The incidences of corporate decline have been increasing globally causing organizational failure and in this regard turnaround management to be one of the most important topics addressed by business education and research in recent years. A turnaround can refer either to a business firm that faces financial disaster or action taken to prevent the occurrence of that financial disaster. The true nature of turnaround is a firm whose recent past or projected future financial performance unacceptable to the owners / creditors. The turnaround malaise is dissected into its four stages of progressive virulence using the analogy of restoration of physical health to the restoration of fiscal health.
Due to management inefficiency, most of the corporate fail to identify the problems and therefore delay in taking precautionary measures affecting the owners, employees, customers, suppliers and the economy. To restore the organisation on its normal course, a corporate turnaround is essential. Organizational turnaround is influenced not only by good management practices but also by shifts in organization. The impact of such shifts on organizational performance especially in public sector organizations has neutral or negative effects on performance but the extent of organizational strategy as well as environment influence turnaround success.
Good management practices, favorable shifts in external environmental variables, and changes in organizational inertia are all contribute to turnaround success besides organizational performance which can be influenced strongly by both organizational choices and external constraints. It is therefore, apparent to study and differentiate the seeds of business decline of the declining firms viz., internal as well as external. While most of the external signals of business failure cannot be fully controlled by the firms on the other hand the internal events are believed to be extremely important because the management has a direct control over them.
Few of the key ingredients of turnaround are:
i. a dynamic change agent with a strong sense of mission, preferably from outside the organisation,
ii. credibility building through some outstanding performance,
iii. mobilization of the rank-and-file by getting them involved in the organisation's goals and activities,
iv. quick pay-off projects for some immediate relief,
v. reprieve from serious external pressures, especially those relating to industrial relations, finance, key inputs, stakeholders, etc.
vi. mobilization of external resources and utilisation of environmental opportunities,
vii. strengthening of mechanisms to influence the environment, such as marketing, and public relations,
viii. selective changes in the product mix, concentrating on high pay-off products,
ix. selective strengthening of management functions and systems, especially the financial control system,
x. motivating managers through participation, autonomy, challenging tasks, accountability, example setting, etc.
xi. coordination through regular review meetings and face- to-face interaction and
xii. performance control through goalsetting and fixing of responsibility, often creating profit and cost centres
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