Now I spent a few years doing turn arounds. One must understand that these are often companies in some rather bad straits. They are burning money, have a management which may have become deer in head lights and are very close to their demise.
So here are the three rules of a turn around:
1. Fire half the people. Yes, half. How did I do this, easy, I have a Social Security number which ends in an odd number so I fired all those with even numbers. Nothing personal, and people actually understand that they just drew the wrong card. Even the lawyers accepted it. Why half, well it cuts costs and it makes a statement, namely we are really in bad shape. It is also fast. You do not get into the problem if making choices.
2. Raise the Prices. Why raise prices? Well simply you find out very quickly who are real customers who want your product or services and then you quickly get rid of those dragging you down. By this time you have actually become profitable, possibly still burning cash but profitable.
3. Find a buyer! This must be done quickly. You now have cleaned up problems, shown how to get the business functioning but you may very well have gutted it too much, so find someone who will keep it rolling and sees value.
Those three simple rules are rules of survival. Now the Times states:
But an examination of the Dade deal shows the unintended human costs and
messy financial consequences behind the brand of capitalism that Mr.
Romney practiced for 15 years. At Bain Capital’s direction, Dade quadrupled the money it owed creditors
and vendors. It took steps that propelled the business toward
bankruptcy. And in waves of layoffs, it cut loose 1,700 workers in the
United States, including ..., who lost their
jobs at a plant in Westwood, Mass. Staggered, Mr. .... wondered,
“How can the bean counters just come in here and say, Hey, it’s over?” Mr. Romney’s career at Bain Capital, which he owned and ran as chief
executive, is a cornerstone of his campaign for the Republican
presidential nomination — a credential, he argues, that showcases the
management skills and business acumen that America needs to revive a
stalled economy. Creating jobs, Mr. Romney says, is exactly what he
knows how to do.
The writer has no idea what a turn around is. It saves what is savable. The company was dying, you had to remove parts to save the remainder. I had done this many times, it is emotionally exhausting. I remember once in Memphis the above rule caught a man whose wife was dying of cancer. He came in to see me mad as hell. Did I make an exception, not exactly, but I did find him another job and we bridged health care costs. I was always willing to face those who I had cut, sometimes helpfully, sometimes as a cathartic.
The people at a dying company know what is happening. They all too often hang on in hope of someone saving them instead of recognizing that they should take it upon themselves to seek alternatives. Turn arounds are job preserving for some, and possibly job creating for others.
Thus the above article totally fails to understand what a turn around is. It demonstrates the gross and total ignorance and/or bias of our press. The "bean counters" are coming in after the company was near death, and if an employee did not recognize that then in my opinion and based upon my experience, they have a real problem.
I guess I just have the distinct disadvantage of experience!
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