Organizations are living, breathing entities, and as such are prone to ups and downs. Most problems are quite normal and are easily corrected. Others, however, are indicative of deeper issues. Here are seven signs of trouble you don’t want to ignore and what to do should you encounter them.
1. Management Team Inexperience. Knowledge, experience and leadership are vital to a growing organization. Sometimes, however, an organization’s needs outgrow the management team’s ability to deliver. Weather you develop or acquire your talent, look ahead and build your organization with the skills and experience you need for tomorrow.
2. Aging Ownership and Workforce. Successful companies stay vibrant and relevant in their markets and that means staying vibrant and relevant internally. If you haven’t hired in years, or if a large portion of your organization will retire in close proximity to one another, you are out of balance. Don’t wait for problems. Take a fresh look at your organization and make changes.
3. Core Business Challenges. An organization’s business environment is constantly evolving, and new volume and margin patterns may be early signs of change in your competitive market place. Avoid being blindsided by new competitors, changing buying patterns and technological advancements. Look forward at least 3 years in each planning cycle and pay careful attention to all new trends.
4. New Venture & Investment Strains. Just like new business startups, most internally launched ventures struggle or fail for lack of planning, funding and/or organizational resources. If your new venture is underperforming, reassess carefully. You’ll likely be doubling down or pulling the plug. Either choice will influence your organization’s future.
5. Risky Business & Legal Activity. Nothing will consume an organization quite as completely as dealing with a major loss or lawsuit. Regularly review risk exposures, and take steps to mitigate potential losses. Evaluate insurance coverage, contractual documents and asset exposures. If you’re already engaged in legal activity, plan early and for all possible outcomes. You can survive if you stay properly prepared.
6. Unexpected Leadership & Management Change. The unexpected departure of key leadership or management personnel is almost always a sign of deeper problems. Take control early in investigating the real reasons for turnover, and lead all organizational communications. Key departures are predictive of future turnover, so your words and actions matter greatly.
7. Distrust, Secrecy and Conflict. The trifecta of organizational chaos, these findings are a guarantee of bigger problems to come. Left unchecked, the rational elements of organizational governance give way to a political environment favoring self interest and self preservation. Take control early. Strong centralized leadership is essential to rebuilding the integrity and effectiveness of the organization.
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About the Author. John Sherwood is the founder and Managing Director of CExOGroup, a professional services firm supporting the leaders and capital partners of privately-held companies in the mid-Atlantic region with assessment, advisory, management and recruiting services.