Turnaround leaders deal with both tangible elements (finances, operations, strategy, process improvements) and intangible elements (leadership, team changes, coaching, development, cultural change) simultaneously. This blend is evident throughout the entire process, and this duality of the role of the leader is critical for success.
My experience in turning around stalled projects is in the resort/shared-ownership industry. However, it is apparent that these lessons can be readily applied to most sales organizations.
The turnaround leader is an external catalyst for change; his or her arrival provides a focal point around which to distill the organization's concerns. The turnaround leader singularly expresses the organization's dissatisfaction with the status quo. Through initial interactions and autocratic involvement, he or she creates a sense of urgency and awareness of the need to change. Finally, he or she helps to drive changes by making the tough decisions and, eventually, by refining the skills of the team. Eventually a turnaround leader may even reach the point when his or her involvement is no longer required.
Being a turnaround leader mirrors the entire turnaround process. First understanding, then breaking, and then fixing the business in a new form is a succinct description of the turnaround process.
Leadership in turnaround balances judgements about performance and expectations. The turnaround leader must not only assess what is achievable with the available resources but also communicate his or her findings both internally and externally.
Internal communication is critical to getting a stalled project back on course, while external communication is critical to managing stakeholder expectations. Thus, the turnaround leader acts, on the one hand, as an agent of change on behalf of the stakeholders and, on the other, as a reality check for the stakeholders on behalf of the resources under his or her care.
Finally, leadership in the turnaround process relies on personal experience, as it does in any other setting. The strength of a leader results from the way in which his or her combination of practical skills and experience is applied to the problem. This, in turn, is driven by his or her personal style and qualities.
The Nature of Leadership
There are major differences between managers and leaders. Managers manage tasks that can involve people; leaders lead the people who manage those tasks. Managers generally have stronger analytical skills, while leaders need to have analytical skills that are maximized by their social/people skills.
Managers can be leaders—and most often are, to some extent. Managers who can also lead are themselves better managers.
The more you seek to advance in the corporate world, the more leadership skills you need to develop.
The importance of leadership in changing the momentum of a stalled project is paramount. The leader of a turnaround assumes a significant level of responsibility and accountability for both the project and the team.
Turnaround situations in the resort business are the result of the project failing to meet its sales goals. Before the specialist is called in, there have invariably been attempts to "turn the business around" using existing in-house talent, and these have also failed. The line personnel are scared of losing their jobs and generally have been made promises that management has, for whatever reason, been unable to keep.
The turnaround specialist enters a hostile arena. The personnel are cynical and skeptical of the "outsider" who now will be determining their and the company's future.
Leadership 101
In a turnaround setting, there is a tremendous responsibility on the leader. If the wrong decisions lead to failure of the project, then the leader has failed to handle his or her responsibilities. On the other hand, if those decisions lead to success, then while the leader's decisions were the right ones, the credit goes to the team because they have successfully executed the plan.
A true leader accepts responsibility and deflects praise.
The Ingredients of Turnaround Leadership
Hands-on involvement from day one is clearly evident and embodies an approach that is intended not only to take control of the techniques that will stem the project's losses but also to send a clear message to the team about the leader's role. The order of tasks may vary slightly depending on the prevailing circumstances. They usually encompass the following:
- Establish credibility with the team as quickly as possible—having a reputation helps.
- Do not "sugarcoat" the situation for either the team or the stakeholders. It is vital to identify the issues and look for solutions.
- Determine the financial viability of the project.
- Determine why the project is stalled or, as is more frequently the case, not living up to expectations. Consider whether expectations are realistic.
- Find the "skeletons." Look under every rock, be skeptical of all information, and don't take anything at face value.
- Listen to everybody's opinion—even if you know it is wrong.
- Identify the staff that you think can be retained.
- Determine which programs or products are profitable and which need to be cut in the short term to stem cash burn and in the long term for the project's future viability.
- Look for redundancy in responsibilities to determine which staff cuts can be made without crippling the organization.
- Determine if current reporting systems are accurate and supply the information needed for decision making. If not, create reporting that accurately measures what you are trying to manage.
- Stop the financial bleeding.
- Look for corruption (e.g., kickbacks to vendors, phantom staff).
- Create the plan (for short-term survival as well as long-term success) and determine, based on the human and financial resources available, how much you can accomplish in the shortest amount of time.
- Prioritize accordingly. Timelines are negotiated with the developer, and this process often requires "upward management" to reset expectations, which may also involve the lender.
- Set realistic goals that are time bound and get buy-in from the developer and the team.
I realize "day one" is a bit frightening for all involved. In my case, as I go through the first meetings, I have to be skeptical of everything and everyone until I begin to sort out the players, their agendas, and the basic problems. I try to put people at ease while at the same time letting them know that the situation is serious and that it is my job to act in the best interests of the company at all times because by doing so I am acting in the best interests of the people.
If I save the project but some people have had to go in order to make the project work, then I have done the best for the people that have been retained because they have their positions—and those who have not been retained would have eventually gone anyway, or the project would have failed, and everyone would have lost his or her job.
To be continued...
About the Author:
Ron Frank is known throughout the shared-ownership resort industry as a top-level executive with a straightforward approach and a "can-do" attitude. With more than 25 years of experience in the resort industry, Ron has held executive positions with such industry leaders as Fairfield, Shell Vacations, Sunterra Resorts, and Radisson Hotels and Resorts.
As a Regional Vice President of Sales and Marketing for Sunterra Corporation, Ron was part of the team that brought the corporation out of Chapter 11. With an extensive sales and marketing background specializing in startups and workouts, budget management, and strategic planning, Ron is highly regarded in the areas of staff planning, recruitment, supervision, training, evaluation, and organization, and he is recognized as having a natural talent for managing and developing all levels of resort staff.
An innovative thinker with extensive international experience, Ron has been responsible for creating and managing sales and marketing teams that have produced in excess of $67 million annually. Ron is a Registered Resort Professional (RRP), the highest designation given by the resort industry's professional organization, the American Resort Development Association (ARDA).
