Telltale signs of a mismanaged company

Are you seeing this in your business right now: falling profits, inadequate quality control and high turnover levels, unhappy staff, poor customer service? There are many tell-tale signs of a mismanaged company, and it’s of concern to all stakeholders since it can result in layoffs, which is  bad news for employees, and a lowered stock prices for public companies, which is bad for investors.


Indeed, the first step to creating a better setup for your company is to discover all the signs that point toward a mismanaged setup. Here are the basic signs to look for:

A declining profit despite the same effort. One clear sign of a mismanaged company is declining profits regardless of effort given by the production team. Sales typically fall when managers can’t position a company’s products effectively in the market or are late in creating new products. Rising costs is a result of poor cost controls, extra inventory as well as failure to forecast changing customer needs.

High turnover rate. High levels of turnover both among executives and regular employees are typically signs of ineffectual managers. Employees generally don’t want to stay in a company where no leadership is seen or one with limited career advancement chances.

Low worker morale. Morale can suffer drastically when leaders can’t effectively motivate the employees. Also, inept managers have the tendency not to hire or promote the most-qualified candidates, which often leads to further morale and performance issues. Poor morale commonly increases staff turnover while lowering business productivity and profitability.

Insufficient quality control. Poor service and product quality are two more signs of incompetent management. Poor quality control is represented in flawed or damaged products, regular service interruptions, growing levels of product returns as well as increased consumer complaints.

Bad customer service. Quality control and customer service are related issues. If your company provides substandard service or sells inferior quality products, the number of calls to its customer service representatives will likely increase. The company may not have the manpower to handle the barrage of calls, which could mean angrier customers.

Poor communication. Conflicting signals, secrecy and refusing to accept issues are all signs of incompetent management. This results in uncertain stakeholders regarding a company’s direction and they cannot trust what management has to reason.

Unreliable guidance. Incompetent managers in a mismanaged company will be unable to provide reliable and realistic guidance. They may provide excessively positive revenue and profit forecasts. If they are incapable of meeting these predictions, stakeholders will begin to lose faith in management. This means lower stock prices for public companies.

Negative media coverage. A mismanaged company will find it hard to get media coverage, and when it does, the coverage is frequently negative. The reason for this could be a poor relationship with the press or a history of giving incorrect or poor information.

End Note

If your company has any of the above symptoms, then take actions right away to fix it. These symptoms will not disappear on their own, plus they can increase in severity – first crippling, and then putting an end to the company as a whole. You can ask assistance from business management consultants to accomplish a complete audit of the systems and apply the necessary changes.

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