Organisational Failure – A rough guide to the red flags

Red flags

The global financial crisis has delivered a sucker punch to the integrity and reputations of companies. If you scratch beneath the surface as many financial regulators have, to expose the unscrupulous practices of companies, there will be many critical indicators  why many business empires within the banking and financial services industry came crashing down. But go further and beyond these industries, and it is issues relating to management, leadership, strategy and operations that can fracture and/or destroy a company. Here is a list of things (some lighthearted) which may help identify red flags that indicate shortcomings within a company:

  • The HR department should be at the forefront in practicing active talent management, not just a department that processes hiring and firing decisions
  • When the company uses propaganda to disguise its underlying problems, and presents a different image to the public
  • The company has a revolving door policy where the employee is literally considered disposable. Companies like this have a high turnover rate. They place regular job advertisements all year round
  • Relentlessly recording and monitoring employee’s activities. The reason given for this is for  training and monitoring purposes, but actually it’s just a way of micro managing employees
  • The scripting of client conversations – If there is anything that gets on the nerves of clients; it is people talking to them in robotic voices that starve the client relationship management process of individuality and life. Clients are not brainless and know when somebody is reading from a script
  • Setting overly challenging KPIs for employees that are counter – productive and encourage malpractice among employees. Targets only work if they if they are realistically challenging and motivating
  • Constantly changing KPIs, and manipulating performance metrics to limit bonus payouts
  • Weak and ineffective communication that results in employees never getting clear and meaningful direction of where the company is going
  • Delaying promotions and making it difficult for employees to progress
  • Promoting people on favoritism, and not merit
  • Lack of trust between senior management and employees – not being honest with employees
  • Poorly remunerating employees who deliver key front line services
  • Misselling the job at the interview stage just to draw people in
  • Micro-managing employees down to the last detail – a reflection of weak managers
  • Treating employees as a number/statistic
  • Putting employees on probation for underperformance instead of offering remedial coaching which may be more beneficial and cost effective for both the employee and company
  • Rewarding incompetent employees and punishing productive employees for good deeds
  • Appointing people into management positions that are not fit for the job, subsequently running the risk of obliterating an entire function or department
  • Nobody other than the CEO has the authority to make decisions: no delegation of responsibilities -getting management approval for anything, no management buy in for ideas that come from front line employees
  • Top heavy management structure – power is too centrally concentrated
  • Atmosphere and culture of fear -‘do what we say or else!’
  • When the company believes it is bigger and better than it actually is – indicating a possible deep lying branding problem
  • When the company never talks about the negative aspects of their business – are they perfect?
  • When employees are fired for making constructive comments
  • When your own clients tell you that your products and services are overpriced
  • When employees are terminated without notice
  • Calling customers when they have specifically instructed not to be called , and believing that harassing people over the phone would make them cooperate
  • The absence of a compliance and/or ethics program
  • Treating employees like they are your personal property
  • Having a one size fits all approach to customer and employee issues
  • When promotions are subjective and political
  • Use of intimidation and humiliation to motivate employees
  • Failure to take action on reported cases of misconduct
  • Introducing last minute projects with impossible deadlines
  • Using performance metrics analytics that are difficult to comprehend, and prone to misinterpretation
  • Placing unrealistic expectations on employees
  • Deliberately finding reasons to fire employees
  • When the company is taking more cancellations, than generating sales
  • When senior management in the company don’t understand their own industry – no background in the industry in which they operate
  • When senior management do not give employees meaningful feedback
  • When ex – employees say that the training they received was non – existent to irrelevant
  • When the IT system is full of glitches -new systems are introduced before proper testing
  • When the company doesn’t listen to its own customer’s feedback
  • When competent employees are threatened with demotion, and worse still demoted
  • Undermining employees potential
  • Ignorant attitude towards employees and the entire industry in which the company operates
  • When employees feel that they are sitting on an ejectable seat
  • When employees work in the company only to avoid unemployment
  • When the best thing former employees remember about the company was the time they handed in their notice and left
  • When the only advice former employees give to prospective new hires, is not to take a job at the company
  • When the best advice you receive from a fellow employee is to stay quiet, and keep your head down
  • When senior executives have never worked for another company in their lives – lacking depth of experience
  • When the client/customer you call doesn’t want to speak to you
  • When line managers are afraid of senior executives, and afraid to tell them that a project needs more time/planning

Even one of these red flags is a cause for concern. Left unaddressed, the impact this could have on a company over time could be catastrophic. Would you like to work for a company displaying these red flags?  Well, many times we don’t have a choice in this. It is just luck of the draw whether you are an employee who is on the receiving end of one of these red flags. If you are, you may even find yourself in catch 22 situations, and often departing is the most viable option. But if you are braver, then you may choose to blow the whistle as Michael Woodford did.

What do we do?

There is an increasing consensus in the academic and business community that soft skills will increasingly play a key role in the making and breaking of companies. Perhaps companies need to bench mark themselves against industry standards of what constitutes a good place to work.  What is required is a conscious effort by senior executives to identify and diagnose problems before they turn nasty and risk taking everybody down. A risk management/compliance – ethics program would be a good place to start, and a commitment by everybody in the company to discuss issues openly without the risk of reprisal.

N.B. The above post is based on insight from industry research reports, surveys, and news articles.


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