Human Capital & Leadership in Turnaround Flashcards
6 cards from real CTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Human Capital & Leadership in Turnaround flashcards as text
The WARN Act (Worker Adjustment and Retraining Notification Act) requires US employers to:
Answer: Provide 60 days' advance notice for mass layoffs or plant closings affecting 50 or more employees
WARN Act violations in bankruptcy can create administrative claims that must be paid ahead of other unsecured claims, making compliance important for managing restructuring costs.
In a turnaround, 'management incentive plans' (MIPs) for the reorganized company are designed to:
Answer: Align management financial interests with the objectives of new stakeholders in the reorganized company
MIPs give new management meaningful equity or performance-based incentives that align their goals with value creation for the new creditor/equity base of the reorganized company.
Which behavior by senior management most undermines employee confidence during a turnaround?
Answer: Protecting executive compensation while implementing broad employee pay cuts
Perceived executive hypocrisy — asking employees to sacrifice while protecting leadership compensation — destroys morale and the trust required to maintain productivity during restructuring.
A 'performance improvement plan' (PIP) in a turnaround context is used to:
Answer: Provide a framework for employees to understand expectations and improve performance before any termination decision
A PIP provides clear performance expectations and a defined improvement timeline, giving employees a fair opportunity to meet standards and protecting the company from wrongful termination claims.
What is the purpose of 'cultural assessment' in a turnaround diagnostic?
Answer: Identifying cultural factors — risk aversion, blame culture, poor communication — that contributed to the distress and must change for recovery to succeed
Cultural dysfunction — siloed communication, blame-shifting, or excessive risk aversion — often enables or worsens financial distress and must be addressed for the turnaround to be sustainable.
In a turnaround restructuring, 'change management' principles are applied to:
Answer: Help employees and stakeholders understand, accept, and adopt the new ways of operating required by the turnaround plan
Effective change management reduces resistance, accelerates adoption of new processes, and sustains the behavioral changes required to prevent the company from sliding back into distress.