“Many people overlook inside risks— possibly because they are risks for which they themselves are responsible.” — Michael Bruch, British business writer.
Sometimes failure is an inside job. As much as we worry about external dangers like the economy, global competition, technological change, financial crises, and a host of other outside factors in our assessments of business risk, we humans are just as likely to cause the problems that bring down our organizations. We don’t do it on purpose of course, but the worst aspects of human nature do sometimes overwhelm our better nature.
Yet too often, those of us tasked with leadership simply can’t see the internal risks due to our focus on the external. In a sense, you might say we can’t see the weeds for the forest. A few years ago, Europe’s Allianz Group carried out a series of analyses in which they asked managers what the greatest risks to their customers would be in the future. Most respondents cited factors like population increase, the growing Chinese economy, the widening gap between rich and poor, global climate changes, electronic data piracy, and the like. But few considered human failings like workplace politics, egotism, out-of-control ambition, and blind faith in metrics.
In this article, I’ll point out a few internal risks I often see in the organizations I work with, and suggest how you might either avoid or repair them. I’ll focus here on purely human-based items, rather than things like poor marketing and customer relations.
1. An inexperienced workforce. We all have to start somewhere, but one thing you never want to do is pack your team with inexperienced personnel if you can avoid it. Even if you find yourself in a young field full of inexperienced people, salt the group with more experienced workers who can mentor the newbies. Of course, time and a willingness to work hard will eventually overcome their lack of experience. Meanwhile, don’t let it overcome you. Keep an eye on your less-experienced personnel, providing them with all the training and tools they need to succeed. Training may prove your most important tool in this endeavor, because it inevitably helps willing employees do their jobs better.
2. Lack of engagement. As few as 17% of the workers in a typical workforce are fully engaged in their jobs, with about half the group somewhat engaged and the result fully disengaged. Lack of engagement costs American businesses $300 billion annually, according to one Gallup study. When your team members own their jobs, they’ll pour their discretionary effort and time into their work, maximizing productivity. Motivation in the form of bonuses, social recognition, an excellent workplace, and a wonderful example set by you all help prop up your productivity.
3. Unclear goals. If leadership can’t decide where it wants to go, then how can the rest of the team? Typically, poor goals and objectives boil down to unclear mission, vision, and core values. Revisit all three; if nothing else, start from your core values, from which everything else emerges. One of my clients, Click-fil-A, was established with Christian values at its core. The founders closed the stores on Sundays, so the operators could be with their families and attend church. When I was onsite, I could observe how these values affected the internal goals of the organization, and three generations later, the incoming owners wouldn’t dream of changing this policy. Although Chick-fil-A outlets stay closed on Sundays, it hasn’t affected their earnings a bit (they are incredibly profitable). In fact, all operators and spouses went on a cruise last year, paid for by the company.
4. Attitude. Your attitude as leader will affect your team. If you express a defeatist attitude, do you suppose they’ll bother to work hard for you? Might your attitude about a social subgroup of whatever type poison the general attitude of your workers—or drive some away? This may prove especially dangerous if your group handles customer relations. As I’ve already indicated, leading by example can pump up engagement and productivity…but leading by bad example can have equally bad effects.
5. Inflexibility. As the times change, so must you. Keep an eye on what your end users or customers want, and when those things change, don’t just keep doing the same old things as before. Consider the most recent failure of Hostess Brands in 2012. One reason they failed was apparently because management ignored a consumer desire for lighter, low-fat snack items as health consciousness increased. This, in addition to rising costs and labor issues, caused them to snap and fall into Chapter 11 rather than bend enough to survive their bad patch. Hopefully, the resurrected Hostess Brands will keep these factors in mind in the future.
6. Lack of innovation. In a way, this serves as an extension of #5. If you lack mental and processual flexibility, how likely are you to come up with exciting new ideas that push the organizational envelope and challenge your customers? Flexible organizations can not only twist to avoid nasty changes, they also create and nurture new ideas. Do both, and your team will stay mentally young, agile, and fast—all the factors necessary for survival in today’s business world.
Facing the Challenge
If you fail to take into account the negative potentials of team dynamics, you’ll eventually be slapped hard by reality. The possibilities I’ve listed above represent only some of the most common, those that result from either ignorance or inattention. Keep an eye out not only for these, but for any others that might result.