In discussing business turnarounds, we have seen that the three fundamentals to turn a troubled business around are as follows:

1. Understand Reality, Face Reality
2. Focus, Prioritize, Plan (Less is More)
3. Right People Doing the Right Job

Today, we turn our attention to the third fundamental: “Right People Doing the Right Job.”

You have defined the problem.  You are working on the plan.  Now, what you need to execute the turnaround is the right people doing the right job.  This fundamental is somewhat iterative with the “Focus, Prioritize, Plan” fundamental since you really need to have the right people who are capable and want to implement the plan.

In all the turnarounds that I worked on, the “wrong people” were let go, quickly but fairly and with dignity.  In truth, they were the “C” and “D” players that should have been let go years ago.  They were the people who just did not get it.  They were the people who could not implement the plan.  And they were the people who just did not want to implement the plan.

Start near the top with the senior managers.  In all three turn-arounds, the “lead elephants” were the first to be let go.  In hindsight, this was not surprising because they were the ones who got the business into trouble in the first place, and they were the ones who were most resistant to change.

In evaluating the right people doing the right job, there are a few things to consider.

1. Attitude matters most.  I would choose someone slightly less talented that cares and believes in the plan and the company over a more talented colleague with the wrong attitude.
2. Do not be afraid to move good people with the right attitude into different positions.  They may just bloom.  Who would have thunk it, but we had a salesman and an engineer each become excellent operations managers!
3. Take every opportunity to trade up.  Replacing non-performers with high performers is in the best interest of everyone and will save you countless hours and headaches.
4. Do not be afraid to cut to the bone.  These are business turnarounds and the viability of the business is at stake.  Without a viable business, no one has a job.  Sometimes, even good people have to be let go so that other, more valuable employees can remain working in a viable business.

What does this mean for you as leaders of a business?

I am not naïve enough to think that you are going to fire yourself.  Instead, I suggest that you go look at your top team.

1. Does your top management team have the collective “DNA” to get done what needs to be done?
2. Are each of your managers really the right people with the right talents and personality to do the right role that is now required of them?
3. Are each of your managers committed to the turnaround plan?

If not, then what are you going to do about it?

The first round of laying-off or the firing of people is a shock to the company.  But, done right, it will help introduce a measure of accountability into the culture where it has been lacking.  Realize, however, that there will likely be a second round of lay-offs as you discover a number of people who do not want to be in this newly accountable and more demanding company.

One final anecdote from one of the companies we turned around.

After the first few weeks of rolling out the plan, one of the top managers came to give his resignation.  He did not have another job at the time.  But, he realized that he just did not have what it would take to work in a business environment where you are being held accountable to perform. 

So, what was our response to this person?

1.     We accepted the resignation and saved ourselves severance and other costs

2.     We thanked him for his honesty.  We told him that we would lay him off with the severance package we were offering all employees at that time.  And we would allow him to collect unemployment.

The answer of course was number 2.

Even in the midst of a turnaround and lay-offs, you need to do the right thing for the people on your team.  And you need to be seen doing the right thing for the people on your team.

Dignity and respect matter.