produce improvements, outages of production were reduced and running times increased, leading in turn to positive cashflow and a return to modest profitability.
So the financial turnaround was a consequence rather than the driver of the turnaround.
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