Change is part and parcel of life in business these days and many change projects arise out of the need to turn around financial problems. A business might be facing problems making a profit or liquidity problems around servicing borrowings that it has made to name just a few. So what common mistakes do people make when it comes to financial turnaround projects?
Mistake 1: Seeing it as something for the accountants
Yes accountants have an important role to play in financial management in organisations but the reality is that they spend very little of the organisation’s money. Often when faced with financial problems, non financial managers see it as something to be dealt with by accountants rather than by the whole organisation.
Solution: Start seeing financial turnaround projects as business change projects.
Mistake 2: Trying to rely on quick fixes
Quick fixes such as short term cuts in expenditure or deferring something are clearly important to stop the rot but they are not the route to sustained turnaround of performance. Think about it, if you had a deep cut that needed stitching to heal properly, you would not merely cover the wound with a plaster or bandage. You would look for the best long term solution.
Solution: Use quick fixes as the start point not the end point of financial turnaround.
Mistake 3: Deck chair shuffling
By the term deck chair shuffling, I mean making the easy changes without ever tackling the real issues that are getting in the way of performance. It is easy to delude yourself that you are making a change when in reality all you are doing is making surface level changes within the comfort zone.
Solution: Make a commitment to keep deck chair shuffling to a minimum and focus energies on the real issues that need tackling, even if they are uncomfortable.
Mistake 4: Short term focus
Anyone can grab the low hanging fruit and achieve short term improvement. Trouble is that it is only a matter of time before the same problems arise again and the organisation finds itself in a worse position than it already was in.
Solution: When faced with a turnaround and change situation focus on creating long term sustainable change.
Mistake 5: Failing to give people enough time
When organisations are facing challenges, it is all too easy to remove the current senior team, bring in the new people and expect them to deliver miracles overnight. Change, other than that of a short term quick fix strategies takes time.
Solution: Give senior people sufficient time to make sustainable change.
Sustainable change is not something that happens overnight. By avoiding these five common mistakes you can greatly increase the chances of achieving financial turnaround and achieving sustainable change.
Since 2006 I’ve worked with in excess of 7,000 accountants and professionals in workshops, seminars and one to one helping them land their next jobs and become better leaders, presenters and business partners. Before that I spent 25 years in accountancy climbing the career ladder from Payments Clerk to FD. I’m a CIMA Fellow, Certified Professional Coach and Team Coach Facilitator.