In an effort to establish a set of characteristics that define a successful and high performing turnaround management professional (TMP), Baird (2014:8) explored a missing link in the Dynamic Capabilities Theory relating to human capital and its impact on competitive advantage. Dynamic capability is defined as the firm’s ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments (Teece, Pisano & Shuen 1997). An important component of the Dynamic Capabilities Theory suggests that human capital of turnaround firms will provide a competitive advantage in the form of knowledge, skills and experience of individuals (Baird 2014:33).

Baird (2014:83) undertook research to identify the characteristics of high performing, successful turnaround management professionals. He sought to expand on the work of the turnaround industry which identified knowledge in the areas of accounting, finance, legal and business acumen and, coupled with experience, as characteristics of successful turnaround practitioners (Turnaround Management Association [TMA] 2012, cited in Baird 2014:4). The initial survey conducted with presidents of turnaround organisations identified the following characteristics as important measures of success in relation to a turnaround management professional (Baird 2014:85):

The second phase of Baird’s research involved the utilisation of a questionnaire completed by turnaround management professionals to identify characteristics of a successful turnaround practitioner. The results of his research are illustrated in Figure 1 (Baird 2014:125).

Figure 1 demonstrates that a successful turnaround manager requires a unique combination of educational, experiential and personality skills to be a successful turnaround management professional. Due to the overlap in the objectives between turnarounds and business rescue discussed earlier, these findings can be used as a basis, after suitable adaptation to meet South African conditions, for the much-needed accreditation of a business rescue practitioner.

In order to recommend competencies and educational requirements to achieve these competencies to the CIPC, Pretorius (2013a) initially focused on the important tasks and activities of the business rescue practitioner. He concluded that the five important tasks that must be undertaken by a successful business rescue practitioner are taking management control, investigating the affairs of the distressed firm, compiling a rescue plan, implementing this plan and complying with the statutory plan. Thereafter, in an effort to identify the most important activities of a business rescue practitioner, he expanded each of the tasks into an activity. According to Jarzabkowski, Balogun and Seidi (2007), a practice relates to the cognitive, behavioural, procedural, discursive, motivational and physical resources that practitioners combine and use in the performance of their responsibilities. The research indicated that there are five activities undertaken by business rescue practitioners that contribute to 55% of their total activity. These important activities are undertaking a viability analysis (14% of the total activity of a business rescue practitioner), conducting a feasibility analysis (9%), meeting with stakeholders (11%), preparing a rescue plan (8%) and following the rescue process (14%).

Further research, conducted by Pretorius (2014:10) to identify the competencies required by the business rescue practitioner to successfully complete tasks and activities, concluded that the most important competencies are sense-making, decision-making and integration. These competencies are to be achieved through collaboration, which was considered to be the central competency. However, there is an absence of literature relating to the educational qualifications that will contribute towards a competent practitioner (Table 1).

As reflected in Table 1, there exists a research gap due to the absence of literature relating to the qualifications that a successful business rescue practitioner must possess. According to Guerrero and De los Ríos (2012:9), knowledge forms an important component of the successful execution of a professional task. According to Section 138 (a) of the Companies Act (RSA 2008), a person may be appointed as a business rescue practitioner if they are a member in good standing of a legal, accounting or business management profession accredited by the CIPC. A shortcoming of existing literature is that guidance is not provided on the most suitable educational qualification that will result in a competent practitioner. Although research on business rescue practitioners indicated support for an examination and a formal qualification as a prerequisite for practitioner appointments, existing literature has provided no guidance on the suitable scope of the qualification or the content of the examination (Pretorius 2015:92).

In order to meet the objectives of the research and to harness and develop new knowledge in the field of business rescue, it was important to adopt a complementary mixed methods approach to satisfy the research objectives. A complementary mixed methods approach entails the use of both a quantitative and a qualitative approach. The usage of this approach is supported by Creswell (2003:17) as a means to achieve research rigour. It is a sound principle of research to view qualitative and quantitative research as being complementary, rather than in competition with each other (Malhotra 2004:137). The researcher therefore decided that the use of a mixed methods approach would follow different paths to establish the competencies that are required to be a successful practitioner (Gerring 2008).

Having justified the need for a mixed methods approach to meet the research objectives, it was important for the research design to reflect a comprehensive strategy that would solve the research problem (Leedy & Ormrod 2001:91).

