Refocusing the Management Team in Crisis

by Bob Cohen
Ohio TMA News – February 2013

Over the years, turnaround and crisis management professionals each develop their own style of effectuating a turnaround. Certainly there is the initial work of developing a cash flow forecast, assessing the liquidation value of a company and the overall development of a restructuring plan. Once the turnaround or restructuring plan has been developed and approved by company management, the company board of directors and the secured lenders, the style utilized for the implementation of the turnaround leadership can vary significantly from one turnaround professional to another.

There is no right or wrong style to provide the leadership to the management team as they navigate through the turnaround process. However, in addition to determining if there is a core business, a good management team and adequate financial resources, the turnaround professional must establish a relationship based upon respect with the existing management team. Seldom can a turnaround professional successfully implement a turnaround without the support and respect of the management team of the troubled company.

Almost without exception, every employee of a distressed company is concerned about loosing their employment. If the company president privately owns the company, the owner is concerned about losing his/her company and potentially, his/her entire personal wealth. The turnaround professional must lead the company employees and owner to think more about the process of rehabilitating the company and less about the loss of their jobs or ownership.

My style over the years has been to use appropriate humor and insightful comments to assist management and employees in grasping a better appreciation for how the company is positioned, what managements’ roll is in effectuating a turnaround, and to focus upon the future as opposed to constantly revisiting what life will be like after the demise of the company. When applied in an appropriate fashion, humor is an effective tool in assisting management in taking the rehabilitative steps to move beyond a fatalistic view of the future, and reposition their focus on self-confidence and self-respect.

Example 1: Confusion

What is the response to the management team that has identified that all of their competitors and suppliers within their industry are confused regarding the overall future of their industry? The appropriate response would be:

“There is profit in confusion so long as you are not the one that is confused.”

Example 2: Moving Forward

What is the response to the management team and the secured lender when there is concern that the company is not yet profitable, understanding that the company has lost money each year for the past five years and the initial strategy is to first become cash flow break even? The appropriate response would be:

“When you are going 100 miles in reverse, your first forward motion is dead stop.”

Example 3: Assessing Individual Success

What is the response to the business owner who is fixated upon the thought that he may lose his entire business? The appropriate response is:

“I no longer judge people based upon their success. I now judge people based upon their recovery from failure.”


“Every successful person I have met has failed at least twice.”


“I have learned more from my failures than my successes, and I plan on getting a lot smarter.”

Example 4: For the young executive who has all of the answers

What is the response to the young executive that believes that he/she alone, has all of the answers to correct the problem? The appropriate response is:

“The last time I knew everything is when I was 33, and I have only been getting “stupider” since then.”

Example 5: The Smartest Person in the World

What is the response to the person who knows everything? The appropriate response is:

“The smartest person in the world is the person who knows what he/she doesn’t know.”

Example 6: How did this happen to me?

What is the response to the company owner when he/her expresses frustration with uncertainty as to how the company got to this level of demise? The appropriate response is:

“You must have done something right along the way to grow the business to this level.”

Example 7: It’s not my fault

What is the response to the management of the company when they blame each other for the problems within the company? The appropriate response is:

“This reminds me of two friends of mine that decided to take a canoe ride down a raging river. My friend in the front of the boat was responsible for bailing any water that leaked in the front of the canoe. My friend in the back of the boat was responsible for bailing any water that leaked into the back of the canoe. The canoe hits a big rock, putting a large hole in the front of the boat. The water is coming into the canoe faster than my friend could bail the water out. So my friend in the back of the canoe said, ‘I sure am glad that the hole is not on my side of the canoe.’”