Managing change: How to turn your business around

In this article: In the second part of Tristan Young’s series on managing a changing business, he looks at coming up with a  turnaround plan to get things back on track

If the signals in your business are pointing in the wrong direction, then it’s pointless to keep doing the same things in the same ways because that way disaster lurks. Hoping for external factors to improve with no input on your part is tantamount to madness. What you need is change to turn your business around.

Often the first move is to cut costs and this can mean letting people go, but you’ll also need a strong turnaround plan to get things moving in the right direction again.

Ian Allen, from CNA International, is a renowned auto retail operations expert and has recently been made a member of influential organisation the Institute for Turnaround. Allen specialises in getting businesses back on track. So what does he think businesses need to look at?

First, it’s essential to work out where costs can be reduced.

“The best way to identify the least efficient areas of the business, which will help with narrowing down where you can reduce headcount, is to carry out a brief and specific business review,” says Allen.

“This can be by outside advisors, but it depends on cost. The review will identify and determine the under-performing areas of your business. If you’re a franchised dealer, then you can compare your business against the dealer composites for the brand you represent. Whether you’re a franchised or independent dealer you can compare your sales against SMMT, and other available data, in terms of sales per employee and you can also look at return on capital employed.

“Thereafter, compare staff performance with national data. This may help in deciding the most efficient staff and those that are under-performing and may need assistance, in the first instance, to improve performance and then move to replacement if there’s no uplift.”

Allen advises that if you do have to go down the redundancy route for some staff, then you should always follow a regulatory consultation and redundancy process – discussed in the first article in this series.

While letting staff go is tough on all concerned, a good employer can go beyond the legal requirements at little cost to help soften the blow of being made redundant, according to Allen.

“Those staff that leave your business may need help with CV writing and also another good idea would be an introduction to a career specific recruitment company. For example, a financial controller may need help from an accountancy specific recruitment firm – likewise sales and technician staff if required.”

It could also be worth staying in touch with the people you let go, in case in future you expand and want to take them back on.

Losing staff in a small company doesn’t only impact the people leaving, but also those that are staying. Any round of redundancies can unsettle a workforce, so to counter this you’ll need to work on morale.

“Lead by example,” says Allen. “Bosses should be very visible within the business and ‘at the coalface’ with staff.

“One of the biggest complaints that I hear from staff when I am working on a turnaround is that there is no leadership and that management doesn’t engage with the workforce.

“Hold regular meetings to explain your vision and your progress plans and also engage staff by encouraging their input at meetings. Specific staff training and career path planning can be a good idea depending on the size of the business.”

Allen offers one final tip to keep in mind when going through a turnaround plan: “Remember; the customer is king. Look at how the customer experience can be improved. What can the business offer to customers that it currently doesn’t? Offering customers what they want and with a better experience will see an expanded customer based and ultimately greater profitability.”

Read part one of Tristan young’s series on managing change, and find out the legal implications of reducing a business’s head count

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