HR's Role in Business Turnarounds

HR’s Role in
Business Turnarounds
The HPO Global Alliance ©2017
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HR’s Role in Business Turnarounds
Dave Hanna
The HPO Global Alliance
“Many business leaders today are challenged
to turn around their businesses
due to massive changes in the marketplace.
Turnarounds seldom are accomplished by a
brilliant individual acting alone; they require
the teaming of different resources and efficient,
supportive organizational processes
and systems. HR professionals should have
the skills necessary to take the lead in getting
people and systems better synced to
produce a business turnaround.
Here are six examples of leaders who navigated
successful business turnarounds and a
brief description in each case of what their
HR managers did to add value to the effort.
1. Communicate a clear vision and
strategy: The president of a large European
organization aimed to better align
how country organizations collaborated
in new market dynamics in Europe.
The president kept getting feedback
that associates in the different countries
didn’t know what the strategic priorities
were. This lack of clarity led to very
diverse (and often counterproductive)
actions that reinforced the status quo.
Although the president had announced
the strategic priorities in speeches, executive
meetings, and memos over several
months, everyone still operated by
the old code of conduct. Finally, his HR
coach said to him, “People don’t pull out
a memo to refresh their memory about
what’s important. What they need is a
short statement that they can hold in
their mind’s eye as they work.” At the
president’s request, the coach went
through the various documents and produced
a short three-paragraph strategy
statement in the president’s own words.
As this new document was distributed
and discussed, the confusion about
strategic priorities went away. For
example, one general manager complained
that the European R&D organization
wanted to introduce a new
product under a brand name that this
manager’s market research indicated
was a very weak position vs. competition.
“What can I do?” he asked.
His HR coach asked, “Is there anything in
the strategy that justifies your position?”
The general manager replied, “Well
there is that priority about stopping
any profit hemorrhages. That’s it! What
R&D is asking us to do is off strategy for
our market.”
The new product enjoyed a successful
launch –under a different brand name–
and is still a profit contributor many
years later.
2. Lead by example: Members of an
executive team, in response to an
economic recession, voluntarily suspended
their own salaries at the same
time they had to reduce employee
wages to weather the storm. Associates
in this company were impressed
that their leaders were sacrificing
along with them in this tough period.
Building on this goodwill and the clear
message of the seriousness of their
situation, the HR function organized
workshops in all corners of the company
to identify tangible ways to cut costs
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so that everyone’s normal wages could
be reinstated as soon as possible. The
brainstorming moved quickly to implementation
and the company got back
to normal faster than its competitors.
3. Align processes and systems to fully
support vision and strategy: Leaders
at a premier agricultural products company
have a simple, straightforward mission:
“to produce (our) products and
services which consistently achieve the
quality and service expectations of our
customers in a cost effective, environmentally
responsible manner.” Two governing
principles support this mission:
• Don’t use force
• Keep your commitments
HR has taken the lead to shape an organizational
infrastructure to align with
the mission and governing principles:
• One production line is shared as
needed by two product groups
(bulk product and finished product).
• Individual goals and teamwork are
focused on the key factors to fulfill
the mission.
• Every associate is personally responsible
for getting the training
they need, scheduling their time
commitments, upholding performance
standards, and contributing
to fulfilling the mission and governing
principles.
• Differences in values and work approaches
are acceptable, providing
those differences do not detract
from fulfilling the mission.
• Associates exchange information
freely with all stakeholders and
help as needed to ensure everyone
succeeds.
• All associates live, speak, and endeavor
to find the truth.
This company’s “turnaround” has been
to convert a successful start-up into a
high performing, rapidly-expanding operation
that has become the world’s
leading food processor in its product
category. Its innovative and productive
work culture has transformed traditional
“hired hands” in the farming
industry into loyal, skilled, and committed
contributors to its success.
More than 97 percent of the 4,000
seasonal associates return each year
despite the fact they are employed
only four months out of the year.
4. Connect emotionally with associates:
The associates and leaders of a
South African financial services company
collaborated to assist a recentlyhired
associate who was experiencing
several crises simultaneously. This associate’s
husband died suddenly; she was
facing the likelihood of defaulting on her
home mortgage; and she had just begun
treatment for newly-discovered cancer.
