The tasks assigned to personnel are not performed, lost, forgotten. If they are executed, then with significant delays in terms, after repeated reminders. A lot of effort is spent on control.
Poor accounting (or lack of accounting) of current tasks and the status of their implementation leads to constant anxiety of the leader, dissatisfaction from unfinished business or missed deadlines.
Violations of the deadlines for fulfilling tasks and their falling out of the focus of attention lead to serious negative consequences for the business .
Communications in business develop not just without a system, but chaoticly, randomly and go in an unstructured flow without filtering and prioritization. In this flow of information it is difficult to isolate really important, it has a lot of unnecessary and non-essential information. An “information noise” is formed, which prevents one from concentrating on the main and essential for decision-making. In order to find the necessary information and format it in a reasonable way for making a decision, the manager has to make significant efforts.
Such information chaos dramatically reduces management efficiency. Information for business solutions is constantly either not enough, or for its structuring and analysis you have to seriously strain it, even if it is typical and familiar. With this state of affairs, resource costs for developing solutions increase sharply. And with a lack of information, the risks of making wrong decisions increase. The overall efficiency, effectiveness and competitiveness of the business is declining.
The variety and non-formalization of communication channels used in business makes them cumbersome (discussions - in chats, documents - by email, meetings, events, tasks - all in separate communication channels).
Communication channels do not have a hierarchy, a specific functional purpose, or access levels. Working communications are dispersed over many channels, are lost, duplicated, contradict and interfere with each other.
Managers and their employees are overloaded with the need to digest information in a short time in numerous information flows.
As a result: low efficiency of working interactions and the business as a whole.
If the company does not have a strategy, then there is no understanding - where the business is moving (and where it should move) to.
The lack of a formalized strategy and clear cross-functional goals and plans resulting from it become the reason for the inconsistent work of individual parts of the business, its chaos in general.
The motivation and goal-setting of owners and key business managers in such conditions is not obvious to other employees and therefore does not always determine their behavior and decisions.
The whole essence of management is reduced to tactical, local actions without a reference to any strategic vectors. Each specific decision depends on the particular executor and his or her idea of what is best for the business (or personally for him/her). The situational, random nature of decisions is growing.
The business is exposed to serious strategic risks, does not realize its full potential and does not develop.
The business as a whole moves, but from time to time serious problems for the business arise. Problems that were not taken into account in advance, since the shareholders and top management do not have a clear idea of the possible risks and threats to the business. Problems are not predicted or prevented. Preventive work to prevent the realization of risks is not carried out. There is no system for identifying, evaluating, prioritizing and managing business risks.
“To solve a problem when it happened” approach in relation to the occurrence of a problem prevails. The fight against the negative consequences of the risks takes place “off the wheels” in the response mode, when the probability and cost of errors increases. The business costs of “resolving” the problems that have occurred are very significant.
As a result:
- Realized risks negatively and significantly affect business performance.
- There is growing uncertainty about the future and concerns about the long-term sustainability of the business.
- Decreased confidence in the implementation of business goals and plans.
- Increasing general anxiety and nervousness in business management
Your business is faced with pressure from various regulators: the Central Bank, the tax inspectorate, the labor inspectorate, the sanitary and epidemiological station, firefighters, and other government organizations that regulate and control the compliance of business activities with complex, confusing and often changing legislation.
The legislative field in which the business operates is very strict, and sometimes just tough. And the failure to comply with certain legislative norms and rules is fraught with sensitive consequences for the business. It also happens that they are fatal (revocation of licenses, gigantic fines, seizure of assets / accounts, criminal prosecution of officials). Regulators “tighten the screws”, heavy fines and the threat of losing a license have become a popular topic of your nightmares. The current system of control and execution of Compliance procedures in business is opaque, unreliable, and largely rests on the “human factor”.
There is no system of management norms and rules in business; there is no sustainable culture of making managerial decisions and monitoring their implementation until the result.
Tasks are poorly predicted, they arise abruptly in a force majeure mode and are more suitable for the definition of “Problems”. The collection of information is difficult and not systematic. Decisions are not adequately prepared, they have to be taken “according to the situation”, “in time pressure”. The quality of decisions is low.
Monitoring the implementation of decisions is in the “manual mode”, when the leader individually deals with each specific task. Or, if not involved, the execution of the task is in question.
Good employees are lacking chronically.
Each unit works according to its own rules and interests. Coordination and overall result suffer. Constantly tensions and conflicts arise.
The business operates in a constant situation of uncertainty. The overall result is poorly predicted.
The head often takes a defensive position in communication with shareholders, trying to justify the existing state of things. Shareholders are unhappy.
In some companies, all management decisions are made by one leader individually. A managerial “bottleneck” arises - one person is not able to cope with the growing volume of tasks.
It is possible that some decisions are delegated to other employees. Then there is concern about the loss of control and the fear that not all decisions are made in a quality and proper manner.
To avoid this, many control points are created and numerous formal procedures are introduced, which quickly leads the business to bureaucratization, inhibition, loss of flexibility and efficiency.
