The Law of Red Flags in Management

The Law of Red Flags in ManagementManaging people can be one of the most difficult, challenging and frustrating aspects of running a business or advancing in your career. It can also be one of the most rewarding. How do you get more of the latter and less of the former? It’s a not only a complex topic and challenging in and of itself, but critical to the success of any business.

After managing – hiring, firing, hopefully inspiring – people of varying backgrounds and levels for more than 13 years as I’ve built a company, I’ve found it really comes down to retaining the good people and most importantly avoiding those that don’t fit. Numerous books and articles explore topic of hiring and retaining the right people. ‘Hire slow and fire fast’ is as good advice as any. This article focuses on the ‘fire fast’ side of the equation – knowing when to move on.

One principal that’s helped me throughout the years has been applying the ‘Law of Red Flags’ to personnel management. Red flags have come to symbolize potential problems or danger since the 18th century and can denote various attention and awareness indicators and signals that something is wrong.

For the first several years after starting my business, I approached management with the view that I have an obligation to work with people I hire and to turn the bad to mediocre and the mediocre to good. And why not? Shouldn’t you develop the people who work for you? And as entrepreneurs, don’t we believe that we’re omnipotent in our ability to fix problems and make things work?

Unfortunately time and time again, I’ve spent good time after bad on people who for whatever reason just didn’t fit. Trying to change someone will curse a personal relationship. It’s just as bad in the work world. Hire slow, fire fast is easier said than done.

So how do you decide when to cut bait and when ‘life’s just too short’? It’s probably sooner than you think. I’ve had the difficult task of letting many people go over the past 13 years and although each was difficult in its own way, there isn’t one that I look back on as too soon. In fact, in most cases, I waited too long.

Why is this? Psychologically, it takes a lot to decide and then to fire someone. We put it off and rationalize away issues because it’s human nature to want to avoid a painful termination process. Also, employment law and the litigious nature of our society means we need to be careful, document behavior and in many states, give people the chance to fix whatever problems exist.

I’ve heard experts suggest that if you think about firing someone even once, then it’s an indicator that you should move on. I have 60 people in my company and most, I’ve never thought of firing. However, good people can get off track. Personal issues can crop up. Sometimes you have the right person in the wrong role.

The Law of Red Flags helps and here is how I apply it: If you are managing an employee and red flags pop up, then there is likely 2 or 3 and possibly up to 10 times that number out there. Of course, people have bad weeks or months, and you could argue that chance or randomness might bring a disproportionate number of red flags to the surface at any given time. I agree. It’s possible and fair to explain away up to 2 or 3 red flags in any given period. But I’ve found that if you are a busy person and managing a lot of people, you should to get concerned with a couple of red flags and really get concerned if 4 or 5 red flags appear.

For example, I had a situation with one of my team leads earlier in my career that really brought home the Law of Red Flags. They tried to sneak expenses through. Reports were sloppy. There were rumors of inappropriate behavior. They bordered on being disrespectful to colleagues, yet their work performance seemed strong and it was easy to explain away each individual occurrence as an anomaly or not meaningful.

However, when enough was enough and we let them go, it turned out that there were nearly 10 red flags out there for every one that had come to my attention. It was a real eye opener.

Since then, I have used the law of red flags to counter the tendency to explain away issues and postpone tough decisions relating to personnel. I’ve even used it to kill a potential business development deal or two. In general, the principle has saved me time and allowed me to put a concrete thought process behind accelerating decisions I would have otherwise made further down the road saving time, irritation and hassle.

About alexford

Alex Ford is an accomplished entrepreneur, angel investor and executive and the founder of Praetorian Digital.
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