Sinking ship – are all hands on deck?
Entrepreneurs who have experienced financial woes will tell you that under such circumstances, the situation can be likened to the feelings of the captain of a sinking ship.
For a company, the first order of business is to “plug the leaks”: manage cash closely and, by any means necessary, come up with sources of financing to keep the company afloat such as:
  • An additional loan from current lenders or a new   institution;
  • Increased support from goods and services suppliers; 
  • Sale of surplus assets or divisions;
  • Capital expenditures by current shareholders or new private or institutional partners.
Likewise, the situation calls for “a sharp turn in the opposite direction”: an operational turnaround that would reassess:
  •  The company’s mission and objectives; 
  •  Product line and services; 
  •  Target markets;
  •  Management style and competencies of the organization’s members;
  •  Level of expenses;
  •  Operating methods: processes, equipment, etc.
One element that is vital to a company’s turnaround, i.e. rescue process: the continued support of employees at every level of the organization.
These elements are not new and will continue to be concerns for managers who will one day have to navigate these difficulties.
 
What has changed?
Companies that have had financial difficulties over the past twenty years have usually succeeded in obtaining the support of their employees, since they wanted to “save their jobs”. Until the mid-90s, it was not uncommon to see turnaround plans that involved widespread salary cuts. Other than a few exceptions, that period has evidently come and gone.
For many years now, we’ve heard talk about the wave of retiring baby boomers and the impact this phenomenon would have on the existing qualified labour force in every industry. Currently, in the Quebec region, unemployment rates are decreasing. Several companies are even making their need known with loud cries of: “We’re hiring!” The employee shortages are now a reality and no longer a mid- and long-term prospect.
It should therefore be expected that the employees of companies in financial difficulty become less vulnerable and more confident of being able to find work elsewhere almost immediately. Hence, it is no longer about obtaining their support in order to “save their job” but in order to “save the company”.
To do so, the feeling of commitment should already have been ingrained long before the company started sinking into financial difficulty. How? Through:
  • Participative management;
  • A motivational promotion policy;
  • Personalized career plans;
  • Attractive benefits;
  • Shareholder participation programs, etc.
Entrepreneurs who have taken these matters lightly and who will be facing stormy seas can only hope their employees will take pity, just like the careless sea captain who implores his crew not to abandon a sinking ship.