How to Undertake a Financial Restructuring: Prepare to Face the External Challenges
Not only will the new leadership have to deal with amplified scrutiny on behalf of creditors and shareholders, but also the challenges of the 24-hour news cycle. In many cases, those most affected by potential restructuring find out from the media before internal communication has been advanced. Fear spreads quickly, especially when the overall economy is experiencing a downturn. The antidote is a clear vision of emergence that management and staff can get behind and implement with determination. Getting ahead of the media is often a necessary first step in stemming disaster.
Bankruptcy and re-organization, especially when undertaken by major corporations, will naturally result in media attention (and probably more that any resulting success will receive). All involved- management, vested interests, and staff- will need to develop a thick skin.
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How to Undertake a Financial Restructuring: Open the Lines of Communication
The two major lines that need constant and transparent communication are between:
1. Management and employees: In order for financial and debt restructuring to work, all hands need to be on deck. The often-necessary downsizing and overhaul of familiar protocols and processes can create disorientation, stress, and apprehension company-wide. The solution is transparency and the fostering of a community effort.
2. Financial consultants and creditors: At the end of the day, a company's survival may depend of the goodwill of potentially disillusioned creditors and holders of debt. It is the responsibility of the financial consultant, in tandem with the CEO, to present a clear and focused strategy for reducing debt and costs while maintaining market viability. Creditors ensure operation and must be convinced that the compass is pointing in the right direction. It is equally important for those responsible for the plan to present a clear and honest agenda to the staff who will be ultimately responsible for implementing it.
O'Rauiri sees employee feedback as a crucial, and often overlooked, resource. "Management, unless working day to day with the issue their staff have to contend with, usually don't have the same appreciation of problems or solutions. When a blanket "save money" type order comes from HQ or the CEO, management has a tendency to do the things that show immediately (often staff reductions) rather than stepping back and looking at the whole picture. Using your employees' past experience should be compulsory, but isn't."
Clarity and community are key aspects of any transition, and in business, a positive group dynamic is essential to capitalizing on the gains made through restructuring.
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How to Undertake a Financial Restructuring: Stay Committed and Know That Restructuring Works
It is likely that some aspects of restructuring- systemic change, outsourcing, staff reduction- can sow doubt, both internally and externally. To get through this, focused leadership, excellent advice, and complete transparency must be applied to the disruptive and challenging process of reversing a company's downward trend. CEO's and consultants must keep the light at the end of the tunnel bright enough for every concerned party to see clearly- creditors and employees alike.
Although many companies emerge from the darkness of bankruptcy and debt restructuring with less resources and staff than they started out with, there are many examples of the rapid recovery and success that results. An experienced consultant and a focused CEO should be able sustain a corporate juggling act: ensuring a company's operational capacity while assuaging creditors, reducing debt, and suspending the morale of its' staff. Although never easy, the ultimate dividends from financial restructuring are ultimately worth the struggle.
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How to Undertake a Financial Restructuring: Additional Resources
Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups by Stuart C. Gilson
Restructuring For Growth by John C. Michaelson
