State-of-the-art Tips to Effect a Turn Around in a Loss Making Firm
State-of-the-art Tips to Effect a Turn Around in a Loss Making Firm
If everything is going on well in a business unit, the age old management principles will hold good but to effect a turnaround in a loss making firm is a different concept. Let us consider some state-of-the-art tweaks to effect a turnaround:
Dealing with Inefficient Employees: Whether or not your employees are inefficient is a difficult-to-assess, easy to misunderstand aspect. Employees may be actually inefficient due to lack of skill, lack of information and lack of professional attitude or they may appear to be inefficient due to lack of motivation. In the later case, one may apply corrective measures by granting incentives, leaves, amenities etc. But the earlier case is more complex. Humanistic managerial theories indicate arrangement of training tools to impart acquirable skills and customer friendly behavioural attitudes and they have been found to yield results too. In case these strategies fail to do so, pink slip might be the best option.
Removing Rigid Administration and inflexible Marketing Policies: Managers cannot only blame workers and hand over pink slips. To gain insight into the problems, middle and upper echelons of management must also be churned. Many a time administration and the policies adopted are to blame for the southward movement of the firm.
A rigid administration which does not respond to the ambience is bound to fail. For example a marketing infrastructure complete in itself with all the conventional P's of marketing mix may also not achieve the desired results. It may need some finer adjustments. Recently the middle management of a mobile operating company observed that an announcement for free prepaid connections during a period covering the independence day attracted a huge number of applicants. The only benefit though, from customer point of view was only Rs 39/- per connection which was the initial charge for the connections. Obviously the company must have reaped sky high benefits in terms of all the recharges and top-ups that the mobile subscribers would have done. This was sort of a fluke but riding on the feedback by mid level management the company made it a point to give such offers frequently and hence pocket huge profits. The substance is that a flexible approach which acknowledges the business climate surrounding the firm is more likely to win.
Moreover a tough and unadaptive attitude towards the workers is highly uncalled for. Naresh Sisodia who is a mid rank manager in a numerical control firm says about one of his subordinates, “Mr. X was not a punctual and sincere worker. But I rather concentrated on his problems than rebuking him. The only problem I came across was the time of his duty and some petty timing problems on the family front. I only altered his duty timings due to which he was able to make necessary adjustments during the day for his son and working wife. And the result was quite vivid. He is working better and has since seemed punctual. Moreover I find him in a good state of mind."
Adherence to Norms: First of all there must be concrete rules and regulations for everybody in the firm. Even if it is a private, small sized firm and norms are self made for the staff, these should be near to standard practices followed in big private firms. For example leaves, refreshment allowances, conveyance benefits, daily allowances etc. should conform to those of big firms. Moreover people lower down the order must be enabled to feel that the rules are followed even by those high up. It creates an environment of impartiality and rids the employees of the fear of discrimination.
Following the norms and applying the controls as per the existing practices does away with the undue claims by employees. Even chances of injustice to anyone is ruled out since all the decisions are taken as per the established protocols. Furthermore it is easy for the employees to know in advance how will they be rewarded or punished for their special and desultory efforts respectively.
Keeping an Eye on your Dynamic Balance Sheet: Balance sheet is the financial statement of a firm over a period of time, say a quarter, a year etc. In contrast a dynamic balance sheet may be regarded as a rough calculation of daily expenditures, incomes and profits and losses thereof. On many occasions a manager finds that expenditures march past the incomes. But here is the catch. In a loss making firm we cannot go for high risks. We should more often emerge winners than losers in our daily balance sheet. If a part of the business seems to be a potential field for earning good revenue in future but currently requires incurring expenditure without immediate profit, it may temporarily be kept on hold and this potential may be kept aside for mobilization in good times. For example, a motor parts sales and service firm observed that the bills it raised for service of vehicles in a government department required huge time span for disbursement. On the other hand its counter sales and daily sales and service aspects were a bit in a neglected state. So the manager, as a reformative course, withdrew the services of the firm from government departments and concentrated more towards the works which earned immediate revenue. With this, all the problems of the firm got wiped out and a turnaround took place within the next three quarters.
No Substitute for improvement of Quality of Product or Service: Today's customers are not like those in the old days. They are more informed very often more than the sellers, good bargainers, internet savvy and have more choices to make. So a seller has no alternative but to supply quality products or services. A typical cellphone customer compares service quality, tariffs, reaction time to complains, staff behaviour etc. before taking a connection from a mobile operator. This is enough to provide a glimpse of the analytical nature of today's customer. Therefore the way to survival in the cut throat competition arena is to cultivate quality and this can be practised with quality staff. So firms will do well to employ and retain eager-to-learn workers. Also it is to be understood well by the management that such people stay long in a firm if they find prospects for career growth.
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