The questionnaire, comprising closed-ended questions, was used to address the objectives of this study. The questionnaire was answered by the members of the TMA-SA, a group of turnaround and business rehabilitation experts. The questionnaire required the TMA-SA membership to:

The data were analysed using graphical statistics (bar graphs and frequency tables) and inferential statistics (chi-square tests of independence and non-parametric tests such as Mann Whitney U tests).

The interviews with business rescue practitioners were able to establish information that could be utilised to meet the research objectives. The interview schedule was constructed in a manner that would obtain feedback from the top 10 business rescue practitioners relating to the competencies of a business rescue practitioner. The following questions were asked:

The duration of each interview was approximately 1 h and it was recorded for analysis. The data was analysed using content analysis.

The first question of the survey required responses to the two most important qualifications required to be a successful business rescue practitioner. The feedback is illustrated in Figure 2.

According to Figure 2, an accounting qualification had the highest average ranking of 38%. Although the identification of an accounting qualification as the most important qualification for business rescue practitioners represents a new contribution to knowledge in business rescue, it does support the focus on effective cash management of a financially distressed business that was highlighted in existing literature (Mindlin 2013; Pretorius 2012).

Possession of an accounting qualification will also facilitate the development of an improved business rescue plan. Pretorius (2012) noted that fewer than 50% of business rescue plans contained sufficient details relating to projected cash flow statements, balance sheets and income statements, which has negative consequences for the success of a business rescue plan and the business rescue. Business rescue practitioners who have an accounting qualification will therefore contribute significantly to compiling the business rescue plan and the chances of raising post rescue finance.

Approximately 26% of the respondents ranked the accreditation of a turnaround management professional as the most important skill that a successful business rescue practitioner should possess. Whilst Section 138(a) of the Companies Act (RSA 2008) allows for the appointment of a business rescue practitioner if the person is a member in good standing of a legal, accounting or business management profession accredited by the CIPC, it does not include turnaround management accreditation or experience. In order to successfully rehabilitate a financially distressed company, the practitioner requires ‘war-zone’ experience (Pretorius 2013b:1). An accredited turnaround management professional will possess the necessary skills to restore profitability to financially distressed companies. Baird (2014) noted that successful turnaround management professionals possess the necessary psychometric profile, educational, knowledge and experience to implement a successful turnaround strategy. His research findings acknowledge the vast spectrum of responsibilities relating to negotiation, cash flow management, strategy, conflict resolution and administration required by the business rescue practitioner.

A Levene’s test for the equality of variances was conducted to investigate if significant differences exist between an accounting qualification and accreditation as a turnaround management professional. The test statistic of 3.125 and a p value of 0.047 indicated that there was a significant difference between these variances.

A legal qualification was ranked as the least important qualification. Although the business rescue process is non-judicial and commercial in nature, there remains a high reliance on courts to ensure compliance (Ensor 2014). There are concerns relating to the legal skills of South African courts to handle business rescue disputes (Visser 2013). These concerns point to the need for special legal qualifications relating to business rescue during disputes or judicial matters rather than in the performance of a business rescue practitioner’s responsibilities.

Overall, it can be concluded that a successful business rescue practitioner must possess an accounting qualification or be an accredited TMP. In addition to a qualification, a successful business rescue practitioner must possess certain important skills, as discussed next.

The second question related to the three most important skills required to be a successful business rescue practitioner. The results of the most important skills are presented in Figure 3.

According to Figure 3, a strong sense of decision-making was ranked as the most important skill. The ability to implement effective cash management strategies and a strong aptitude for success were regarded as the second and third most important skill respectively. A Levene’s test on the equality of variances was conducted on the second and third most important skill. The results indicated that there is no significant difference in the variance of these skills.

Effective cash management relates to the raising of post-rescue funding and the effective management and utilisation of cash resources during a rescue.

Existing literature supports the generation of cash as vital to a successful turnaround or business rescue (Carter & Van Auken 2006; Du Preez 2012; Mindlin 2013; Vriesendorp & Gramatikov 2010). In the USA, a feature of the Chapter 11 rescue mechanism is the availability of funding, which is viewed as a reason for many successful rescues (Bharath, Panchaegesan & Werner 2013:10). A business rescue practitioner who is skilled in implementing effective cash management strategies will contribute to the overall success of the rescue. This finding is highly consistent with the finding that a business rescue practitioner must possess an accounting qualification.

