The Turnaround Management Society (TMS) has finished it’s most ambitious project to develop a standard for turnaround management practitioners. The project was set for three years and lead by Christoph Lymbersky director and lead project manager of the Turnaround Management Society.
Turnarounds are a very common situation that statically 30% of the listed companies on the NYSE run into within ten years. The research led by Christoph Lymbersky of turnaround cases suggests that a lot turnarounds are done in house by the companies themselves, few have professional turnaround help. It seems that these companies follow a rather unstructured approach to overcome their problems and to being able to achieve a successful sustainable turnaround . This is backed up by the Administrative Office of the U.S. courts that states that only one out of eight cases that file for Chapter 11 have achieved to reorganized themselves successfully. – here it is left open what is defined a successful turnaround – Only about one-third of these firms continued in operation two years after their chapter proceedings closed.
Until now there has been no real method or standard of how to conduct a turnaround. Also most turnarounds fail and if they successed then about 80% go back into a company wide crisis situation within 5 years. Hence, there is room for improvement. Throughout our studies of turnaround management we have recognized that most turnarounds are focused on specific areas, that symptoms rather than causes are treated and that, turnarounds are done by experts from specific areas such as purely financial experts or legal experts.
In our research we have not encountered a standard structured way of turning a company around. We know that some turnaround firms have their own loose “guidelines” on how to do a turnaround. Also, a few authors have published books about something that outlines different strategies and stages of a turnaround process (especially C.B. Bibeault, Slater & Lovett), but nothing comes close to being as comprehensive universal and applicable as the ITMS (International Turnaround Management Standard). We have not found substantial evidence of Change-Management and Project Management techniques applied to turnaround management in such a structured way as in the ITMS. Or at least there has not been a focus on it.
But, the ITMS is not only about project management and turnarounds, it furthermore includes financial restructuring techniques, strategic & operational strategies, marketing aspects, crisis communication aspects with stakeholders (to maximize the support and minimize bad press) and internally, controlling, quality control processes, of the turnaround itself, risk management, etc., etc.Imagine you are the CEO of a troubled company or a turnaround manager. The ITMS will be a framework that is divided into different stages, in which you can easily find the situation that your company is in. Let’s say you have products that don’t sell well, you are in a certain competitive environment with few global players that practically own the market, and you have financial difficulties. You will find your situation in the ITMS and the ITMS will tell you proven, through our examination of more then 150 case studies, strategies out of that situation (if there is a way out).
The International Turnaround Management Standard™ (TIMS) is a method and guided way to achieve a sustainable turnaround. The ITMS includes all possible aspects and business areas that need to be analyzed and considered when restructuring a company:
- Financial Strategies
- Strategic- & Operational Strategies
- HR Aspects
- Crisis Communication Management
- Project Management Techniques and Methods
- Change Management
- Controlling and Management of Risk
- Marketing Aspects
- Quality Control processes
- Process Improvements
The standard, furthermore serves the turnaround management team as a guideline of what they need to do at what time, how to do it and who you need to provide information too and what other aspects you need to take care of.
In a nutshell: The ITMS targets all the major problems why companies fail in turnarounds; insufficient support of shareholders and lenders, non-comprehensive turnarounds (with other words things where simply overseen, or not regarded as important), targeting of symptoms rather than issues, unstructured approaches to turnarounds, etc.
What are the Advantages of using the International Turnaround Management Standard?
The ITMS (International Turnaround Management Standard) that we have developed includes all areas that are known to us to be important in a turnaround situation and not just focused on one business area. We believe that a structured approach to turnarounds that includes, financial aspects, strategic reorganization, turnaround strategies and best practices, project management tools and techniques, change management tools, HR aspects, etc., can lead to a more sufficient and sustainable recovery. The following points are things that should improve the current turnaround practice by employing the ITMS that we have developed:
directing the turnaround (the board is a lot more involved with the actual turnaround process, but stays at a necessary distance to give the turnaround management the freedom that it needs, after all they are professionals and know most of the time better what to do than the board. They also need to keep the necessary distance from the board members, which might have personal interests in the company, fear losing something, or are otherwise emotionally involved with the company which might distract the turnaround process. ITMS keeps the board discreet distance from the turnaround management team, but still involves them in major decisions.
- ITMS creates a shared responsibility between the board members, major stakeholders and the turnaround management team.
- ITMS is logic in its flow
- ITMS’s flow of activities is orientated along a timescale. Companies using ITMS can see at any point in time what activities need to be done at what stage and time throughout the turnaround process.
- ITMS provides a checklist of activities, derived from other turnarounds, restructurings, case studies, experiences, and collected lessons learned reports, so that nothing will be forgotten or overseen and to avoid pitfalls during the analysis of the company and the turnaround process. Leading to a more sustainable turnaround process.
- A company using ITMS can quickly identify at what stage the company is in, what situation they are facing and what proven strategies there are to overcome the turnaround process. Hence, the process gets speeded up and becomes more sustainable.
- Even CEOs that don’t have much turnaround experience can easily employ the standard, identify their situation and turn the company around using proven techniques, outlined checklists throughout the whole process and guided procedures.
- ITMS manages the flow of information, distributing the right information at the right time to the right parties. Counter fighting the need for banks to employ investigating accountants, which damage the managements reputation even further and helps to keep the investors and stakeholders support by openly, but thoughtfully communicating on the important issues at crucial times.
- Banks or financial investors get ensured that they will get the information they need if a company uses the ITMS to overcome a crisis situation. The ITMS should help them to revcover their investment.
- The ITMS makes sure that no business aspect or process is overseen in a turnaournd situation. By guiding the turnaround management through the whole process. Therefore the turnaround that can be achieved using the ITMS should be more sustainable.
- The ITMS points out and treats the causes of the decline and not just the symptomes.
- The ITMS establishes a crisis monitoring process in the company that creats early warning signals for the Management / Investors in case the company should slide back into a crisis situation after the turnaround process.
- The ITMS has a formal beginning and a formal end.
To know more about the ITMS, training or certifications please contact the TMS directly.