Organizational turnaround: moving beyond one-size-fits-all solutions

Abstract

Literature on organizational turnaround has frequently suggested, but rarely investigated, the possibility that turnaround strategies for failing organizations must be matched to the specific needs of the organization. Building on work related to causes of decline in private sector literature, this study offers a framework for matching strategic interventions to the current state of an organization’s functioning in terms of resources (material and human), coordination (horizontal and vertical), and the environment. Using a panel dataset of New York City schools, we find that two understandings of turnaround that often appear mutually exclusive—that an organization can improve performance by shoring up weaknesses and that an organization should play to its current strengths—can complement each other and may both appropriately describe different types of organizational challenges.

Notes

1 Other typologies of decline also exist. For example, McKiernan (2002) identifies four types of decline triggers—physical, managerial, behavioral, and financial. We focus here on the internal and external dichotomy due to the predominance of this typology in the literature and the lower likelihood of category overlap.

2 This type is also referred to as k-extinction. Conceptually, “K” represents the upper limit by which an organization may operate, given the resources available.

3 Research in this area also notes that it is possible that the chance of turnaround may depend on the implementation of a turnaround process (Hoffman 1989; O’Neill 1986). Thus, even when an appropriate strategy is selected, faulty implementation may prohibit the organization from experiencing any improvement.

4 The components we identify are not an all-inclusive list but provide what we believe is a reasonable approach to conceptualizing the many structures and processes present in organizations. There are many ways these components might be grouped or categorized. For example, Nadler and Tushman (1980) identify four organizational inputs (environment, resources, history, and strategy) and four organizational components (task, individual, formal organizational arrangements, and informal organization). Adapting Nadler and Tushman’s model slightly, Scott and Davis (2007:19–25) identify six elements of organizations: environment, strategy/goals, work/technology, formal organization, informal organization, and people. Waterman, Peters, and Phillips (1980) offer a framework with seven components: structure, strategy, systems, style, staff, skills, and superordinate goals. For the purposes of building a framework for matching turnaround strategies to organizations, we prefer our categories because we believe they clearly identify a small number of relatively distinct aspects of an organization that one might target for improvement.

5 We opted for a single lagged value (t-1) of the dependent variable since additional lags would substantially reduce our sample size, given the small number of years included in the dataset. Substantive results change little when additional lags (t-2, t-3) are added, except that counseling spending has a significant (positive) association with violence and safety spending has no significant relationship with violence when exactly two lags are used.

6 Adding a second lag (t-2) produces an insignificant coefficient at the .05 level (p = .053). The substantive results do not change dramatically when the second lag is included, but we lose a number of cases, since one year of our rather short panel must be omitted for every additional lag we add.

Additional information

Notes on contributors

Amanda Rutherford

Amanda Rutherford ([email protected]) is an assistant professor in the School of Public and Environmental Affairs at Indiana University. Her research focuses on performance accountability policies, managerial decision making, and equitable access for underrepresented groups in the context of K–12 and postsecondary education. She has published in the American Political Science Review, American Journal of Political Science, American Review of Public Administration, and Public Administration. She serves as the book review editor for the Journal of Public Administration Research and Theory and is part of the Rising Professional Editorial Board for the Journal of Student Financial Aid.

Nathan Favero

Nathan Favero ([email protected]) is an assistant professor in the Department of Public Administration and Policy at American University’s School of Public Affairs. His research interests include public management, race and ethnicity, public policy, public administration, and research methodology. He has published in the American Review of Public Administration, Journal of Public Administration Research and Theory, Public Administration, and Public Administration Review, among other outlets.