Leaders set the tone for any organization and when it comes to your company, your leaders should display the behaviors and attitudes that are expected from your team. For example, when a leader remains positive, solution-oriented, and focused, your team is more likely to follow suit.
Additionally, having a leader who isn’t shaken by a business crisis is key to a company successfully navigating challenges, minimizing negative impacts, and positioning the organization for recovery and growth.
But how do you know if you have the “right” leader in place? At JACO Advisory Group, we feel the answer is proper evaluation and selection of someone who meets the characteristics outlined by stakeholders and other decision-makers; characteristics that are essential for managing crises, strengthening the team, restoring financial stability, and positioning the organization for recovery most effectively.
In this article, the business crisis we will focus on is a turnaround management situation. This is a very stressful time for any company because it means the company is performing poorly, launching it into a period of financial stress. A crisis like this can evoke fear and panic, both internally and externally, but when you have an effective leader in place, who is able to remain calm under pressure, this projects confidence and stability. This demeanor helps reassure employees, stakeholders, and customers that the situation is being well-managed.
We feel there are many characteristics effective leaders should have, but when it comes to a turnaround management situation, here is what we deem as the top 12.
- Experience in Turnarounds: Having a leader in place who has experience in leading successful turnarounds can bring valuable insights and strategies to the table and can help expedite the recovery process.
- Results-Oriented: The primary objective of a turnaround is achieving tangible results. Effective leaders should set clear, measurable performance metrics, monitor progress, and adjust strategies as needed to meet recovery goals.
- People Driven: Everyone in the organization needs to be part of the solution. A strong leader will empower front-line associates with structure, and push as much decision-making down as possible. In parallel, the leader will galvanize the executive leadership team around clear priorities.
- Thoughtful, Decisive Decision-Making: During a turnaround, leaders must make tough, well-thought-out decisions quickly and decisively. They should gather relevant information promptly, assess the situation, and make rapid informed decisions. Procrastination will only exacerbate the crisis and reduce trust. Effective leaders can analyze complex situations, weigh the pros and cons, and make bold decisions that align with the recovery objectives, which help them execute the recovery plan. Implementing well-considered plans demonstrates leadership’s commitment to resolving the crisis and builds confidence in their abilities.
- Communication & Transparency: Clear and transparent communication is vital during a turnaround. Leaders should be able to articulate the company’s vision, provide regular updates, acknowledge challenges, share progress, and effectively convey changes to employees, stakeholders, and customers, openly and honestly. This type of transparency builds trust and helps employees understand the company’s direction. Leaders who can manage relationships, provide clear and transparent communication, and address concerns effectively enhance credibility and confidence.
- Adaptability and Innovation: A crisis such as a turnaround often necessitates changing plans and strategies. Effective leaders can adapt and willingly pivot as new information emerges, adjusting their approaches based on the evolving circumstances. A leader who can drive innovation and adapt to changing market conditions can help the company remain competitive. They should be open to exploring new technologies, business models, and approaches that support the company’s recovery and growth.
- Strategic Vision: While addressing the immediate crisis is crucial, effective leaders also keep the long-term vision in mind. They make decisions that align with the company’s overall strategy, ensuring that the crisis response contributes to future success. A leader with a clear strategic vision can assess the company’s current situation and formulate a comprehensive plan for recovery. This includes setting achievable goals, identifying growth opportunities, and mapping out a path to financial stability. Look for leaders who can develop a clear vision for the turnaround and a strategic plan to achieve it, articulate a compelling direction for the organization, and create a roadmap for recovery.
- Collaborative Approach: Effective leaders foster a collaborative and cohesive team environment. They build relationships, inspire teamwork, and leverage the strengths of individual team members to drive collective success. Additionally, effective leaders collect input, leverage diverse perspectives, and foster collaboration. Leaders who foster collaboration among teams, departments, and business units can leverage the collective expertise of the organization to drive the turnaround process.
- Financial Acumen: A strong understanding of financial management is essential. Leaders should be capable of analyzing financial statements, managing budgets, interpreting key financial ratios, and making financially sound decisions to optimize resources. Effective leaders should also be able to allocate resources wisely to ensure critical areas receive the necessary support. This might involve reallocating budgets, reprioritizing projects, and optimizing operations. In the end, they need to make informed financial decisions to address liquidity, solvency, and profitability challenges.
- Customer-Centric Approach: Leaders who prioritize understanding and meeting customer needs can improve customer satisfaction, loyalty, and retention, which all contribute to the company’s turnaround efforts. Leaders should align strategies with customer expectations, which helps contribute to both short-term recovery and long-term growth.
- Vulnerability: Elite leaders are comfortable when they don’t have all of the answers. Asking questions to learn about the details and about your associates’ thinking can provide helpful learning.
- Maintain Morale: Employees often look to leadership for guidance and reassurance during difficult times. Maintaining a positive attitude, celebrating small wins, and recognizing the efforts of your team members are imperative. Leaders who can inspire, engage, and lead teams through uncertainty and change contribute to a more cohesive and focused workforce.
Effective leadership in a business crisis involves maintaining composure, transparent communication, quick decision-making, collaboration, and adaptability. By evaluating and choosing a leader who demonstrates these strong leadership qualities, you can lead your organization through the storm and emerge stronger on the other side.
The turnaround process can be a daunting and complex task, which is why having an experienced and knowledgeable team on your side is paramount for success. Maybe you’re not in a position to choose an internal leader. That’s where our team comes in. We have experience creating and executing actionable plans for middle-market companies to address the immediate issues causing distress to get your organization back on track. Give us a call, or drop us an email, so we can learn more about your situation and your leadership, and help you get your business on the road to recovery.
About Chris
Chris spent the past 3 decades as part of high performance, global businesses in general management (P&L responsibility), marketing, sales, strategy, and M&A roles. He partnered with customers to drive growth in business to business environments at General Electric and consumer products at Scotts Miracle Gro.
If you have a business challenge around strategy, marketing, growth, or leadership, let’s talk.
When he’s not working, he enjoys physical fitness and spending time with his family, and announcing football, basketball, and baseball games at the high school and college level.
