A Guide to Managing Relationships Through a Turnaround
Executing a corporate reorganization is tough. Throw in the backdrop of a global pandemic and looming recession and the thought is downright scary. While the internet is full of resources addressing different approaches to reorganization, from operational turnarounds to bankruptcies, very few touch on the light on the other end of the tunnel. No human likes change. But if we can grit our teeth and embrace it, we might just open the door of golden opportunity.
“In the midst of chaos, there is also opportunity.” – Sun Tzu, Art of War
At the end of the day, no matter the industry, you’re in the business of relationships. Relationships with your customers, your suppliers, and your employees. More than likely, you’ve engaged a turnaround consultant, restructuring attorney, or other professional who is digging into your operations, cash flow, capital structure, and so on (if you’re looking for an introduction to world class restructuring professionals in your area, don’t hesitate to reach out to LSQ). While they are driving that process forward, focus on your relationships.
Customer Communication is Key
You may be worried about the optics a restructuring may have to your customers. At the end of the day, your customers care about getting the product or service they need from you in the most painless way possible.
The best way to maintain a strong relationship with your customers during this tumultuous time, is open and honest communication. Harvard Business Review recommends using a HEART framework as a basis for your customer strategy: humanize your company, educate your customers on how to interact with your company, assure customers your company values will continue, revolutionize what customers value about your company, and tackle the future. This simple framework will work whether you’re selling into SMBs or to the most sophisticated Fortune 500.
Engaging in authentic relationships with your customers may also give you insight into their financial health so you can get ahead of any potential disruptions or upcoming growth in purchases.
Supplier Relationships May Be One of Your Most Valuable Assets
Depending on your business, the relationship you have with your suppliers may be even more valuable than that with your customers. In a time of widespread global supply chain disruption, having access to and support from key suppliers can be a key differentiator. Keep them abreast of the important milestones as you navigate your restructuring and communicate clearly any upcoming changes to your strategy. If they are an experienced supplier in your industry, lean on them for insight around best practices or trends they are seeing in the market.
And as you emerge from restructuring, make sure you reward those suppliers that stuck by you and provided guidance by paying them on time or early!
Keep Employees Engaged and Mission-Driven
Managing the culture and morale of your team through a restructuring may be the most difficult yet crucial component of your emerging successfully. Poor employee morale can have devastating and longstanding consequences impacting your company’s productivity through disengagement and employee attrition. Managed correctly, meaningfully engaging your team during the restructuring process can result in a strengthened culture, increased sense of ownership, and even an improved business strategy.
Many employers think that letting employees know about upcoming turbulence may cause them to jump ship. However, keeping key information from them will erode trust and confidence in you and the company over time. Be honest and transparent about the situation. Admit that this will be a difficult process. And understand that some of your employees may choose to pursue other opportunities. The remaining team will feel more engaged to help you shape the new future of your organization.
As part of your transparency, understand that it’s ok to acknowledge you don’t have all the answers. Listen to your team to learn where there may be room for improvement. Keep rumors from circulating by keeping the doors of communication open at all times. And finally, give frequent recognition. No one thinks this process is easy, acknowledging the efforts of your team will keep everyone pulling in the same direction.
As your business evolves, realigns, or pivots, make sure you’re addressing workload issues accordingly. Ensure that your employees have enough to do but aren’t overloaded with new responsibility. Finally, don’t forget to underline your mission, values, and goals often. Remind your employees why they work there and how serving your customers accomplishes your mission. And if you don’t have a mission statement, now would be the perfect time to write one.
People First, Profits Follow
The moral of the story is that strong communication and a little bit of empathy can go a long way towards maintaining relationships coming out of a restructuring. While it may feel intuitive to keep the developments of the process to yourself, strategic yet honest communication with your customers, suppliers, and most importantly your employees is key to paving the way for a successful turnaround. In the end we’re all facing the same crisis, albeit manifested in different ways – you may be surprised by the outpouring of support you receive.