How do you turnaround an organisation to create business success?

November 2nd, 2012 by Sarah Green Leave a reply »

In this current climate Zircon are being asked by our clients “How do you turnaround an organisation to create business success?” According to Kanter, a professor of Business Administration at Harvard Business School the critical elements are smart financial and strategic decision making. However they’re useless if the leaders are not able to restore people’s confidence in themselves and each other.

Kanter has been inside over 20 global turnaround organisations and each of these organisations, the key success factor was that the Executives restored their people’s confidence in themselves and one another – a necessary antecendent to restoring investor or public confidence. They insired and empowered their organisations to take new actions that could renew profitability. In short, each had to lead a “psychological turnaround”. Kanter suggests there are four steps to turning around businesses to success:

Here are the four steps in more detail:

Promoting Dialogue – The first task is for leaders to open channels of commication, starting at the top. Open dialogie exposes the facts and tells the truth.

Engendering Respect – A successful corporate turnaround depends on relationships as well as information. Reconsiliation helps people move beyond assigning blame for problems; it helps them regain respect for one another while becoming more personally accountable.

Creating Collaboration – Turnaround leaders recognise that problem solving requires collaboration across departments and divisions so that innovation can come from these joint projects. Collective commitments are required to change the company dynamics.

Inspiring Initiative – Finally, turnaround leaders need to empower their employees to initatie the actions that will improve the company’s financial and strategic position.

Whilst leaders bring their own style and approach to the task, all turnaround leaders share the overarching task of restoring confidence through empowerment – replacing denial with dialogue, blame with respect, isolation with collaboration and helplessness with initiative. Leaders need to create a “winners attitude in people” even before they succeed.

The message is clear, turnarounds are when leadership matters most. Putting an organistion a positive path toward future success requires that the leaders energise their workforce, throughout the ranks. The small wins that newly empowered people create are the first signs that a turnaround is on track. Strong, positive and energising leadership with a clear vision of the future is critical to organisational success.

Prepared by Dr Amanda Potter CPsychol

Source: Leadership and the Psychology of Turnarounds, RM Kanter. Harvard Business Review. 2012

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