8 Undeniable Signs That Your Business Needs New Management

By Keith Tully

Deciding when to dismiss one or more of your managerial employees can be a challenging task, especially when you've been working with them for a while. And while it may be difficult to put emotions and relationships aside, it is absolutely imperative to make firing and hiring decisions from a purely business-oriented standpoint. Bringing in new management could mean the difference between going out of business and facilitating a last-chance turnaround.

If you recognize any of the following signs, then it may be time to admit the undeniable fact that your current management team is failing and either needs to be replaced or retrained.

1. Poor Productivity and Planning Procedures

A stagnant rate of client solicitation or poor progress in existing projects is a sure indicator that your management is not ambitiously and actively driving expansion and improvement. Your managers should have an ongoing focus of increasing productivity through the implementation of comprehensive planning strategies. If management meetings are not being held regularly and milestones are not being set forth, this is a clear sign that managers are slacking in their approach.

2. Ineffective Employee Management and Low Morale 

To produce optimal results, employees need continual guidance and supervision. When managers do not monitor and refine employee practices, the company will almost certainly never reach its full potential. In fact, when employees are left to do as they please without any external input or motivation, it is likely that the business will not thrive, and it may have trouble staying in operation altogether in the long-term. Likewise, if your employees do not respect or get along with your company's leaders for justifiable reasons, then it may be time to bring in a more motivational and effective management team.

3. Faulty Accounting and Reporting

Are your managers ensuring that the company's affairs are properly recorded? If budgeting and accounting practices are being neglected or tax requirements are not being fulfilled, then it is imperative that you address the situation immediately. Irresponsible accounting and budgeting can lead to unnecessary tax penalties and unexpected financial shortcomings. Even if you have a designated bookkeeper, accountant, or tax lawyer it is still important for your management to keep a record of all transactions, income, and expenditures so that this information can be relayed to the appropriate professional.

4. Misuse of Funds and/or Assets

Your management team should not be using the funds of the business inappropriately, whether for personal gain or for unauthorized company expenses. Misuse of company vehicles, credit cards, or equipment are all grounds for dismissal. While it may be okay to permit such activity on a case-by-case basis, if a particular manager has gone against your wishes regarding use of the company's assets/funds more than once, despite being warned, then it would be a serious mistake to leave him or her in an authoritative position; at the very least their administrative privileges should be restricted or taken away altogether.

5. Complaints or Lawsuits from Clients/Customers

If paying customers aren't happy with your management, then you should be even more upset than them about the situation. Your customers and clients are the driving force behind the success of your business, so taking heed to their concerns is paramount. A few complaints here or there are not necessarily cause for concern, but when clients are repeatedly expressing their disdain for a particular manager, you may have no choice but to begin the search for a replacement. After all, there must be something true to the old adage “the customer is always right.”

6. Lack of Progressive Investing and Outreach

Perhaps one of the most important yet commonly overlooked aspects of managing a business is ensuring a decent rate of expansion. If your company is becoming stagnant because managers are not being proactive in their marketing efforts, it may be time to bring in a professional that has an outreach-oriented approach. Reinvesting a percentage of profits into advertising and sales will ensure that your company is maintaining a competitive edge within its niche.

7. Behind on Bill Payments or Overburdened with a Heavy Debt Load

If your company is consistently behind on bills and unable to keep up with an overwhelming volume of debt, this could a be a telltale sign that your management team has not been meeting expectations. Sometimes management is not to blame when it comes to a company having a large debt load, but without investigating the activity of each manager individually, it is not possible to determine whether the business is heavily indebted due primarily to poor management. Even so, if it is evident that your current management is not making a concerted effort to improve the company's financial position, then you may consider hiring some help and/or releasing some of your most non-productive members.

8. Pressure from Bill Collectors and Creditors Threatening Legal Action

If creditors and bill collectors are applying pressure and threatening to take your company to court, it is essential that your managers take the necessary steps to determine the best course of action as soon as possible. Meetings should be held and a consultation with an licensed advisor should be arranged. If there is no time to hire new managers before your creditors initiate legal action, then it may be a wise decision to enter into a formal proceeding.