HR learned of this woman’s desperate
situation and organized contributions
from the company and voluntary contributions
from associates. HR also managed
a flexible work schedule tailored
to her unique needs. This woman has
emerged successfully from this emotional
pit and the bond between her
and the company couldn’t be stronger.
The HPO Global Alliance ©2017
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5. Overcome obstacles: A European
producer of machine tools, laser technology,
and electronics was facing a 40
percent drop in sales during the 2008
recession. Company leaders were
firm that no associates should be laid
off. But how else could this company
make it through this economic hardship?
The HR function managed a plan
to reduce work hours for all associates.
Associates responded very positively
to the company preserving their
jobs when so many others in their
region were being laid off. “Tightening
our belts is a much better alternative
than losing our jobs,” one associate said.
The silver lining in this dark cloud was
revealed when the recession ended and
the company could immediately go back
to full production. Other companies,
who had laid off experienced workers,
now had to hire new employees
and wait for them to get up to speed.
This company’s sales increased 50 percent
in the first year of its recovery
6. Celebrate success and inspire continuous
improvement: A leading pharmaceutical
company, led jointly by its president
and HR leaders, invested heavily in
changing the mindset of its top leadership
echelons from being “good managers”
to being “effective leaders.” Twelve
months later under the new leadership
focus, a record sales year was celebrated.
The next year, the company went even
further, implementing a process in which
each of its top 250 managers aligned
their key priorities with specific points
in the company mission and with priorities
of their functional colleagues and
their cross-functional team colleagues,
and with their boss. This tight alignment
with the mission delivered yet another
record sales year and a growth rate
four times as fast as the global market.
Essential HR Competencies That
Drive Turnarounds
Drawn from these case examples, here
are four essential competencies for HR
professionals who coach and consult with
business leaders who seek a turnaround:
• The Competency to Diagnose: the
ability to see what others may miss in
how the organization is really operating
and to identify the multiple cause and effect
streams that affect the bottom line.
• The Competency to Apply Organization
Theory: an understanding
of the theories, research findings, and
practical experience that can predict
how people will work together in a
variety of situations and the ability to
apply this understanding in a practical
way that delivers improved results.
• The Competency to Design High
Performance Organizations: knowing
the results of past experiments with
organizational form in motivating and
regulating work interactions so that
reshaping strategy, processes, systems,
and structures produces better results.
• The Competency to Coach Business
Leaders in the Dynamics of a Turnaround:
knowing the organizational
dynamics around change, the emotions
that change brings out in people, and
business leaders’ personalities so that
your advice, coaching, and feedback will
help make the turnaround a success.
Review the following table to glean a few
more ideas of how you might add value
to your leaders’ turnaround attempts.
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WHAT BUSINESS LEADERS DO
1. Communicate a clear vision and
strategy to pursue
WHAT HR PROFESSIONALS DO
• Monitor industry, customers, and competitors to be able
to discuss intelligently what future opportunities could be
explored
• Work with leaders to articulate the vision and strategy
• Coach leaders on ways to build understanding and commitment
2. Lead by example • Build leaders’ awareness of how stakeholders view the leaders’
behaviors
3. Align organizational systems to
fulfill the vision and strategy
4. Connect emotionally with
others
• Point out situations where leading by example is critical
• Provide feedback on how well leaders “walk the talk”
• Be up to date on organization design principles and available
tools that may be used to fit everything together
• Diagnose the whole system’s dynamics and root causes to
understand precisely what helps or hinders the goals
• Facilitate work sessions to align processes, structures,
people development systems, and rewards with vision and
strategy
• Gather feedback on how things are going via opinion surveys
and discussion groups and share results with leaders
• Organize discussion forums with customers, suppliers, employees,
etc. so that leaders get first-hand feedback on how
things are going
• Point out critical incidents and coach leaders how to connect
emotionally with others for positive outcomes
5. Overcome obstacles • Coach leaders to understand first the realities and their
root causes of the situation
6. Celebrate success and inspire
continuous improvement
• Facilitate the creation of an implementation plan
• Monitor the implementation until the turnaround is successful.
• Coach the leaders not to rest on their laurels, but to renew
the entire process (1-6) as the evolving market dictates.
• As a facilitator, constantly ask groups, “What have we
learned? “ and “How can we improve?”
• Stay in touch with what really motivates individuals and
groups and help the leaders connect these factors with continuous
improvement initiatives
The HPO Global Alliance ©2017
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