Turning a failing organization

Turning a failing organization around is one of the most interesting activities in management. When organizations see themselves in that downward spiral, their managers may feel that they are unable to stop the pace of negative change. That worry and that downward momentum can be very powerful. At the same time, it sometimes takes only a key impetus to deflect that movement and turn things around.

Picture yourself as a new manager hired into a failing division in a company. The product line is outdated and losing market share, inter-departmental communication is adversarial, and competition for corporate funding is fierce. How are you, a new person, going to turn things around? Consider the following example, Symphonic Cooperation, from another "industry" below. The following article is an example of how one person, working in a very different type of workplace, turned around a company by making changes in its structure. Some of what was done may be food for thought in your very different work environment. As your first job as the new manager at the outdated, adversarial company, write a plan for changing its organizational structure, incorporating the following elements:

Your vision of the new organizational structure for your division including how you would realign individuals, tasks, processes and functions
Steps to manage the transition from the old organizational structure to the new
New policies that you would implement that should begin right away to facilitate the change to the new organizational structure

LEAD STORY-DATELINE: The New York Times, February 20, 2002.

The last decade has been difficult for many major metropolitan orchestras in the U.S. Through most of the 20th century, orchestras, along with art museums and opera companies, were at the center of the cultural life of big cities. The 1990s were a time of considerable strain for the orchestra industry, which was faced with declining audiences, changing tastes, and technologies that offer substitutes for live performance. Especially in the late 1990s, orchestras in cities like Denver, Hartford, and New Orleans all faced life threatening, and even in some cases, terminal crises. In 2001, the St. Louis Symphony was facing such a crisis. Its long-time musical director had retired; it was losing money year after year; a referendum to provide more public financing to cultural organizations failed; public and corporate support was declining; the musicians were requesting substantial pay raises in their collective bargaining; and unlike other major orchestras, the St. Louis Symphony had not built up a significant endowment that could generate a stream of investment income.

Clearly, changes were needed, and the Kinzer article describes a series of moves that have started a major turnaround for the orchestra. The business leaders in St. Louis persuaded the Board to accept outside help from W. Randolph Adams, who started as a consultant to the orchestra and was then hired as its president. Adams took a series of steps to reinvigorate the orchestra. Initial actions included opening the financial statements of the orchestra to the musicians union so they were more accurately informed about the orchestra's condition. The musicians, faced with a request for a big reduction in pay, decided to collaborate with the new managers and to take a more active and participative role in the future of the orchestra as an institution, rather than just counting on it as an employer. Some changes involved reducing the size of the orchestra's program by cutting the number of concerts in some of its series, and by divesting its music education program to a local college. Another significant change was to bring management and musicians together in a series of collaborative decision-making steps.

The community response to the changes has been positive. Kinzer notes that some significant new financial donations made it possible to shrink the size of the musicians' pay cut. The orchestra received some challenge grants, which are commitments by a donor to match their gift with other donations (these are called "challenge grants" because they challenge the organizations to raise new money to make the match). The orchestra's Board has made a commitment to both pay off the last few years' worth of deficits, and simultaneously to build up the endowment. While the future is uncertain, it appears that St. Louis is much more likely to have thriving orchestra in coming years than if it had continued on the same path.