How to break this vicious circle?
The company has collective management bodies. However, instead of improving business management processes, new management bodies only make it more difficult.
To work in committees, councils, etc. unnecessarily much time is wasted, discussions are chasing in a circle. There are a lot of emotions and little use!
Not only the efficiency of decision-making is low, but also their quality. Decisions in the discussion process are either made in unclear formulations, or, in view of the difficulties of the discussion, they are not taken at all.
The execution of decisions also leaves much to be desired. It is not clear who is responsible for the execution of decisions and how they control and report on them.
The benefit to the business of such collective management bodies is a big question!
The structure of the financial result of the business is incomprehensible. The profitability of individual lines of business / customers is unknown. Financial performance is poorly planned. The flow of financial information is not structured, it is collected from different (sometimes conflicting) sources, processing is carried out in a semi-manual mode. Analysis of the information collected is difficult and inaccurate. Critical financial information arrives with a significant delay.
Business exists in a critical situation of high financial uncertainty. Strategic decisions are made on a hunch with high risks to the business. At some point, a businessman loses control threads and does not understand either the structure of his finances, or, accordingly, his financial prospects.
The situation when the current financial condition is unclear and there is no certainty of financial forecasts and indicators, entails a whole bunch of problems:
- paralyzes any investment activity - it is difficult for an investor to give money for something, not knowing what will be the return on it.
- provokes management anxiety and chaotic decisions without economic justification:
• unreasonable / excessive sequestration of budgets (of all, and not only development budgets);
• “squeezes” even in justified expenses necessary for business;
• dismissal (again needed by the business) of personnel, etc.
A typical problem of small / medium (and not only) business is when the manager has the feeling that money is being earned and the assessment of the finance is positive, but the cash flow balance is always less than expected! Money somewhere "disappears." The manager understands that the funds are somehow spent, but, according to his internal expectations, less should be spent. This is especially true in cases where there is no accurate and relevant information on the expenditure of funds and conclusions are drawn "by eye" on the basis of some internal, subjective feelings.
Obviously, one of the most important tasks in business is to ensure the targeted use of funds. Moreover, the biggest fear of business leaders and owners concerns not just misuse / unreasonable use of funds, but simply theft!
The cash flow on business accounts is chaotic, not properly organized and planned. Payment decisions are made when such requests arise. Information on cash balances in the accounts is missing, unreliable and / or irrelevant.
Periodically, situations arise when the accounts do not have enough funds to fulfill business obligations. Which entails the implementation of both financial and reputational risks.
The lack of cash-liquidity management procedures leads to unreasonable expenses (overdraft, interest) and loss of potential revenue (from the temporarily free cash).
The activities of financial operators and other financial workers are poorly automated and not systematized, which is why there is a high probability of operational errors, the consequences of which (money went wrong) can become critical for business.
What will happen to our business if the bank in which we hold the accounts is revoked tomorrow? All bank accounts will be blocked, and our funds will be unavailable for an indefinite period. In order to at least somehow try to save your money, you will have to make a bunch of bureaucratic actions, spend a bunch of resources in order to maintain at least the hope that the money (or part) can return. The most disgusting thing is that, despite all the heroic efforts, it is by no means always possible to get back your funds (or at least part), but more often - you just have to say goodbye to them.
Similar problems for business can arise completely unexpectedly also in connection with an “aggressive” actions applied to your business by the judicial and tax authorities. Money will simply be written off from your accounts, it doesn’t matter that you are sure that it is unfair. Forget the "presumption of innocence"!
The consequences for business can be the most deplorable:
- Disruption of business activities
- Spoiled reputation
- Shareholders may lose personal money
- A complete collapse of the business is possible!
Most offensively, such a situation can arise in any, the most successful and law-abiding business. Business cannot directly influence this. But to take control of such a risk is necessary!
The company does not have a stable practice of staff motivation; purposeful and systematic work in this direction is not carried out.
In the absence of an effective motivation system, employees strive to avoid unnecessary, in their opinion, workloads, work through their sleeves, and move away from work.
Managers are constantly faced with elements of sabotage of assigned tasks, the desire to avoid them, and reduce their workload on the part of employees.
As a result:
- A collective cannot be considered a Team working to implement a single business goal.
- The staff lacks the desire and incentives to work with high intensity and efficiency.
- Constructive interactions are violated, the psychological atmosphere is negative.
- Shortage of effective workers.
There is no system for monitoring and evaluating employee performance. Most evaluations of subordinates by managers are based on assumptions and subjective feelings. Which inevitably gives rise to an unhealthy atmosphere of suspicion and paranoia in the team.
The manager most often thinks that employees pretend more than they actually work, feels like an overseer, suspects everyone of laziness and idleness.
Subordinates either try to please the leader, or deceive him and not strain their work, realizing that initially there are no objective criteria for evaluating their effectiveness.
Employee productivity is low. Motivation tools do not work, because they motivate not according to objective, but exclusively subjective criteria.
