Sinking Ship can Float and sail

Every

company

faces

problems

in

establishing and running the organization.

There are many factors which affects the
performance
Decisions

of

are

the

organization.

made

to

run

the

organizations successfully to earn money

for self and all the stake holders. Some
decision

affects

performance

the

adversely

and

companys
company

starts sinking, generating bad results and hit the financials. By way of my
experience in various industries, I find company's top management many a times
takes wrong decisions. Effects are not immediate; result will come after 2-3
years, by that time, in some of the cases situation have gone out of hands. Lucky
are the organizations which senses the side effects at the early stage and instead
of waiting for the surgery put the situation on medication.
Here, I would like to highlight few of the crisis factors and some tips how to save
the sinking ship, repair it and keep it sailing.
Few decisions which may pave the company to the crisis are A) Appointment of wrong executive, which effect company' decision making,
B) wrong selection of plant and machinery,
C) wrong product selection and continue to supply in the market despite of
market rejection,
D) wrong sales policy, focus more on schemes, discounts, etc., instead of
focus on improving services, product quality, market penetration, making
the customer product aware,
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E) neglected brand management,

F) Compromise with quality of product, aiming at increasing the productivity.
There are many other relates issues also, which may be related to the above
reasons. Due to these reasons we see distress in the employees and stake
holders. Few of the distressing symptoms are following employees turnover
large and unplanned reductions in workforce
stock aging increases and wrong stock evaluation
declining cash flow
frequent changing in vendors terms
increasing creditors outstanding
increasing debtors outstanding
unstable finance and HR department
shrinking market share and market depth
How to fight against the adverse condition is a big question. Once distress is in
the company's culture, it is very difficult to come out of it. Revival becomes even
tougher.
Based on my experience, studies and what the big BPR institutes suggests, a
company can take following precautions and action plans 1) Generate cash by liquidating dead wood from the stocks, it may be raw
material, semi finish or finish goods, otherwise its value will further
deteriorate. Finance may be financially attached with the old valuation
(Higher) and to show healthy asset side in the balance sheet, but ultimately
company has to take decision and generate the cash at the present rates or
face worst market rates of the products in the future. Why to wait worse
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to come? At least company get discounted rates, some cash to invest in

new projects and generate more cash by revolving it into the system.
2) Do SWOT analysis of the companys business plan. Thorough analysis of
business plan has to be done and evaluate the inflow and outflow of the
plan. Throughput has to be calculated. Less than 100% is dangerous,
indicating review and revaluation of the business
plan. Top management team should regularly
review the risk factors in the business and should
apprise the board of directors. Help and
assistance will surely come from them. Hiding will
not help in long term.
3) Never compromise on targets, review goals,
targets and performance on daily basis. Every
day should have a target and give a message to
the team that no target can be carryforward to
next day. Setting monthly target waste 30 days
and it is too late to heal the damage and
recover the losses. Act now and achieve the daily sales and collection
targets. Both have to have to happen.
4) Old outstanding debtors to be continuously chased and should be helped
to clear all the bad debts. If required, a special task force may be deputed
for this job. Customers (dealers/distributors) are the front brand
ambassadors of the company. Regular discussions on their business health
to be discussed. Help them liquidating their old stock, if any. Categorize the
slow movers and dont allow the outstanding to pileup beyond control.
5) Work for being profitable, generate cash and maintain the operations
intact. Consistent quality, healthy production / sales throughput, growing
distribution network, control on number skus (stock keeping unit) and
inventory aging. These can change the total scenario of the company's
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image and health.

6) Easy going mind set is the biggest obstacle
in dealing with crisis. Every manger should
act as a crisis manager. Every manger should
realize the crisis situation and the same
should be spread downstream. Hiding the
situation only aggravate the situation, because things will emerge as
gallery talks and whispers. Be open and make the change happen by
sharing the truth. True crisis managers will come forward for handling the
situation, take action and will act as catalysts in crisis management.
7) Discussions and Brain storming sessions
can only bring the company out of the
crisis.

Every

employee's

suggestion

should be viewed in a serious note. 5S and

Kaizen tools are of great help in coming
out of the crisis situation. These activities
should be initiated by appointing the group leaders who can move in right
direction to help company come out of the crisis.
8) Never take big steps in handling the
crisis like, making drastic changing in
purchase policy effecting supplies and
also never change the distribution
channel in one shot. Big decisions
should be taken in steps and with
every possible precaution. Initially
organization should change with-in, effects will be immediate and
supporting. Many times internal changes bring about changes in external
environment also. Activities like Cost cutting inside the organization will
give a message across the organization, everyone will be part of change
management and will make the company get out of the crisis. Choose the
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catalysts in the company. If they think and work for beating the crisis,
others will follow them.
9) Target achievement based incentives should be initiated in the company's
incentive plans. These incentive plans should be activity based and short
term. Same Incentive plans, months over months will become a right for
the employees. Keep introducing new incentive plans. This will keep the
employees afresh, energetic and positive in their approach. Once
stagnation is removed, all are on their feet to take challenges; crisis will be
changed into challenge and then comes the success.
10) In my career of more than 25 years, I have seen
company coming out of crisis by replacing one or
two top team members. People who are attached
with the organization for longer time are in a
very stable and comfortable situation. They are
always working in a comfortable zone. They always feel difficulty in
changing their aged old fundamentals and philosophy. They talk about the
old philosophy and principles by which the Company has achieved targets
in the past. They don't realize and acknowledge the paradigm changes in
the business environment. They resist changes and always blame younger
employees and they are successful
also in convincing the management
due

to

closeness

management.

with

Company

the

top

should

identify the employees working in

comfort

zone

and

are

inclined

resisting change to happen. They should be passes clear and sound signal
that company wants to change at any cost.
In my views the best asset which any company have is, positive, hardworking,
change makers and out of box thinkers employees. The company has to find out
these doers, integrate them and value them. Make them change leaders. In many
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situations I have find people emerging as crisis manger from two to three level
down the hierarchy. They are always waiting for the
opportunity to come out and perform. They may not be
old employees. They may be one or two years old and
may have analysed the company's internal bottle necks
and obstructions. They are the bull dozers who will
remove all the bottlenecks and speed breakers.

These are few of the points I have

realized and found workable to make
the change happen and bring the
company out of crisis.

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