One of the biggest hurdles a chief restructuring officer (CRO) faces is persuading stakeholders and employees that changes need to be made, and they need to be made right away. Organizational inertia is the tendency to continue self-defeating behaviors, even when it’s clear the old ways are no longer working. I’ve seen individuals drive companies off the proverbial cliff, even when they saw the cliff coming and knew the business was headed in the wrong direction.  

It can take a lot of determination and persuasion to facilitate change, sometimes even requiring the removal of people unable or unwilling to accept a company’s new direction, business restructuring and strategies. Once the CRO, company owners and directors, and key management personnel agree on a different approach, it must be diligently and purposefully implemented. This can sometimes require all the willpower key stakeholders can muster to ensure difficult decisions are enforced.  

It’s also critical to make tough choices immediately, instead of putting them off until later.  Even after agreeing to change, many people tend to put off implementing the selected course. In a crisis situation, this cannot be allowed to happen and is one of the reasons we need 13-week cash flow projections. This tells us the time we have to make changes and determine whether they are having the desired effect before our cash runs out (and we drive off the cliff).  

Another difficult decision inherent to those in crisis mode is whether they should borrow money in an attempt to get the company out of debt. Or, alternatively, obtain a new equity investor to cover the organization’s losses. TAP’s business restructuring group has seen many owners scrambling to borrow or seek new investment to solve a cash shortfall. The problem with that approach is that most lenders or investors want to see the company stabilized before they provide capital. They want the problems causing the cash shortfall or loss to be solved before financing.   

While all this is going on, the company needs to retain its key employees and good customers; both could leave if they see leadership in a panic. It’s important to have a sense of urgency, but not desperation. Panic is often the precursor to failure. Conversely, solving difficult problems quickly, and making tough decisions, can be reassuring to employees and customers. Many people will give a company the benefit of the doubt if they see progress being made toward the return to solvency. Communicating clearly and honestly with both stakeholder groups is the key to maintaining engagement. “Yes, we know we have problems, but we have developed solutions, and we are implementing them quickly” is a reassuring statement to hear, especially when it’s followed by the announcement of a clear plan of action that includes decisive corrective measures.  

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