Turnaround management.

Traditionally, turnaround management (TM) has been viewed as necessary only for companies in deep trouble. However, in this era of rapid and significant change in market conditions and competitive position, the TM style is a useful weapon for CEOs who wish to stay ahead of the curve and their

When TM is used in its traditional, reactive mode, its primary goal is to return the ailing company to profitability through cost reduction and revenue enhancement. Unfortunately, this often means reducing costs, regardless of strategy, and accepting new sales from any buyer, regardless of the impact those sales will have on the company's longer term capacity for success.

However, as a proactive approach, TM is freed from the constraints imposed by poor financial condition and the sense of impending doom. Instead, the management team can operate in a rational environment and focus on the important issue of alignment. This concept has several interrelated facets, and builds from the marketplace in.

Strategies vs. Realities

The first alignment priority is to ensure that business, marketing and manufacturing strategies are aligned with marketplace realities. The turnaround manager assesses economic trends, competitive moves and customer needs to determine if the organization is properly positioned for the next stage in the industry's evolution. If not, changes can be made gradually in preparation for the next stage, rather than in haste, after the bottom has fallen out.

Circumstances in the metalcasting industry provide a textbook example of the need for proactive strategic change. While conditions are relatively comfortable for most, the combination of significant capacity building, the impending shift from iron to aluminum and further industry consolidation means this comfort zone will not last long for most. The vulnerability of organizations with misaligned strategies will be exposed, with important financial consequences, by the inevitable economic downturn.

CEOs must realize that success breeds complacency. A different approach may be required to create positive change in today's environment. The TM style could be that alternative approach.

Budgeting

The second alignment priority is budgetary in nature. Here, the turnaround manager determines if the company is allocating its resources properly. More than anything else, funding or not funding a program, product, department or activity defines the most important aspect of managing - implementation. By employing the TM style now, these decisions can be made, cool heads can prevail and the need to "slash costs" can be avoided.

An example of this issue faces gray iron automotive foundries. The CEO and management team must decide if further investments in gray iron are wise given the coming of aluminum and the increase of lower cost competition from developing nations - and all this while sales of gray iron casting may be at record levels.

Organization Structure

The next alignment priority relates to organization structure. Given the nature of competition in the 1990s, many organizations in the manufacturing sector have abandoned traditional functional organizations in favor of a more flexible, responsive, multi-disciplinary team approach. However, there is a growing need to streamline by eliminating the old style functional organization altogether.

One of the most powerful agents of change is a new organization chart. Requiring people to give up long-held titles and the comfort of familiar positions is difficult, but today's metalcasting business cannot afford an organization with redundant activities, with departments that have difficulty communicating or working across functional lines, or with structures that inhibit the development and nurturing of new ideas. A TM style can make this transition happen.

Staffing

That brings us to the final alignment priority - staffing. Beyond the impersonal priorities of budget and structure, the personal issue of ensuring that the people are in the right positions will ultimately determine the extent to which organizations can successfully implement competitive strategies, effectively serve customers and generate increasing levels of profitability. The CEO determines if roles and positions are defined properly. With the ideal staff defined on paper, the key is to match individuals with positions, moving current employees when appropriate and bringing in new blood if needed.

While the metalcasting industry has been strong in the manufacturing disciplines, one of its primary weaknesses is in human resources. To reverse that trend, a CEO who acts as turnaround manager can reexamine company views on staffing (including the importance of line and staff positions outside the manufacturing area); personnel policies; salary and benefits offerings; the importance of advanced degrees in technical and management disciplines and, of course, the legitimacy of "the way it has always been done."

Whether employed within the context of a TM style or not, it is important to note that alignment is among the most powerful concepts in the management lexicon. To illustrate this idea, think of your business and the strategies it employs as a mobile hanging from the ceiling. if strategy is aligned with market-place realities - and budgets, structures and staff are similarly aligned - the mobile will be in balance and will function as intended. If alignment has not been achieved, the mobile will be tilted out of balance and will lurch uncontrollably as marketplace forces and competitive winds change direction.

In today's metalcasting industry, strong demand and healthy profits do not diminish the need for alignment. However, these conditions mask that need and the fact that most businesses are significantly out of alignment. A TM style can prevent a cover-up from happening, thereby minimizing the after-shock that would otherwise be experienced when capacity once again meets up with demand.