Identify Badly Managed Companies?
To identify a badly managed company, you have to look at the business from the employee’s point of view. If the employees are not satisfied with the business and their role, the business will cease to exist very quickly.
Have you heard of Top to Bottom autonomy?
It refers to the organizational hierarchy and how the top and most senior employees effect the autonomy of the bottom employees. But the bottom employees in a hierarchy have the widest reach to customers.
(this shows a typical hierarchy, but be aware that these can vary significantly business to business).
If low level employees aren't satisfied with their job, something is wrong. It usually means that management has been unsatisfactory and ineffective. You can be confident that when a low level member of staff isn't happy, they will not do their job.
Even if they do their job, they will lack the following:
- Attitude. When you walk into a business, the receptionist and floor staff are the first to greet you. If you are to be treated poorly or in a rude manner, you will never visit that business again. But worse, you will tell (as indicated by marketing research) 6–10 of your friend and family network, not to visit that business.
- Quality of work. If, for example, you work in sales. But your boss has been on your case for a long time, not giving you choice and supervising you very closely (backing you into a corner); it’s going to show, when your sales review comes out, that you’ve done very poorly.
- Motivation. This is an area of business that Fortune 500 companies sometimes spend millions of pound trying to improve. Here’s a list of things that would happen when there is a consistent motivation problem:
- High labor turnover.
- Low labor efficiency.
- Low ambition.
- Lack of creativity.
- Bad reputation.
- Wastefulness of time and resources.
I’m sure there are more factors that would be effected, but those are what quickly come to mind.
(This reminds me of the motivation theorist; Taylor who put forward the idea that workers are motivated mainly by pay. His Theory of Scientific Management argued the following: “Workers do not naturally enjoy work and so need close supervision and control. Therefore managers should break down production into a series of small tasks”. This may work for certain high out focused manufacturing companies, not for your typical business however).
To identify and measure the managerial performance (or how bad it is), one must first look at the companies employees. They're the most important asset in any company and the happier they are the better they work. You will see greater increase in performance, efficiency and customer satisfaction.
For the mathematicians out there, I am going to try and demonstrate the above with the use of numbers.
Average employee salary throughout the organization: $45,000
This means that in ‘theory, you’d expect them to ‘make’ you at the very least, that amount.
But an unhappy employee is a wasteful employee: $500 per annum.
An unhappy employee is a de-motivated employee:
- Low level of working: $1,500 to $2,000 per annum in lost time.
- Quality of work: $500 - $2,000 per annum (depending on industry)
An unhappy employee will most likely have a bad attitude with customers: assume 1 lost customer a day, 360 in a year, average spend (for illustration) $5 makes $1800 loss in potential sales.
Assume that is all of the losses that you’d incur because of unhappy employees (there is so much more), the total loss for the year, for one employee is around $6,300.
Average number of employees in a Fortune 500 company (as at 2013) is: 52,810
So, $6,300 x 52,810 staff = $332,703,000 in losses to a firm, for a year.
This can be translated as if you are paying the employees 14% more per year.
Do you see why top firms don’t mind spending ridiculous amounts to improve employee motivation levels?
So to recap:
Poor management makes unhappy employees.
Unhappy employees make wasteful employees.
Wastefulness is due to de-motivation.
De-motivation is reflected in attitude.
Attitude has an effect on the customer.
Customer has the money.
Money, your business doesn't have any more. Because its gone bust.
(should've taken care of your employees).
You can identify a badly managed company by investigating its employees.
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