Choosing a Turnaround Professional
For a troubled company, no decision may be more crucial than hiring a turnaround manager. Yet, with all the pressures and distractions building within a troubled company, this decision must be made at the worst possible and most stressful time. Time, indeed, is often of the essence.
When evaluating the decision of whether and when to introduce a turnaround professional into a company, several important questions should be considered:
- How long will the services of a turnaround specialist be required?
- Can the company pay the turnaround specialist’s fees?
- Will other specialists be brought in by the turnaround manager?
- Is the existing management team willing to work with the specialist?
- What exactly is expected and are the goals in writing?
- What are the chances of success in turning around the company?
Key Factors and Considerations
Background. Experience is the most important credential. Degrees and designations count for little if a turnaround manager does not have a proven track record. A candidate should be able to produce a portfolio of success stories and satisfied clients.
Ethics and Professionalism. TMA membership is tangible evidence of the degree of professionalism, experience, and integrity of a turnaround professional. TMA also encourages professionals to pursue the Certified Turnaround Professional (CTP) designation as a further demonstration of their expertise and commitment to the corporate renewal industry. The CTP designation indicates that a turnaround specialist has met specific standards of education, experience, and professional conduct, and has successfully completed a rigorous three-part written examination. TMA’s strict Code of Ethics is signed by all members. In addition, CTPs must adhere to the Code of Ethics and can be brought before a Standards Committee if a violations charge is made. If the person is found to have violated the code, the Standards Committee can impose sanctions, including taking away the professional’s CTP designation.
Reputation. No turnaround manager can expect to succeed without quickly gaining the confidence of creditors, as well as accessing new sources of credit. A company considering hiring a turnaround professional should check the candidate’s reputation with leading bankers, attorneys, accountants, financial advisors, factors, and trade creditors.
Managerial Skills. As the chief architect and implementer of new strategies, the turnaround specialist must be an organizational leader. One should look for a person of action who has entrepreneurial instincts, “hands on” experience, and interviewing and negotiating skills.
Fee Structure. The fee structure of the turnaround specialist should be clear and fair. A company should make sure it can afford such a service to avoid trading one set of problems for another. The company should look to see if the proposed contract includes an incentive or performance arrangement.
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