When a company reaches the brink of disaster, the board of directors often looks for a new CEO or CFO to step in and turn things around. Declining profits, loss of major customers, and a freefall in share price are all indicators that someone needs to step in fast or risk the company heading into bankruptcy.
Finding the right person for the job isn’t easy. Leading a company on a downward trend can harm an executive’s reputation, especially if their turnaround efforts fail to bear fruit. Additionally, they’ll need to carefully balance their plans for the organization with the board of directors’ ideas, which may differ.
If you’re looking for a new CEO or CFO to revive your company, consider these tips.
It takes a lot of effort to change the direction of a company in decline. You’ll want to find someone with the ambition to make it happen. That person will likely be working extensive hours, especially in the initial year or two of restructuring. You’ll need someone who can commit and won’t let other parts of their life distract them.
A CEO or CFO who successfully pivots a company from severe losses into a revenue machine will be highly attractive to future organizations. However, if they fail at their endeavors, it won’t reflect well on them. They must understand the risk and be ready to take on the challenge.
In a turnaround situation, you don’t want a “yes person.” The yes person agrees with everything the board of directors and other stakeholders tell them. They don’t speak their truth because they’re too busy navigating a positive relationship with other leaders.
While agreeable executives can provide a friendly working environment:
If you want actual organizational change, look for a candidate willing to push back a little. Remember, the company wouldn’t be in this situation if the wrong decisions hadn’t been made. Someone who is ready to go against the grain may be the right person for the job.
In a turnaround situation, there are real problems with the company. Some may be massive, like too much debt, lack of interest from investors, or a short runway until the finances run out.
The right person to handle a turnaround situation won’t bat an eye at these problems. Instead, they’ll look for immediate solutions, and they’ll come up with creative ways to implement them.
You’ll know you have a problem-solver when you find a candidate who has overcome other significant issues in the past. They’ll be able to describe the problems they worked through and how their unique solutions helped their company move forward.
There is no time for minor fixes or quick wins in a turnaround situation. Usually, everything’s on fire, and someone with a decisive and cool head will need to fan out the flames nearly instantaneously.
Your new CEO or CFO should have enough familiarity with your industry to get to work quickly. You don’t want someone who will need months to understand your business or will take their sweet time getting to know how each department works.
Ideally, your newest executive will sit down with senior leadership and other stakeholders to understand the problems the company is facing. From there, they can quickly identify what needs to happen to recover the organization’s health.
While organizational restructuring can take time, identifying the most critical issues and addressing them first can go a long way toward future success.
Your newest executive may have the final say on strategic initiatives, but they won’t be doing the heavy lifting alone. They’ll need the chutzpah to rally the team, from other executives to entry-level staff.
Someone with a talent for team management will know how to motivate employees, even when everything seems like it’s falling apart. Remember, by the time a company is in the turnaround stage, everyone knows that there are massive existing problems.
Most turnaround companies have low employee morale among team members. Some may be convinced the company is headed for the dustbins of history, and they’ll be actively looking for other jobs. Low morale can increase turnover in your organization, making it hard to keep the hands you need to build the company back up.
An executive who can illustrate their vision for the future and show employees how it’s possible can be a source of inspiration for the team. You’ll see people perk back up, eager to get to work and make it happen.
Strategies for a turnaround won’t always work out. Sometimes the approach is wrong, while other times, unexpected external events derail even the best-made plans. A turnaround CEO or CFO must prepare themselves for the possibility that their vision won’t work.
The best turnaround executives will always have a plan A, B, and C. If their top strategy proves to be a failure, they don’t hang on to it. They’ll let it go and move on to the next option.
A strong candidate will focus on both external and internal problems.
Often, turnaround executives step in with an immediate focus on cost-cutting and controlling finances. While that’s undoubtedly important, they should also maintain a close eye on competitors.
Competitors often try to strike when they know a company is in a bad situation. They’ll use the opportunity to gain the upper hand. If a turnaround executive isn’t paying attention, they may find all their efforts go to waste simply because the competitor got ahead of them.
Finding a suitable turnaround executive for a faltering company isn’t easy. You’ll want someone entirely up to the job who can drive the company in a new direction. Look for our suggested qualities when searching for your next turnaround CEO or CFO.
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