Another important skill that that was identified was the 5 to 25 years of experience as a turnaround management professional. It is consistent with the earlier finding on the importance of a qualification as a TMP.

These findings, however, contradict earlier research which concluded that enhanced collaborative skills are the central and most important competency that a business rescue practitioner must possess (Pretorius 2014). This study has ranked that skill as the least important.

In an effort to develop a framework for the accreditation, a further question dealt with the need for a written examination.

The final quantitative question related to the necessity of a written examination as part of the accreditation process. The results are presented in Figure 4.

It is evident from Figure 4 that the majority (56%) are in favour of a written examination to improve the competencies of business rescue practitioners. A written exam can be used as a mechanism in the accreditation process to address some of the concerns relating to the poor skills of practitioners (Ensor 2014; Pretorius 2013a). The finding that a written examination is necessary supports existing literature relating to this necessity (Pretorius 2015:92). Although the margin of 12% represented a small majority in favour of a formal accreditation examination, it must be noted that a test for the difference between the two proportions indicated a significant difference between those respondents in support of a written exam and those not in support.

A consensus view of interviewees is that the establishment of accreditation criteria will have an extremely positive impact on the business rescue sector. This view was driven by a recognition that the responsibilities and tasks of a business rescue practitioner are distinctly different from any other profession. Therefore, a separate skills set is required to become a successful business rescue practitioner. An accreditation framework consisting of strict criteria will equip business rescue practitioners with the necessary skills to ensure successful business rescues. Some interviewees suggested that the accreditation process is essential and not negotiable. They pointed to their experience of many unsuitable practitioners that appear on the CIPC panel. The establishment of accreditation criteria will rectify this adverse situation.

There is thus no doubt that the establishment of accreditation criteria will have a positive impact on business rescue. It will legitimise the profession and increase the potential for successful business rescues. An improvement in the expertise and qualifications of business rescue practitioners will improve the effectiveness of practitioner performance.

This question served to build on the previous question relating to the necessity of accrediting business rescue professionals. Responses to this question can generate knowledge in support of the research objective to develop a set of competencies required to be a successful business rescue practitioner. The interviewees indicated that an individual who possesses only a single skill (such as only a legal or accounting skill) will not be a successful business rescue practitioner. It was evident that the interviewees view a successful business rescue practitioner as having a multitude of skills and qualifications. A successful business rescue practitioner must possess effective legal, restructuring, accounting, and mediation and conflict resolution skills (Figure 5).

The legal skills must not be of a general nature or focused on an area that is not related to financial distress or corporate rehabilitation. The skills must be related to contractual, company and insolvency law. A person trained as a criminal lawyer only will not possess the necessary legal skills for business rescue. In addition to the legal skills, a successful practitioner must possess accounting and financial skills to sufficiently understand and assess the financial performance of the distressed business. The accounting skills must specifically relate to the rehabilitation of a business. The skills must enable the practitioner to facilitate the rehabilitation and to generate cash for the distressed entity.

In addition to possessing relevant legal and accounting skills, it is important for a business rescue practitioner to have conflict resolution, mediation and negotiation skills. An interviewee referred to these skills as ‘political skills’, which include the ability to negotiate and mediate an outcome that considers the interests of various affected parties. Conflict resolution, mediation and negotiation skills must be complemented by skills to effect a successful rehabilitation. The interviewees felt that restructuring and turnaround management skills are vital to successfully rescue a financially distressed business.

Four interviewees acknowledged the difficulty for an individual to possess these diverse skills. As a solution to this difficulty, they suggested a joint appointment for rescues where more than one practitioner is appointed. This will ensure that there is sufficient expertise devoted to a business rescue. There was considerable support for joint appointments so that one practitioner complements the weakness of another. The interviewees also suggested the enforcement of joint appointments at the initial phase of a career as business rescue practitioner which will encompass a joint appointment of an inexperienced practitioner with a more experienced managing practitioner. This arrangement will benefit the company in business rescue by ensuring that there are adequate skills for a successful rehabilitation and it will facilitate a transfer of skills to the newly appointed business rescue practitioner.

An interviewee recommended that businesses comprising a single person, such as a one-man consultancy, must not be a business recue practitioner. In order to be successful, a practitioner must possess proper infrastructure, including office and administrative support. The practitioner must also have a proper support team to ensure that he has access to the necessary legal, accounting, turnaround and mediation skills.

