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5 Mistakes to Avoid in Business Management

5 Mistakes to Avoid in Business Management


Unauthorized Actions and Overlooking

When it comes to managing a company, a grave mistake to make is to allow or overlook unauthorized actions and decisions. The former are decisions that were made without having the right permissions, or that were made outside the area that an employee is authorized to be involved in. As a rule, they become a cause of abortive attempts, significant financial losses, and a company’s diminished reputation. A key example is the notorious Wells Fargo scandal of 2016 when employees would create millions of unauthorized bank and credit card accounts to satisfy sales targets . The decision made by these employees who overstepped their authority and client trust led to a significant customer loss and a $ 185 million fine. The company’s stock and the number of customers decreased several times.

In order to avoid such decisions, it is vital to implement strict policies, consider strong control tools, and strive to achieve an ethical climate. Thus, a company may have a rule of thumb to receive dual approval from equally qualified responsible employees in order for a critical decision to be made. Regular checkups and training programs aimed at encouraging adherence to protocols are just as essential.

Another critical mistake that a company might allow is to overlook and ignore employee feedback. Implications are high: a company’s morale decreases, which leads to reduced productivity, and employee turnover rates reach the level that start to impede with effectiveness and growth. A good example is the statistical data from Gallup, organization, and surveys, which suggest that companies with engaged employees can be 21% more profitable . When employee feedback is ignored entirely, managers and supervisors get disconnected from the actual situation inside the company and take decisions they consider appropriate and that do not necessarily correspond to actual corporate and human needs. To avoid that, it is critical to make regular feedback meetings every quarter and make them — and anonymous feedback in particular — a part of a feedback loop training for managers and supervisors to ensure their ability to listen and take critical feedback constructively.

Mismanaging Change

Change management is a sensitive area and something that many organizations get wrong. Poor planning of changes or even the failure to communicate them well could lead to chaos, employee resistance, and performance decline. A prime example is the failed merger of AOL and Time Warner in 2001, which was one of the worst mergers of all times. They failed to communicate the change clearly, plan the integration, or to be concerned about the cultural fit of the two companies. The result of their failure was a staggering loss of $99 billion .

To avoid mistakes like this, leaders need to take time and develop a solid change management plan. This plan should not only include an analysis of the stakeholders and the risks involved but also communication strategies. It is important to provide the necessary training and support to all employees. They need to know the reason behind these changes, which should be clearly communicated. In addition, it is always a good idea to get their input during the planning stage. The company probably employs the best experts on the daily business, so their opinion should be always considered while planning changes.

Ignoring Market Trends

Many companies make the mistake of ignoring new market trends and end up dying away. Gone are the days when the business environment was so static. As for today, markets are very dynamic and the business that adapts to these changes survives. For example, Blockbuster entirely failed to recognize the change in the market trends and adapt. They failed to see the shift from direct delivery of DVDs to customers’ homes to the online streaming of digital copies . As a result, Netflix killed Blockbusters while they had the opportunity to buy them. The proper approach when it comes to this trend would be at least to continuously scan the environment and act once the trends to replace one business model by another become unequivocal.


Micromanagement is often seen as well-intentioned by managers seeking to maintain quality and order. However, it can result in unanticipated consequences, lessening the creativity and motivation of employees. As a result, the management practice may lead to a decrease in employee engagement and higher turnover, damaging any organization. For instance, a notable tech company suffered significant employee exit as a result of such management practices. The staff was required to perform alongside managers, who sought to control employees from approving even the smallest of tasks, slowing the process while reducing employee satisfaction by 20%, as calculated via annual internal surveys.

The consequences of micromanagement create a need for a focus on how to empower employees, as opposed to controlling them. Managers should make certain that the team understands the goals to be accomplished, with the tools of achieving them being determined by the staff members themselves. For instance, focusing on results-oriented work environment fosters innovation and satisfaction for employees.

Failing to Delegate

An immediate result of micromanagement is that the team does not delegate the jobs for which it is responsible. The practice worsens the burden placed on the manager but also decreases the scope for the employees to improve their competencies and contributions. Upon reaching an agreement, the CEO of a middle-sized marketing firm decided to oversee the entire campaign, signing off each client’s communication. As a result, the time management slowed down the process. More importantly, frustrated customers began leaving the organization, and the service quality dropped quickly.

To ensure that such examples do not reappear, managers should be trained to delegate power effectively. The regular use of competent programs that train and provide feedback on delegation techniques can instill confidence in the manager that his team of the members is capable of performing work for them. For added efficacy, regular feedback sessions may enable the manager to correct their method of implementing their strategies and ensure that the team understands that they are aided but not thoroughly controlled.

Not Communicating

Poor communication in business management can have significant effects on the misunderstandings, misaligned goals, and decreased productivity . Proper and transparent communication throughout all company teams is, therefore, fundamental to the organizational success.

An example can be illustrated by the communications of a multinational corporation that changed its strategic goals. The global teams accepted the new goals differently: the Asian part of the company continued rapidly expand its market share while the European team expected them to cut the costs. This confusion significantly influenced the company’s annual financial outcomes: a noticeable fall in quarterly earnings was experienced by the European team only, whereas the earnings of their Asian colleagues were growing as planned.

