Culture Clash Learn to recognize the warning signs of a business on the verge of collapse.

Is your company headed for trouble? Long before a businessfails, you can count on warning signs to start flashing. "Ifyou have your eyes open and know what to look for, you cananticipate and avoid big problems," says Fran Lipson, a vicepresident and managing director with Boston-based Burke StrategicConsulting Group who specializes in turning around businesses thathave hit a wall and are nearing collapse.

Although there's no disputing the role of shaky finances insmall-business failures, there are other issues that may be equallyimportant. "Human issues--problems in the corporateculture--can play a big part, too," says Lipson.

When a company's culture--its internal belief system, valuesand methods--turns sour, productivity tumbles. "The culture introuble is one that's turned away from the common, collectivegood and focused on egocentric concerns," says John Nirenberg,Ph.D., business consultant and executive director/chair for thedepartment of doctoral studies in business at the University ofPhoenix. Put more plainly, in a company that's going bad,workers stop putting out any effort on behalf of the business as awhole; they do what's required to get by in their jobs andnothing more. "That's not an attitude that spawns businessgrowth," says Nirenberg.

Even so, discovering this before the disease turns terminal maybe difficult for an entrepreneur because the desire to succeed canbe so powerful, it overwhelms the ability to perceive troublespots. "Entrepreneurs just don't pay enough attention to[their company's] developing culture. By the time they noticewhat's occurred, the culture has fully formed and it can bevery hard to change," says Ron Riggio, director of the KravisLeadership Institute, a leadership research organization atClaremont McKenna College in Claremont, California.

Fighting the tendency to ignore problems and seeing problemswhen they're still small enough to be quickly and easilyremedied is crucial. So how do you monitor the business on anongoing basis? "Stay in synch with your employees," saysLipson.

"Get out among your employees and listen," agrees JohnPeterson, managing director of the Los Angeles executive searchfirm Greger/Peterson. "A CEO told me, `Every good decision Imade, I was out in the field; every bad decision I made, I wassitting at my desk in my office.' Talk to people at every levelin your organization. And listen hard to what they're tellingyou."

Warning signals

Following are some signs that your corporate culture--and yourbusiness--could be in trouble:

• Increased turnover. "Are employees jumping ship?"asks Lipson. "This is quantifiable and easy for a business tomonitor."

• Difficulty in hiring "A" players. "Goodemployees evaluate a business before taking a job offer," saysPeterson. "When the candidates you want to hire say `nothanks,' this is a big sign of trouble."

• An empty parking lot. When the company parking lot promptlyempties out at 5 p.m., that's a red flag, says Gregory Dess, abusiness professor and the chair of leadership and strategicmanagement at the University of Kentucky in Lexington. It'svivid proof that workers are there only for their paychecks.

• Lack of clarity about the company mission. Collar one of yourworkers, and ask him or her to tell you what your business'smission and goals are. "If they don't know, how can theybe behind the mission?" asks Peterson.

• An "us-them" mentality. Do workers think"We're all in it together," or do they see themselveson one side, with management on the other? "When a smallbusiness divides into two camps, it can break you," warnsPeterson. "To succeed, you have to all be pulling together andin the same direction."

• More "Dilberts" show up on your desk. If one of ScottAdams' "Dilbert" strips is anonymously pushed underyour door, it's nothing to fret about. Get heaps of them, andit's no longer a laughing matter. "When you're thetarget of caustic cartoons, you're in trouble with youremployees," says Dess.

• Falling customer satisfaction. "Are complaints increasing?Are customers leaving you for competitors? If so, you're on aroad that will lead you nowhere good," says Lipson. That'sbecause the likely underlying factor is a drop in quality, sheexplains. And when workers no longer put out top effort, it'sproof they have stopped caring about the company's future.

• Low attendance at company events. Have workers stopped showingup for company picnics? When attendance at off-hour events falls,says Dess, "people are doing only what they have to do to getby."

• Lack of honest communication. "This is a sign you cannotignore," warns Nirenberg. When employees begin lying to you,their co-workers and customers, you'd better address thisproblem--fast.

Just how many signs must be present before you should consideryour business to be in trouble? "The question isn't thenumber but the intensity of the problems," says Dess."Just one sign--rapidly increasing turnover, for instance--canbe enough to warrant a close look at the underlying problems."The bottom line: If any of these warning signs sound familiar,it's time to take action.

Solving the Problem

"The worst mistake a leader can make is to avoid[addressing] the problems," says Dess. When management shutstheir eyes to the warning signs, they're rushing the businessdown the path toward collapse.

How do you renew a culture that's in trouble? A first stepis to reaffirm the company's missions and goals--to get back intouch with why the business exists and what its ultimate purposeis.

Next, become more open with employees. "Gather themtogether and [listen to] what's on their minds," saysDess. "Admit you don't know everything and that you needtheir help in finding out what the problems are and how to fixthem. That's the main step."

You probably won't be able to fix all their concerns in asingle meeting--or even two or three--but when a channel for directcommunication is reestablished, it's a big step toward healingwhat ails your business and putting it firmly on the track to goodhealth.

Robert McGarvey writes on business, psychology and managementtopics for several national publications. To reach him online withyour questions or ideas, e-mail rjmcgarvey@aol.com

Contact Sources

Burke Strategic Consulting Group, 1 Gateway Ctr., #601,Newton, MA 02158, (617) 244-2779

Greger/Peterson, 321 12th St., #210, Manhattan Beach, CA90266, (310)546-8555.