Article: Leading a Turnaround: Learnings from PSU


Leading a Turnaround: Learnings from PSU

Learnings on corporate renewal strategies from PSUs successful turnaround
Leading a Turnaround: Learnings from PSU

Bureaucratic organisations tend to groom leaders who believe in the mechanism of fear; a style not very conducive to bringing about revitalization and change


For the management leading the transformation, it is important to have a communication plan that connects with all employees and stakeholders


The Indian socialist model of development, envisioned and developed during the first few decades post independence, gives the Indian economy one of its very distinctive economic features - the Indian PSU behemoths. Run in characteristic bureaucratic style, which generally typifies not just government institutions, but also most large multinationals, many PSUs in India have successfully transitioned and established themselves in the new economic environment in the last two decades. While some of the successes have been by virtue of the brute force of their size, many others have engineered excellent turnaround from within their bureaucratic framework.

Providing transformational leadership and building excellent two way communication at all levels, which are the critical elements for strategic renewal, are challenges faced by PSUs.

Bureaucratic organizations tend to groom leaders who, more often than not, believe in the mechanism of fear, or administrative action, a style not very conducive to bringing about revitalization or change.

A number of turnaround leaders have been known to lead initially through fear, which is true not only in bureaucratic organizations, but even in other structures. The idea is to create movement within the organization to kick it out of inertia, so that it can be revitalized. And while there have been successes with this style of transformational leadership, all too often, a headstrong CEO, Chairman or a Lead Director possessed with the wrong vision or strategy, destroys an organization even though the movement created within the organization brings an illusion of progress being made. The initial stage would last for a period of 2 to 3 months and any extension beyond that would mean that success is elusive and wrong fixes are being employed. A comprehensive revitalization to turnaround in the competitive business environment, calls for genuine motivation across various levels to sustain the progress.

Very often leaders who see initial success with the use of fear, continue with the same style of management beyond the initial stage and all progress made tends to get lost very quickly. It is this line between initial success and sustained progress where communication plays the most important role in transformational leadership. The movement created through fear has to be quickly transformed into motivation, so that the strategies conceived are put into execution. For both, motivation to be built and strategies to be effective, communication is the most important tool. Moreover, strategies, risks, and renewal efforts, should be disclosed appropriately. Hence, timing the communication is of great importance.

Communication design and strategy

Experiences across the corporate world have shown that larger the organization, the more difficult it is for people within to communicate effectively with each other. These difficulties arise from the physical dispersion, the trend towards compartmentalization, a predominance of functional specialists, a rule by policy and procedures instead of a shared vision and also from complex personal factors. To overcome these difficulties, management needs to recognize the unique, dynamic qualities of each and every communication situation.

There must be considerable diffusion from the level of the CEO to the rank and file. Middle and operating managers have a far greater role in bringing about a turnaround than is commonly believed. It is, therefore, important that they are aligned and motivated to be part of the turnaround vision for the same to be achieved.

The following milestones have been effective in bringing visible and effective change at large PSUs:

1. Minimize dependence on existing structures

In highly structured organizations, the structure becomes the biggest barrier in communication and hence, aligning the middle and operating managers with the employees at large to the vision is a challenge in itself. The communication design has to break the structure barrier and appeal directly to the rank and file. Face to face meetings to communicate directly, work best and are best suited for change.

2. Shed existing methods

It is also important to shed existing ways to communicate as many a times, the modes in use may have lost their relevance by becoming staid and routine. For example, people may have stopped reading the in-house journal and focusing a message in such a medium maybe a lot of effort for a lost cause. Hence, it is important to innovate with regard to the medium. A high visibility wallpaper from the CEO or video clip on the mobile at periodic intervals may work if it attracts attention and generates a buzz.

3. Assess the organization’s pulse

Listening sessions conducted within the workforce are visible signs of outreach, which go a long way in knowing the pulse of the organization. They enable an early warning system to matters that are potentially critical to the turnaround, before they are blown out of control.

4. Reach out to key contributors and opinion leaders

Informal organizational communications typically flows in a ‘hub and spoke’ configuration. ‘Hubs’ are most often key contributors or opinion leaders. High touch communications targeting the hubs are an efficient way to make wide ranging organizational communication work effectively. The key task here is to identify the internal opinion leaders and get their “buy-in” for the new organizational vision, through formal as well as informal channels like a dinner meeting at the young manager’s conference or lunch break chats during a union-management meeting.

5. Equip frontline managers

Equip frontline management to represent the company to employees. Frontline management must speak often and convincingly. And to leave them out or put them aside is a strategic blunder. When we implemented a major organizational restructuring in the late 90s to bring greater customer and product focus, we ensured that each and every frontline executive was covered under the communication exercise. The HR team was closely associated with communication design and delivery. Uniform diffusion was ensured, bringing an alignment of objectives and a major restructuring exercise was implemented with great results, despite a lot of initial resistance from employees as well as frontline managers.

6. Make senior management part of the process

Keep senior management in the loop. Talking points should be constructed to ensure that the message aligns with the new mission. It is important that senior management speaks up and down within the internal, domestic organization as well as internationally, with the same passion and purpose to both internal and external stakeholders.

7. Avoid media scrutiny

Large organizations which are government owned tend to come under the media scanner during the turnaround phase. It is important that organizations avoid adverse media reports during a turnaround. The best solution for this is usually very simple – accessibility. Providing the media close access to CEO and key top managers can help in overcoming the tendency of media to speculate.

An effective corporate renewal strategy will be marked by increased transparency of issues and discussions with the employees, about the situation within the company. An effective communications plan is essential in keeping the employees engaged. For the management, which is leading this transformation, it is important to have a communications plan that connects with all employees and stakeholders. For each phase of the change, there are messages that the senior team needs to collectively craft, and repeatedly deliver, both internally and externally. The message and its consistency are essential for management credibility. It is important to be straight, clear and consistent in communication. Experience gained over the year in transformation has also taught that transformation is not achieved by instilling fear of failure, but by building confidence for success. No matter what kind of grooming one may have had about leadership styles in bureaucratic organizations, good leadership is always one, which is based on the principle of people-centric ideas of motivation, involvement and initiative. All these traits have communication at its core.

Managers may well learn to imbibe these traits and skills and it will surely bring about in them a transformation from being a manager to a leader. This will naturally catapult them in line for greater roles in the organization.


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Topics: Leadership, C-Suite, #ChangeManagement

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