Why do Companies Fail Survey Results published by Dr. Christoph Lymbersky of the Turnaround Management Society
Dr. Christoph Lymbersky executive director of the Turnaround Management Society (TMS) asked 405 turnaround managers and restructuring experts about what factors lead to corporate crises. The last survey on this subject was carried out in 1990. The 2014 TMS survey highlights the internal and external causes that corporate restructuring specialists have witnessed in their assignments over the last five years. The results are then compared to previous surveys in order to identify changes over the last 40 years of why companies fail.
(firmenpresse) - Almost 88 percent of respondents held top management responsible for a crisis situation, and 30.3% blamed middle management. The most commonly cited reason was corporate strategy (45.5%) followed by internal communications (30.2%), marketing (24.3%), sales (24.2%), and customer service (15.2%).
The survey highlights 5 prominent problem areas:
1.Internal communication
In almost a third of all situations, insufficient internal communication played a big part in fostering the crisis. Often the management does not communicate much once a crisis becomes obvious, or the communication is not clear enough. According to the survey a common mistake seems to be that the management plays down the severity of the crisis, or even communicates that everything is okay, while working on job cuts and salary reductions in the background.
2.The educational background of the management
A third (30.3%) of all turnaround consultants found that the management of the company was not very well educated in business matters. The Turnaround Management Society, as a not-for-profit organization, has implemented numerous projects to target this problem. The TMS certification program, “Certified International Turnaround Manager” and the turnaround framework, “International Turnaround Management Standard” are just two of them. The Turnaround Management Society also advises universities on how to set up turnaround management courses and integrate relevant theory into their existing classes in order to educate the leaders of tomorrow as early as possible.
3.The companies product/market mix
Expansion of an existing product line is not always a success and can lead to a corporate crisis (21.2%). In other cases, investment into future products and technologies was, over the years, not enough (18.2%), leading to missed technological advances to reduce production costs, a lack of features, or new technologies that competitors can provide.
4.Financial problems
Quite high up on the list of causes of crises in the questionnaire were liquidity and cash flow problems (27.63%), which are often caused by insufficient controlling and accounting processes (21.2%) and no or inappropriate financial planning (15.2%).
5.Human Resources
No goals or wrong goals for the workforce (15.1%) often contribute to poor performance by employees and accelerate a crisis situation. Setting no goals is as ineffective as too many goals. An employee can only spend so much time on something they are supposed to focus on. If too many goals are set some of them will suffer, or the quality of the work will decrease.
The Turnaround Management Society also compared the internal causes over a timeline of 38 years. The comparison shows for example that the lack of financial control is becoming less and less relevant as a crisis factor. In 1984 inadequate financial control still contributed to 75 percent of all corporate crises. Today, in the 2014 Turnaround Management Society survey, only 36% reported this to be a cause of decline.
To overcome the problems of why companies and turnaround projects fail Dr. Christoph Lymbersky of the Turnaround Management Society has developed the „International Turnaround Management Standard“. It is a project management based method of leading a company to a sustainable turnaround.
The International Turnaround Management Standard includes financial restructuring techniques, strategic & operational strategies, marketing aspects, crisis communication with stakeholders (to maximize the internal support and minimize bad press), controlling, quality control processes, risk management, etc.
To read the full crisis causes survey please visit the Turnaround Management Society homepage.
Themen in dieser Pressemitteilung:
research
turnaround
turnaround-management
corporate-restructuring
business-failure
business-mistakes
corporate-failure
Unternehmensinformation / Kurzprofil:
The Turnaround Management Society is a not for profit organisation of restructuring and turnaround professional around the world.
Turnaround Management Society
Luetkensallee 41
22041 Hamburg
Germany
www.Turnaround-Society.com
Turnaround Management Society
Luetkensallee 41
22041 Hamburg
Germany
www.Turnaround-Society.com
Datum: 25.10.2014 - 11:20 Uhr
Sprache: Deutsch
News-ID 346910
Anzahl Zeichen: 4433
contact information:
Contact person: Sabine Klug
Town:
Hamburg
Phone: 04068949398
Kategorie:
Research & Development
Typ of Press Release: Produktankündigung
type of sending: Veröffentlichung
Date of sending: 25.10.2014
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