As a result:
- The lack of objective criteria for evaluating the effectiveness of employees discourages them from working with high dedication, since it is unlikely that anyone will appreciate it.
- The low efficiency of employees negatively affects business results.
New tasks dictated by changing business reality automatically become problems. The reasons are commonplace: there are no employees of the required qualifications. Existing workers lack knowledge and skills. Human Resources are constantly lacking.
The solution to all tasks and problems rests on the most high-quality performers, whom are simply not enough to solve them all. The “narrow-neck problem” is becoming chronic in business.
As a result:
- The staff lacks knowledge and skills. The result is constantly not obvious and unpredictable.
- Due to the lack of growth and development prospects, the most effective employees leave the company.
- The costs of attracting the human resources necessary for the business are increasing sharply.
- Business is losing flexibility and sustainability.
The company invests money and resources in marketing and advertising to support sales. The sales department has arrays of contacts with potential buyers that need to be worked out. However, the percentage of bringing potential buyers to purchase is low. The whole business because of this receives less income, all development plans go south, the stability of the business is put at risk. The financial business model is not implemented in practice.
The sales process itself is incomprehensible. There is no clear sales technology. Everything is tied to the human factor of the seller.
As a result:
- Sales for the most part are not brought to the end.
- Critical dependence on specific employees, carriers of key sales competencies. With their departure, these important competencies are lost.
- Business is losing money.
It is unclear how the sale occurs. Sales processes - “black box”, “dead zone” for business owners and executives. It is not known how and what to work out to increase sales efficiency. The result in the form of a deal / purchase arises unsystematically, spontaneously, randomly. It is not possible to predict the number of sales in financial terms due to the lack of relevant information. The financial result of the business is not predictable.
Sales occur spontaneously, searches, negotiations and transactions occur under the strong influence of external conditions and personalities of sellers. The sales system is tied only to the result, and there is no understanding and control of the process. The status and condition of each sale is assessed subjectively, “by eye”, there is no systematic understanding of the movement of sales in general, the number of sales in work at various levels of advancement to a transaction. This greatly complicates the identification of problem areas in sales and negatively affects the accuracy of planning and forecasting the financial results of the company.
The sales process itself is incomprehensible. There is no clear sales technology. There is no system. Everything is tied to the human factor of the seller and the coincidence of some external conditions and factors.
As a result:
- The lack of a system in sales makes them unpredictable, and financial plans and forecasts - insolvent.
- Sales efficiency as a parameter is not controlled by the head, as there is no relevant information for conclusions and decisions.
- The emergence of new customers is not regulated in any way and occurs spontaneously. Under the influence of external and internal conditions and factors.
- Business does not receive income. You can sell better - more and faster!
There is no relevant and reliable information about the current work of sellers: the number of sales / customers in work, the distribution of sales according to the levels of the "sales funnel", urgent tasks aimed at "closing" sales. As a result, the processes of managing sellers on the part of their leader - redistributing work, prioritizing tasks, pushing to close sales, etc. - are complicated.
There is no way to evaluate the effectiveness of the seller, since information on the sales processes is either not received, or is received in insufficient volume. If there is no result - a complited sale - most often there is no way to assess the probability (potential) of its completion. There is no way to assess whether the seller’s efforts are adequate to the tasks assigned to him. Accordingly, there is no information in order to make a specific decision on an employee of the sales department: continue cooperation with him or dismiss him.
The business generates mountains of documents that are very different in specificity and purpose. And neither resources nor qualifications are enough for the leader to personally control their development. But, since it is not clear how well they are worked out before signing, and in general, by whom they are worked out, you have to read and dive into each document personally. But the business is growing and the resources to work out all the documents that are sent in batches daily for signature are physically insufficient.
Each document that comes to the manager for signature is one big doubt! In addition, it is not clear what kind of documents they are, how they were worked out before they hit the table for signing, and the risks that each of them carries are unclear. And they can be significant! Therefore, the leader himself has to, often “by eye” assess the risks before signing the document.
At the same time, the pace of the business is high, and the need to make decisions at the moment makes the process of signing documents without proper expertise a kind of roulette, where not only (and not so much) money is at stake, but also risks: administrative, subsidiary, criminal (!) responsibility of the signatory, his reputation risks, the risks of losses for business, etc. .. Since even personally working through the documents, the manager still does not have enough resources and qualifications for the examination of all the various documents that come in large piles daily.
Workflow in business is an absolutely unregulated process. Documents themselves mysteriously appear, move around the company, it is not clear how they are used, and when they are needed, they suddenly disappear without a trace! You can never find the right document at the right time. Often documents are generally lost.
Business-regulations are written, mostly, “to the table”, because they are not read and executed by anyone. No rules and working regulations exist. Dependence on the human factor prevails, which does not always provide the necessary reliability and quality.
The chaos in the documents and the ambiguity of the workflow procedures exacerbate the state of disorder in business, they are a source of various problems and risks with sensitive business consequences, possibly critical.