The human Role of Management Consultants in Turnarounds and Recoveries

The expertise of a management consultant lies not only in diagnosing problems but, more importantly, in crafting bespoke strategies and assisting with the implementation of transformative changes. Often a company finds itself in this situation due to a combination of internal and exogenous factors. Inevitably, internal struggles often result in an inability to weather exogenous threats.

Internal challenges include poor leadership and management, inadequate financial management, operational inefficiencies, workforce challenges, failure to innovate and evolve and ineffective marketing and sales strategies.

Exogenous challenges include economic downturns, technological disruptions, market competition, regulatory changes, global events and natural disasters.

In this article, we will explore the human role management consultants play in guiding companies through the various stages of turnarounds and recoveries.

Understanding the challenges

Consultants will have their own ideas on how to approach the first meetings with a client. When I started out in the legal profession, my dad, who had practised the law in his capacity as a lawyer first and subsequently as a judge, told me: “a skill you should work upon tirelessly is honing the capacity to truly listen. A client’s problem is half solved when he offloads it”.

Very much the same can be said of most advisory professions. While there will be an urge to crunch the data, analyse the numbers, scour over the balance sheet, and understand the cash-flows, experience shows us that going straight to the data often only tells part of the story. And it can derail you in the long run.

Behind every turnaround is one or often multiple human beings who need being convinced that they, or their actions in the run up to seeking advice for a turnaround exercise is not tantamount to an admission of failure.

Understanding the challenges means listening, often for hours on end, to the explanations given by individuals across all levels of the company as to what brought the company to this point. Many times a consultant will not agree with what he is hearing to the point of dismissing it entirely as “irrelevant” information. However, whilst retaining an empathic approach, the crucial part in this exercise is to sieve through the fatigue, the sadness, the hurt pride, the stories of conflict, the finger pointing and various other emotions and to understand the engrained corporate culture which the company fostered in the run up to the turnaround exercise.

This is what you will be battling as a turnaround consultant.

Another reason why listening is so important is that from experience companies passing through extended rough patches display an often-complete erosion of communication channels. And when communication channels are eradicated the inevitable collateral damage is multiple manifestations of loneliness at all levels. Most individuals will have their loneliness masked by other emotions. You will hear that they “lack motivation”, “take all decisions alone”, “are tired of being tired”, “lost the will to wake up in the morning and go to work”. However you rarely hear the phrase “I’m lonely”. It is only when you offer to listen that a person realises they needed to talk. And it is only when a person feels comfortable talking to you that they can warm up to truly trusting you with one of the biggest decisions they ever took in their life.

Once the cultural “as is” has been established, it is time to take the proverbial photograph of the multiple processes and channels of communication which is the point of departure for any transformation process. This is where the task of the team of consultants often translates into multiple interviews to understand how the company “works”. 

The approach to these interviews is a delicate one. In a separate article I have previously written about the evolution of AI and whether it is close to replacing humans. I believe this process is one which best illustrates the importance of a human approach: The understanding that sometimes five minutes of silence are worth more than a thousand words. The understanding of what it means to have the world on your shoulders. Each of these individuals knows that they are part of a mechanism which for some reason fell short of market expectations. Until you walk into the room you never know whether they feel responsibility, acceptance, guilt, or total conviction that they are not to blame. The truth is that you must work around these emotions to capture the process while making sure that you do not in any way come across as accusatory. Just a hint of “blame” and quite possibly you’ve lost this person from the whole process. 

In a small to medium sized firm, management consulting firms tend to be sitting on enough data after the first interviews and after having crunched the main figures to be in a position to develop a tailored turnaround strategy. This will generally take the form of a defined time-line with specific changes across multiple levels within the company. This strategy will need to be communicated clearly with every single individual in the company. What do we keep in mind at this stage? You guessed it: Humans. Resist. Change.

I find that many companies, independent of size, seem to purposely ignore this fundamental aspect which is so inherent to human beings. The most recent well-known catastrophe in this respect was the takeover of Twitter by Elon Musk. Musk’s takeover was intended as a turnaround too. Terror took the place of empathy, and the result was a catastrophe. 

I do not underestimate the fact that in turnarounds time is truly of the essence. It is, indeed, an apparent paradox that change is very unlikely to happen in the absence of a sense of urgency. However, it is a constant trade-off between instilling a sense of urgency and maintaining a sense of serenity and security. Antagonism, blame games, negativity, impatience, division, and most other negative emotions often adopted in a “there’s no more time for playing” bang of a hand on a boardroom table are only conducive to one result: work to rule. At best. Trust me, you will not achieve a successive turnaround if employees are working to rule. 

I have seen the best brains, the most lively, lovely, responsible, and creative individuals simply walk out of companies simply due to an inability to withstand such prolonged periods of negativity.

Once the turnaround strategy has been devised, it is crucial that this is communicated clearly and unequivocally to all those in the company. Communication stops people guessing. 

A mistake I have seen many times is that turnaround strategy meetings are reserved for “the Management”. This is a colossal mistake for several reasons. All the cogs need to work together for a watch to work. A company is no different. One dissenter, one disgruntled member of a team is enough to keep a much larger process from being successful.

Ideally the individual communicating the change is also the person who will continue to lead the company once the management consulting team is out of the daily consulting task. I cannot overstress the importance of leadership in any turnaround effort. Leadership is the ability to take difficult decisions while instilling serenity in those on the other end of the message that your decision is conducive to the wellbeing of the company.