This article was first published by Resolve Group UK in May 2018:
A successful business turnaround is more likely if directors have a shared purpose and a Relationship Grid
Board behaviour and effectiveness consultant, Ciarán Fenton, sets out a process to achieve high levels of unity on boards during the stress of a turnaround programme
A non-executive chairman I was working with once remarked wryly: "few things improve business morale more than a 25% increase in revenue."
The opposite is also true. Tension, anxiety and especially conflict increase under the pressure of a downturn or, in what are euphemistically referred to as, "challenging trading conditions."
So when a business is going through a formal turnaround process, these tensions are at peak and are not helped by emotionally unintelligent turnaround methods like "brutally striping out costs and driving people hard". These may turn things around briefly, but not sustainably.
The business purpose and the personal purpose of each director are inter-dependent. One depends on the other. It follows that if these are not clear and shared then the strategy and behaviour of each director will not match the business strategy and behaviour plan.
I call this Purpose, Strategy and Behaviour Conflict or "PSB Conflict". PSB Conflict is the enemy of successful turnarounds. You can have all the cost cutting, restructuring and "transformation" you like but it won't work unless the people around the Board table are making decisions using a shared personal and organisational PSB.
If one director's underlying purpose is to shift blame and shame for the downturn to others, then their strategy and behaviour will match their purpose, no matter what decision is und