Five stages to corporate health

There are workable preventive, diagnostic and therapeutic steps to treat sick companies, and to restore as well as maintain their well being. Similar to handling of a person’s health, a company needs to monitor the five stages to sustain long-term health and wellness, namely, prevention, early diagnosis, proper treatment, recovery or rehabilitation and strengthening or health-boosting.

Prevention
As the adage goes: Prevention is better than cure. In medical practice, prevention of the disease before its onset is better than giving medication when it is already malignant or full-blown. Getting it right early is much better than subsequent expensive treatments. Furthermore, when you lose your health, the road to recovery gets longer and rougher. Prevention is the name of the game for individuals and companies.

Just like people, most companies get into trouble simply through sheer neglect. Neglect has become the way of some businesses within the latter 2000’s, including Fannie Mae and Freddie Mac, companies which would have benefited greatly from preventive medicine earlier in the game to avoid their later downfalls. Through the lack of monitoring, the accumulation of toxins or disease causing pathogens are allowed to perpetuate into a full manifestation of the ailment before any action is taken to contain it. At the outset, a company should adopt prudent practices to prevent the onset of corporate ills or financial problems. The preliminary issue such as prevention requires the direction to be clear as well as good planning. Next, the hard issues need to be implemented which include diligent financial and other controls. Also, soft issues such as taking good care of your people and the wise management of the talent pool are also crucial.

Diagnosis
Diagnosis is the identification of the disease based on its symptoms. However, the symptoms can sometimes mask the real disease. Also, many diseases share similar symptoms. Thus further probing is required in order to ensure that the disease is not misdiagnosed.

Just as a sick person may manifest early symptoms of an ailment, such as a cough, a running nose, fever and body aches, likewise, there are usually ample warning signs for a company. A high staff turnover and a loss of brand equity are some of the symptoms that indicate that all is not well. However, they are merely the symptoms rather than the real disease or root cause. Treating the symptoms is tantamount to upgrading a cancer-stricken patient to another ward in the hospital, if the condition of the patient does not improve. Prescription without diagnosis is malpractice, and likewise, implementing a corporate restructuring without knowing the root cause of the problems can be disastrous.

The key is early diagnosis as it increases the chances of curing most diseases. Therefore, a company should put in place a detection system to facilitate this early diagnosis. How does a company get out of trouble? A good way is to diagnose how it gets into trouble in the first place.

Diagnosis starts with acknowledgement of the problem, good detection system and identifying the root causes from the symptoms. Then one needs a comprehensive diagnosis of the “hard issues” such as its pricing, process and communication. The company also needs to review the “soft issues” such as communication and leadership functions which may have got the company into trouble.

Treatment
There are panaceas that can turn a critically ill organization into a healthy one; however, proper treatment is necessary as the remedies may be worse than the disease. For instance, some cancer patients are killed by the chemotherapy rather than the disease itself.

As they say, a stitch in time saves nine. Usually an ailing company needs critical attention probably in the form of ‘surgery’ with the primary focus of restructuring the organization and improving its cash flow. Most troubled companies will need to engage external help to advise them through the necessary actions needed to steer them out of the woods. Efforts are also needed to restore the company’s bottom line and profits.

Treatment starts with the execution in appointing the appropriate corporate doctor or turnaround manager or a team. Next, the distressed company needs to focus and understand some of the techniques to remedy its ailment. Hard issues take precedence during this stage with restructuring, right sizing and cost cutting. In some cases, the rescue endeavour may come in too late; however, if this is the case, then an exit strategy may be necessary. After dealing with the hard issues, the company needs to deal with the soft issues of dysfunctional personnel and bureaucracy.

Recovery
Once a company has completed its surgical care and come out of the ‘intensive care’ stage, it is of paramount importance that it can continue to nurse itself to health. The pace of recovery and rehabilitation can vary from patients to patients, even though they maybe afflicted by the same disease. Certainly the solution for saving AIG will not be the same as the one necessary to save Morgan-Stanley. Maintaining flexibility regarding recovery may be the difference between a successful recovery and a continued downward-slide, especially in the current economically distressed environment of the late 2000’s.

Similar to the recovery after a surgery, a physiotherapist will start you on an exercise and rehabilitation regime such as assisting you to walk with crutches. As you recuperate in the hospital, the physiotherapist and occupational therapist will re-teach you the ways to walk, eat, bathe, sit and dress. They will also advise on your diet and exercise programmes when you are discharged from hospital.

A company during this stage of the cycle needs to give itself time for healing and recovery. Then it needs to review and reflect on some of the hard issues relating to sales and marketing, customers and market positioning. However, it is an often occurrence that these basic warnings are not heeded and are rather taken for granted eventually undoing the positive steps taken previously. The recovery period is a good time for the company to recharge and reenergize itself through re-visiting its ethical values, inspirational and renewal process.

Strengthening
After full recovery, the battle to stay in good health is not over yet. The company needs to continue to strengthen and have foresight to transform and innovate. It must also continue to build up its cash reserves.

Some doctors believe that the immune system can defend the body against cancer and germs. The immunity is the defence system to combat diseases. During this phase, the strengthening of the immune system is the key to boosting health.

The immune system for the company is the corporate culture. A dysfunctional corporate culture is one which is arrogant and full of ego. A company needs to strengthen its immune system through healthy mindsets and vision. In medical science of psychosomatic, it is believed that the mental health can affect the physical health; similarly the mindset of the company can hurt the financial health. It is good practice to remember that some times, the root of the problem, is the company itself.

An organization that has regained corporate health needs to implement a sustained programme to remain in the pink of health. The company needs to strengthen its heart through exercising, good diet and vitamin supplements. As these are long -term measures, their benefits are normally not visible immediately.