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Organizational turnaround, a term frequently used to describe
the comeback approaches by companies, generally indicates
the collective result of the strategies adopted to revive
a company from severe and immediate crises. The story may
begin from a dwindling market share due to products at the
declining stage, intense competition from increasing number
of market entrants, an inflection point for a company or
internal HR issues affecting the productivity. Ultimately,
all reflect a common picture of decreasing revenue and heavy
financial burden. Stagnation, declining market share and
a sharp drop in stock prices are all they end up with.
When companies face continuous losses and declining revenues,
the necessity of cost reduction surfaces as the immediate
requirement for almost all the distressed firms. CEOs start
the activities of cost reduction as a desperate effort.
Retrenchment takes place, people lose jobs, non-core businesses
or the loss-making units are sold out, even pay packages
are cut down. However, in this process of aggressive cost-cutting
with an aim to turnaround swiftly, firms often overlook
the need for evaluating other internal and external alternatives,
which are equally important for long-term success and sustainability
of the organizations.
The crisis an organization is going through may have its
cause deep rooted in the HR policies, in the products or
services, in the marketing strategies and promotional activities
or even in the resource allocation process of the company.
A sincere effort in identifying the exact cause has proved
its worth, time and again in avoiding future losses and
similar issues that lead to failure. Successful execution
of short-term turnaround plans is essential to attain immediate
recovery. In addition, building a winning culture, boosting
the morale of the employees, developing leadership, revising
the marketing plan, repositioning its products or refocusing
on a new market or segment, are worth considering as long-term
strategic tools to ensure sustainability.
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