Danger signal: is your organization at risk? Early warning signs can pinpoint business troubles -- and understanding them can help resolve potentially crippling problems.

• Author: Collard, John M.
• Position: Management - Management techniques for troubled companies

Too often, companies die unnecessarily. Why? Because most managers haven't learned to recognize the symptoms of oncoming illness in their business. Managers frequently don't know how to manage in this situation. They haven't had to in the past, and are ill-equipped to do so when trouble sets in.

The obvious signs of business trouble are rarely its root causes. Losing money, for example, isn't the problem; losing money is the result of other problems.

When you wait too long to recognize deteriorating characteristics and the company seeks bankruptcy protection, only creditors, attorneys and accountants stand to benefit. It's the astute manager who recognizes fallibility and has the foresight to ask for help before serious trouble sets in.

Corporate managers and directors share in their company's business risks, and accept additional risk when the company is heading for trouble. By recognizing some early warning signs of business peril on the horizon, they can eliminate, overcome or, at the very least, side-step those risks.

If you can answer yes to some of the following questions, it's time to take decisive action.

Is the owner or top management over-extended?

Whose work are they doing? When they continue to perform functions that should be done by others (once the business has grown to a more complex level), they're over-extended.

Managers need to delegate work appropriately. Define the owner's and key managers' jobs to clarify role responsibility. Assess subordinates' competence; retain them if appropriate -- replace them if not. Monitor key metrics to remain informed about conditions, without being immersed in them.

Is the turnover rate excessive?

A sure sign of underlying problems is rapid employee turnover. Employees know when problems exist, and in a reasonably healthy job market, the good ones will leave early. This condition can result from a faulty hiring process, inadequate training, poor management -- the list goes on. The price for ignoring this problem is high: low morale, lost wages, high recruiting costs, lack of productivity and ultimately, lost business.

Uncover the real causes early on, and rectify them. Solutions include clearly defined job responsibilities, performance expectations, rewards and scope of authority. Several levels of management attention should be devoted to new key employees (and those moving to new positions) during the initial days of their assignment.

Are communications ineffective?

Ineffective meetings...