Turning Around a Struggling Organization

Every organization struggles from time to time. But today, more are struggling than in pre-pandemic times, with insolvency rates rising sharply across major economies and sectors. [1]

And this fragile global business environment brings significant risk of corporate distress – a trend expected to continue into 2025. [2]

The latest twist, according to the World Economic Forum, is that the root causes are becoming entrenched. High financing costs, weak demand, and persistent inflation are damaging liquidity and solvency positions. Some firms are facing unsustainable debt payments, while trade tensions and global market volatility are further eroding business confidence and profitability. [3]

These headwinds could mean you’re a leader in a struggling company sooner than you expected. And if that happens, this survival guide might help you head off problems before it’s too late – and matters are taken out of your hands.

Be Precise About Turnaround

Against a complex backdrop, you need to truly understand how critical your situation is. For a turnaround to gain traction, knowing which levers to pull to steady the ship is your opening move.

First, grasp the size, shape, scale, and severity of your problems. Set up a turnaround team to focus on this assessment stage, because knowing what the data is saying now will form the backbone of decisions later.

It might be difficult to get a clear picture, but that shouldn’t stop you asking difficult questions. From bottlenecks to barriers, you can only manage what you can see, so be forensic.

Conduct a full financial health check. This root-and-branch review of company financials will help you understand positions on liquidity, cash flow, debt levels, and profitability.

Identifying immediate financial threats like bankruptcy and declining revenue will also help you to see your priorities in a brighter light.

Don't Let a Crisis Turn Into a Communication Breakdown

From the start, your leadership communications will be subject to scrutiny. Internal communications matter and your business communication professionals will help you to explain things as they unfold – and educate, engage and involve your people, too.

A struggling company needs renewed purpose and direction. If your company is to recover, then everyone must pull their weight and in the same direction.

Communications professionals are experts at helping you get the essential buy-in from your leadership team, employees, and stakeholders and they should work closely with the turnaround team.

They’ll inform your teams about what’s going on at every step. And it’s important that your people hear directly from your organization, not from the media or via a third party.

With leaders in this situation being time-poor, cascading information through managers is the most effective channel for change communications.

Transparent communication across all levels of the company, filtered through line managers, will help people better understand “what this means for me.”

From Assessment Into Action

These macro and micro pictures are important for seeing how – and in some cases whether – teams and individuals fit into the future. Getting all the right people in play and on the ball will help you deliver necessary changes faster.

But there’ll be people who don’t factor into this turnaround, so tough talent decisions are inevitable.

As you move into action, it’s time to SWOT up on strengths, weaknesses, opportunities, and threats to understand what isn’t working and what could.

Talk to different teams and take a culturally intelligent approach to finding out what help people are looking for, where they think work needs to improve, and how leadership can facilitate changes.

Armed with the right data, information, and communication framework, you can now tackle the challenges you’ve unearthed in the assessment stage.

Here are four areas where you can prioritize your turnaround efforts:

1. Control Cash Flow With Precision

Cash is king in a turnaround – the oxygen that keeps your organization breathing. Meeting short-term obligations like payroll, rent and supplier payments are non-negotiable.

Take control with strict cash-management protocols. Every purchase, no matter how small, should require approval from your turnaround team. Consider centralizing financial control so nothing slips through the cracks.

Analyze cash flow daily, not weekly or monthly. Identify new ways to generate revenue while simultaneously reducing cash outflows.

This might mean renegotiating supplier terms, running inventory down to minimum viable levels, or converting non-essential assets into cash.

2. Make Strategic Focus Your North Star

A struggling business can't afford to be everything to everyone. Strategic focus means making hard choices about where to invest limited resources.

Building on your SWOT analysis, be prepared to make substantive change – cutting product lines, exiting unprofitable markets, exploring ways to create fresh revenue streams, or even divesting entire business units.

Effective leaders must develop x-ray vision when strategies aren't yielding results. Then have the courage to pivot decisively at speed.

In normal times, strategy development can be methodical and deliberate. In a turnaround, you need to accelerate this process dramatically and stay flexible.

Develop what turnaround experts and authors Stuart Slatter, David Lovett, and Laura Barlow call a "strategic credo" – a simple mission statement that gives direction without prescribing every action. This helps teams align but retain agency. [4]

3. Rebuild Confidence and Lead by Example

Turnaround success hinges on having the right people leading the charge. Conversely, poor leadership is frequently the primary reason for an organization's decline.

Review your current leadership team with fresh eyes. Who are your star performers? Who lacks the skills or mindset needed for this fight?

Assemble a leadership team with complementary skills suited to crisis management and your specific challenges. Promoting strong, decisive leaders sends an unequivocal message throughout the organization that business-as-usual is over.

Quick wins also boost confidence. Successful turnaround leaders prioritize fast, visible results that can be delivered quickly.

These victories, however small, build momentum, build trust, and demonstrate to employees and stakeholders that recovery is possible. And they can alter the mindset of a workforce that may be feeling demoralized.

4. Target Process and Performance

Review every business process with a critical eye. Which activities add real value or hold you back?

Be ready to cut red tape and streamline decision-making channels. For example, empowering frontline employees to resolve customer issues without too many approvals can drive efficiency and increase customer satisfaction.

Organizations that embed accountability are more resilient too. So set up a performance management plan – with SMART goals for everyone and specific targets for which people are accountable. This should enable everyone to understand their role in the recovery effort.

Again, line managers are a vital link in the chain, translating wider KPIs into individual targets.

Make Your Move Before It's Too Late

While a cool head is essential, especially under intense scrutiny, leaders also need to inject urgency, and show passion, belief, and commitment to change.

As a turnaround leader, you don't have time and resources in abundance. So, if you don’t exemplify a driven attitude, you can contribute to a downward spiral. And if change takes too long to implement, the window for effective intervention narrows.

Current levels of volatility – tech disruption, supply chain vulnerabilities, and shifting consumer expectations – underline the need for speed. Decision making designed for stable conditions won't work as well as crisis-specific approaches.

You can up the pace through:

• daily standups to report on critical metrics and obstacles.
• adopting a RAPID decision framework (Recommend, Agree, Perform, Input, Decide) to clearly define roles in the decision-making process. [5]
• scenario planning to set out contingency plans and potential outcomes.
• creating a “War Room,” dedicating time, space and resources for the turnaround team.

Turning Is Learning

The organizations most likely to survive aren't necessarily those with the most resources.

If you can learn from the past, diagnose problems quickly, make decisions decisively, and implement changes rapidly, you’re more likely to turn things around.

You don’t have to be struggling to be aware of market forces and competitors, to pay close attention to processes and operations, and to build strong connections with all your stakeholders.

But focusing on cash flow, strategy, confidence, and performance are proven to work – in good times and bad.

Remember, turnarounds are intensive learning experiences. The best leaders always carry these lessons with them whether in a crisis or not.

These skills will serve you throughout your career because leadership that helps organizations grow in the first place is just as valid when survival is on the line.

Frequently Asked Questions

Why is communication critical during a turnaround?

Clear, transparent updates build trust, align teams, and reduce fear – key to keeping people engaged during uncertain times.

What’s the first step in a business turnaround?

Conduct a full financial health check to identify immediate threats, prioritize issues, and guide decision making.

How do you maintain morale in a struggling company?

Celebrate quick wins, lead by example, and provide regular, honest communication to rebuild confidence and momentum.

What should leaders focus on in a crisis?

Control cash flow, sharpen strategic focus, streamline processes, and empower people to act with urgency and accountability.