Friday, July 11, 2008

When Top Management Fails: 7 Warning signs

Why is it that some organizations succeed and others fail even though they have similar resources or marketplace factors. I discovered a free white paper on RHR International's website. RHR is a Leadership development consulting firm and has extensive knowledge on what makes leadership succeed or fail.

http://www.rhrinternational.com/Files/EI/23-2.htm


When I reflect on my past leaders, especially those that had difficulty in succeed, had one or several of these warning signs. As a leader, these are areas that you need to constantly look in the mirror and ask yourself if you have any of these warning signs. If so, how can you improve on them (again, all of us can improve in one area or another -- with me, there are too many areas, but one day at a time)

The Warning Signs

1. Lack of Clear Direction

Most people think they know what business they are in. How long has it been since you took a hard look at your business objectives and examined systems and procedures to see if they mesh with your overall mission?

Companies that lack clear direction tend to engage in a lot of unproductive activity. They drift from one new product or administrative change to the next. They may have unnecessary staff, elaborate computer systems they don’t need, complex control mechanisms that become ends unto themselves, a lot of form without function.

When this happens, employees lose sight of the reason the firm is in business. Good people leave, and the competition beats you to the punch.

2. Failure to Meet the Challenges of Growth

As organizations grow they go through distinct phases. In the entrepreneurial organization, for example, the challenge is survival. Strong leadership, efficient use of scarce resources and flexibility are important. When the company grows, it faces organizational needs which the entrepreneurial CEO may find confining: a need for more professional management, delegation and greater dependence upon staff services.

The signs that an organization is outgrowing its management resources include people who suddenly seem over their heads, the realization that competitors are handling more information or products more efficiently than you are and a growing sense of inadequacy on your part in facing the tasks presented by growth and change.

3. Complacency

It is often far more difficult for a winning team to get up for a game than a losing one. Organizations which have been successful pose a subtle and difficult challenge for their CEOs. The CEO who has been instrumental in solving the firm’s biggest problems in the past may rest on his or her laurels. People ask fewer and fewer questions; there is a failure of nerve, a fear of taking risks.

Signs of complacency include an insistence on doing things the way they have always been done, rejection of outside criticism, exaggerated or arrogant criticism of competitors and a climate in which certain people are recognized as experts and others are not asked for their opinions. Innovation disappears and the effort of the organization is focused on the status quo.

4. Excessive Change

An early sign of top management failure is excessive organizational change, particularly when change is being introduced to bring things under control. It is ironic that, when these efforts at control are applied too often, the organization never settles into a routine and things remain out of control.

Signs to look for here include the frequency of major organizational shifts over the past five years: the average tenure of senior managers, a survivor mentality on the part of employees (which flows from their belief that they will be there after things have quieted down at the top), low morale caused by disorganization, and turnover resulting from job stress.

5. Living with Poor Performance

No one deliberately condones poor performance; ironically, it often happens when CEOs are trying to be fair and supportive, when they want to avoid causing problems for their management teams. Performance reviews mean raises for all, regardless of merit. Genuinely weak performers are rarely fired, and the organization chart reveals unusual reporting relationships because positions have been invented to protect those who have failed. The executive suite becomes a haven for the walking wounded.

In this climate, truly independent and aggressive problem solvers feel unwelcome. There is cynicism in the ranks. The competition gets the edge, because there is no one left to innovate or take advantage of growth opportunities.

6. Lack of Delegation

For all the talk about the importance of delegation, its lack is still surprisingly frequent. The CEO who is failing to delegate may have legitimate reasons for doing so. If managing a turnaround situation or if the senior staff is relatively inexperienced, he or she will need to be more directly involved than the CEO of a well staffed, smoothly running operation. But it is the CEO who should be delegating and isn’t that creates problems deep within the organization.

The signs here include a lack of clarity about roles and responsibilities between the CEO and his or her direct reports, a lack of trust among top managers, excessive numbers of meetings to review routine operating details, a lack of clear communication downward, and a lack of coordination among major departments.

7. Poor Communication

Poor communication is often cited as the reason for management failure when, in fact, other forces are at work. The CEO who tries to do all the work on a one-to-one basis is not only terribly busy, he or she is often guilty of communicating poorly. Because this management style involves a great deal of person-to-person interaction, the CEO is often surprised to hear he or she is not communicating well.

Signs of poor communication include too many bad surprises from the ranks, infrequent and poorly run staff meetings at the top, a critical management attitude which discourages people from bringing problems forward and a generalized unwillingness of the CEO to listen.



If you are in a situation that these are in you, you should address them. If you are in a situation where your leadership teams faces these issues, be careful as you may be in for a rocky time. In the recent past, when I saw these warning signs in the leadership that I reported to, I spoke up and stated my concerns and constructively gave feedback and areas of possible solutions. As one of the warning signs states, they did not want to hear feedback. So, you must be careful when providing constructive feedback to someone who may not want to hear it (i.e., they are not the problem, everyone else is).

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