An accrediting body is required to establish, implement and maintain the accreditation process for business rescue practitioners. A majority of four interviewees felt that the business rescue profession must be self-regulated. The self-regulatory body must be responsible for the establishment and implementation of accreditation criteria. These interviewees did not support an active role by the government or the CIPC in the regulatory authority for the business rescue profession. They felt that the role of the CIPC must be limited to facilitating the creation of the regulator. However, the CIPC must not oversee the regulator or even serve on it. The regulator should be similar to the South African Institute of Chartered Accountants (SAICA). The Institute is created by an Act of parliament, but government does not play an active operational role. The regulator must serve as the accrediting body and must be self-governing.

One of the interviewees felt that there is no need for a separate accreditation body. His justification for not requiring an accreditation authority was that if the business rescue practitioner requires a professional qualification to be a practitioner, then that member is regulated by a professional body already. For example, if a practitioner plays a legal role, then he is already regulated by the law profession. It will be the same for the accountant. Therefore, there would be no need for a separate accreditation body. However, this minority view does not give due cognisance to the fact that specialist legal and financial skills are required to be a successful business rescue practitioner. An accredited attorney or accountant will require more skills, focusing on corporate law, cash management and turnaround procedures, to be effective as a business rescue practitioner.

In summary, although there are different views relating to the accrediting authority for business rescue practitioners, there is support for an independent authority to be established. The role of the government and the CIPC must be limited to facilitating the establishment of the accrediting body. The regulating authority must be independent and self-regulating rather than managed by government.

This study utilised triangulation to facilitate the identification of common themes (Leedy & Ormrod 2001:105). Common themes for this study were developed by an analysis and comparison of the results of the literature review, questionnaire and interviews.

Table 2 lists the competencies that can be utilised to accredit a business rescue practitioner.

According to Table 2, the two methods approach highlighted certain overlaps in the skills and qualifications that are required to become an effective business rescue practitioner. Results of both methodologies indicate that the tasks of the business rescue practitioner are multidimensional and that it is not sufficient to only possess a single qualification. These findings contradict business rescue legislation that requires a person to have either legal, accounting or business management skills in order to be appointed as a business rescue practitioner (RSA 2008:sec. 138).

The interviewees stressed how important it is that a successful business rescue practitioner should possess restructuring and turnaround skills. A primary objective of the business rescue legislation is to achieve the rehabilitation or turnaround of a financially distressed business. Accordingly, the possession of effective turnaround skills will help to achieve the objective of the legislation. This finding is supported by the quantitative methodology results which indicated that accreditation as a turnaround manager is an important qualification for a successful practitioner.

The interviewees also stated that legal and accounting skills are required to be a successful business rescue practitioner. However, they emphasised that these skills must not be of a general nature and must be focused on corporate recovery, which requires knowledge of corporate law. Additionally, the accounting skills must facilitate the rehabilitation of a business. These skills must be focused on cash flow management and enable a practitioner to generate cash for the distressed business. The findings of the quantitative methodology rated the ability of a practitioner to implement effective cash management strategies as an important skill for a successful business rescue practitioner. The focus on cash management skills is warranted due to the lack of post rescue funding being rated as having the highest impact on a failed business rescue.

In the current research setting, the quantitative and qualitative approaches both highlighted similar trends and principles.

The most significant contribution of this study is the identification of competencies required to be a successful business rescue practitioner. The responsibilities of business rescue practitioners are multidimensional and they require a variety of competencies. Both the quantitative and qualitative research results emphasised the importance of the business rescue practitioner being competent in cash flow management and in the turnaround of financially distressed businesses. The quantitative methodology results indicated that the most important qualification required to be a successful business rescue practitioner is an accounting qualification and accreditation as a turnaround management professional. The important skills required to be a successful business rescue practitioner are the ability to implement effective cash management strategies and a strong sense of decision-making.

The findings of the qualitative methodology indicated that both legal and financial qualifications are required to be a successful business rescue practitioner. However, the accounting and legal skills must not be of a general nature. They must be focused in the areas of cash flow generation, financial distress and company law. These competencies must be complemented by conflict resolution and mediation skills.

Overall, the core competencies of a successful business rescue practitioner must include effective turnaround management skills and they must have sound legal and accounting knowledge that focus on the rehabilitation of a distressed business. The financial competencies must extend to the ability to effectively manage and generate cash flows.