How You Can Turnaround Your European Business

 CEOs and CFOs often feel like they are following in the footsteps of Don Quixote when they try to restructure business operations in Europe. In theory, the formula for a restructuring in Europe is the same as the US - control cash, adjust pricing, renegotiate contracts, reduce employees, eliminate poorly performing divisions or products, accelerate collection efforts and restructure the balance sheet. In practice, implementing those actions in Europe can seem like an impossible dream.

Too often, European management or advisors will raise an unending series of roadblocks and reasons as to why they cannot implement change. To complicate matters, when they do decide to act, they often lack the urgency demanded by the deteriorating situation. A half-hearted or botched attempt at a turnaround can further cripple the business, alienate customers and demoralize employees.

To create lasting change in a distressed potranseuropean business, turnaround efforts must go beyond goal setting and conference calls with European management asking for progress reports. The initial focus should be:

1) getting complete buy in from ALL the stakeholders your company and
2) retaining operationally skilled turnaround managers that have experience with the business and legal challenges of Europe.

All turnaround professionals know that getting buy-in from stakeholders is the most difficult part of any turnaround. In addition to insuring that internal company constituencies are aligned with the restructuring goals, substantial effort must be made to insure that shareholders, lenders, employees, vendors and, most importantly, customers, understand and embrace the turnaround plan.

Finding a manager who can trim expenses or improve a specific process is not terribly difficult. Finding an operationally gifted manager who can quickly envision and produce dramatic, enterprise-wide improvements in Europe can be. Companies that lack someone with this skill set should recruit from outside. Whether hiring a full time employee or a turnaround expert, you should look for an experienced hands-on manager who can document strong operational results in situations in which he or she personally led the restructuring efforts. The 3 keys to a successful European turnaround are:

1. An effective management and financial control system,
2. a comprehensive employee plan and
3. cross-Atlantic business alignment.

Developing and implementing a carefully crafted management and financial control system is critical to the long-term success of an operational restructuring. An effective management control system begins with written strategic and operational plans that are specifically designed for your European business. It must go beyond ordinary financial controls and include clear ownership for revenue generation, new organizational charts and job responsibilities with no operational holes, procedures for measuring activitie