In many businesses today, regular company communication channels may include weekly team meetings and monthly newsletters . A one-to-one system of feedback can also serve as a great ongoing communication channel where all questions and confusions can be aired. In addition, digital communication tools like Slack or Microsoft Teams would help connect the wider team in different locations regularly and in a more real-time manner, compared to newsletters.

Assuming Understanding

A massive problem for such corporations, in particular, can be drawing up an understanding that, as soon as the information is shared, it is accepted by everyone. The flaw can lead to significant gaps in the execution and, ultimately, overall engagement.

An example can be an IT company that introduced a new software tool across departments without detailed training or, at least, explanation training. A new tool was not seen as beneficial for the task by many low-level employees, and turned out to lead to a 40% decline in productivity over the first three months.

Organizations should never assume that all communications are clear and easily comprehensible to everyone . Regular checks and Q&A with active or online sessions are recommended to confirm understanding and clear up any points of confusion. Establishing an “open-door” policy is a sure way to create a culture of employees comfortable with asking for clarifications as well.

Overlooking Feedback Loops

Finally, a company can make a critical error in overlooking feedback loops. It is important to learn what employees are thinking and make them feel heard as well as to ensure the continuous growth.

An example can be a retail chain’s problem with a significant retreat at four stores, which they struggled to identify and solve, as they lacked proper communication channels for the employees to express their concerns. As an easy fix, an anonymous survey revealed that poor management issues and problems with scheduling were what most employees at the failing stores complained about.

Such an enterprise can ensure regular feedback from its employees by issuing relevant queues, monthly employees’ surveys, and simple boxes for sending the complaints all to be exemplary in creating an environment of accepting and using feedback.

Don Not  Set Goals

One of the most significant mistakes in business management is setting the wrong goals. I think the most typical mistake in goal-setting is failing to set clear, measurable goals. A seemingly small mistake can cause aimless effort, waste resources, and business failures. From my experience, one of the examples I can provide is the startup that I worked for a few years ago. The company’s management defined the only goal – to start earning money and increase revenues. One year after the beginning of work, the startup staff were trying hard to increase revenues with extraordinary marketing efforts and overall higher sales dynamism. However, the result was not impressive. According to the final outcomes, the company managed to increase revenues by 5%, whereas the industry average for such startups is 20%. Therefore, to avoid such mistake, I would recommend all the companies to set SMART goals which means specific, measurable, ambitious, relevant, and timely.

For example, if I worked for a company that set the goal to “increase sales,” I would recommend my boss to create goals like “to increase sales of Product X by 15% in a quarter by targeting social media and upselling” instead.

Another mistake in defining the objectives is having unclear goals. In some cases, having an ambiguous order is no less dangerous than not having goals at all. One awful example of such a strategy that I experienced is connected with a development company. The technological company where I worked set the goal to “improve software quality”. However, the company never discussed how to measure “better quality” and what the goal was, which led to the software development team making random changes. Finally, the product had no market, it did not meet the customers’ needs, and it negatively affected the company’s image. Overall, vague goals should not be allowed, and all sides should understand what objectives they are working for. To prevent such mistakes, all companies need to hold regular strategy meetings and inform all team members about the goals. Finally, another mistake in the goal-setting process is not adjusting plans and objectives. Companies must understand that markets change, new technologies appear, and customers’ preferences differ. For instance, in case of my former job at the clothing retailer, the company should have understood the trends regarding online sales instead of opening new stores in all parts of the country. In this way, I think companies should have goals, but they should also adjust them and make them clear.

No Feedback

Failure to give feedback is an unusual business management mistake. Proper feedback helps employees grow, become more engaged, and improve the company’s productivity. It is not only about telling someone that they are not doing well, but also about congratulating them when they are, and showing them how to do better in the future. Imagine a scenario where a tech company thrived on its high-paced working environment and innovative value propositions. The feedback loop between managers and subordinates broke, as both parties thought that high performance is self-evident, and negative criticism was excessive. However, after six months, employee satisfaction fell because people did not know what the company thought about their performance. No one knew how to improve and move further. In the end, the company’s turnover rate reached 30%, while other tech companies in the industry averaged 15%. The FeedLoop feedback system can solve the issue caused by the absence of regular feedback. This system uses 360-degree feedback, so employees not only gain insights from their managers but also from their peers and subordinates.

Failure to Provide Constructive Criticism

Another part of the absence of feedback is the failure to give constructive criticism. Managers do not want to risk dissatisfaction or resentment among their subordinates by pointing out the wrongs, but constructive criticism can help not make the same mistakes in the future.

A sales team of a consumer goods company always strove to make the best efforts. However, the manager always praised their efforts without showing the side that needed correction. So sales strategies that were not beneficial for the client continued to fail. In two quarters, the sales fell by 20%. In order to avoid a similar situation, HR managers need to train management staff how to give adequate feedback. When it comes to criticism, the manager should focus on the wrong behavior rather than on the wrong person, provide concrete examples, and suggest a way for improvement. Appreciating other strengths while giving criticism might also help. Another problem is that managers often fail to listen to the ideas of their subordinates. The engineers and workers on the manufacturing lines of the heavy machinery factory noticed the bottleneck in the assembly line. However, no formal system allowed them to communicate their observation to the opportunity management. After the former producing manager became the company’s CEO, he suggested an „open ideas“ forum. Following the employees‘ feedback eased this bottleneck and made the production 40% more efficient.

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