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6. Detailed Diagnosis

The detailed diagnosis explores the deeper causes of financial distress. Understanding root causes is needed for creating lasting solutions.

There are two dimensions to consider in the detailed diagnosis [1]
  • Internal vs. external – Does the cause arise from forces inside or outside the organization?
  • Economic/technical vs. political – Are political or technical issues behind distress?

These two dimensions translate into four categories of potential causes. Examples of deeper causes are available in each category. Use these examples to determine what causes of financial distress might apply to your organization and then use those to develop customized solutions to financial distress. Step 8 of the recovery process provides examples of solutions that correspond to the causes.

 Internal 
External
Political                   
Category 1  
Category 3   
Economic/Technical 
Category 2 

Continue to the next part of the Recovery Process, Part 7-Recovery Plan

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Charles H. Levine, “Organizational Decline and Cutback Management,” Public Administration Review, July-August 1978, pp. 316-325.