Causes of Business Failure by Incompetent Managers

Term Paper (Advanced seminar) 2012 24 Pages

Business economics - Investment and Finance





General Analysis





The issue of competent and qualified human resources in every business is paramount. They are the pivot through which businesses thrive. Therefore, to ensure quality output of products and services in businesses, the competent of the manager should not be compromised. Competency of a manager brings about efficient utilization of resources, effective delivery of services and the movement towards achieving excellence in the organization.

In this regard, in every business management, there exists a manager. A manager here refers to a person who is the head of business enterprise/ organization; who sees to it that, the day-to-day administrative function of the organization are well executed to ensure that, the business achieves its goals and objectives. He/she is therefore the link between manager and employees. Generally, managers in business entities perform so many functions which include;

1 Administrative function; this means that the manager ensures that financial and other resources are well disbursed to various units within the organization. He/she also report the achievements of the day-to-day management.
2 Supervision- The manager performs an oversight responsibility of supervising employee’s performances and output. This is by ensuring that employees post and carrying out their duties assigned to them.

In the light of this, the presentation seeks to account for the reasons why incompetent managers cost businesses by

i) Assessing the various type of managers in organization;
(ii) Enumerating the traits of incompetent managers
(iii) Examining how incompetent managers cost businesses in organization and
(iv) Make some recommendations to improve the situation. The next sub-section of the discussion elaborates on the various types of managers.

Difference Types of Manager’s in organization.

According to resources for humans (2004), there are six different type of manager in organization. These are; the control freak, the Autocrat, the blame fixer, the soft-Heart, the politician as well as the team-builder. These are further explained below

The Control Freak Manager; this type of manager wants to have control over every bit of activity that goes on in the business. He/she does not want his/her subordinates to contribute to any decision making in the business.

The Autocrat; This type of manager sees the enterprise as his/her own, No employee satisfies this type of manager in the organization. His/her sees him/her self as the only competent person in the organization. In this case, he/she imposes him/her self on the organization. Such a manager over appreciates what one does.

The Blame Fixer; this type of manager is not responsible for what goes on in the organization but shifts responsibility to employees organization. But such a manager is quick to take credit for everything that goes on well in the enterprise.

The Soft Heart; these are type of managers who have that human feelings for their employees. These managers always want their employees to have liked them and as such they find it difficult to take certain tougher hard decisions on their employees.

The Politician; this type of manager is charismatic by nature. They always have something good to say. They have no real competence but rely on people who are competent to make them look good.

The Team- Builder; this is the type of manager any one would like to work with. They are competent at what they do. They often solicit ideas and opinions from their employees to enable them work better or improve upon their businesses.

In addition to the type of managers discussed above, Rosen (2008) also enumerated seventy area managers in business organization. These are;

1) The problem-solving manager who is task- driving and focused on achieving business goals.
2) The pitch fork manager- these types of managers do not have sympathy for their employees. They are ruthless by nature and will always do everything possible to achieve results.
3) The pontification manager; they usually do not follow any lay down management strategy. Their decisions are sporadic and unplanned. They are normally caught up in circumstances they are not prepared for. However, they have a quality of manager who can talk to any employee and make the employee feel comfortable.
4) The presumptuous manager; this type of manager is similar to that of the Autocratic manager. Him/her self interest first. For them, their personal recognition and bonuses is of paramount interest than anybody on the organization. They often put their personal needs and objectives.
5) The perfect manager; this kind of manager has unique qualities which they are open to change and accommodating, which all staffs turn to like working with. The perfect manager does not discriminate with all staff and ensures that the right thing is done irrespective of your gender.
6) The passive Manager; they are generally referred to as preaching or pleasing managers just like the soft-heart manager. They have an ultimate goal of making people happy which is their weakness. These are managers who always want to please others to the detriment of the entire company without realizing what cost implication they are causing to the business. Staff knowing this type of manager they work with demand any thing they want particularly where there are female workers or employees working under a male manager.
7) The proactive Manager; surprises all the good qualities that other types of managers have. It is also worth noting that, no manager uniquely possesses exactly any of the characteristics of managers discussed above. Every manager has a combination of two or more characteristics of these manager types.


Character traits of an incompetent manager; According to Lisagor (2008), incompetent managers exhibit the following traits.

These are: (a) they always want to avoid making decisions in the organization.

(b) They treat staff like their personal servants

(c) They are too politically motivated, and always want to satisfy top management or shareholders in order to maintain their position. They yield easily to pressure from top management. They usually have difficulty in staying on target or saying no to out of scope work.

(d) They are allergic to deadlines.

(e) They are consultant’s addicts. This is because they always rely on expert to do most of their work for them

iii) How incompetent in managers cost businesses;

Incompetent managers cost businesses in a number of ways which include:

1) Inability to inject technical know-how into businesses
2) Lack of innovation
3) Refusal to learn and accept errors or mistakes
4) Lack of confidence in the manager by employees

These issues are further discussed into detail

Firstly, incompetent manager do not have the ability to inject technical know-how into a business. This is because, they are probably always not having the required knowledge on the job and as such they are not able to bring to bear what they know about the job. For example, a political scientist who is made a bank manager will not be able to function very well because; he/she does not have any idea about accounting principles or finance.

In this regard, whether the bank is making profit or losses, this kind of manager will not be able to tell. Therefore, this can cost the bank million of dollars since he/she is not competent on the job due to lack of technical abilities in banking sector. However, a qualified accountant or a financial expert will better fit well into this job. Since the person has gone through the required training in this field and probably will have more experience in the banking sector. He/she will better manage the business since the person will know at what point they are making losses or profit and what best practices can be adopted to improve upon the business.

Incompetent managers lack innovation in their businesses to bring about transformation and uniqness in their services and products. As incompetent as the person may be on the job, he/she may not be able to go beyond his/her nose as he/she does not have these ideas that bring new products into the business. Rather they glue to old and archaic method of production which might be out-dated as technology changes. For instance, a manager who is incompetent in a modern banking sector may still stack to the old method of ‘Cash and Carry’ transactions instead of Internet banking, ATM transactions or E-Zwich as in the case of Ghana. This mode of banking transactions attracts charges which will accrue as profit to the bank at the end of the financial year. But once, he/she is incompetent and /or lack innovative ideas, they will lose a lot of money which could serve as profit to the business. Also an incompetent manager may have back-log of goods in his/her warehouse that may go bad especially non-durable goods. Because, if the manger in the company in one reason or the other is incompetent might not be able to discern that promotional sales or advertisement will clear the goods in the warehouse. In this case, if these goods in question lie without clearance from the warehouse, it could cost the company due to the fact that the person at the top is not on top of his/her job.

Thirdly, incompetent managers think that they know it all and as such are infallible, and their inability to learn and accept errors from their own performance and accept criticisms could cost the business. For one to improve upon his/her performance, the person needs to accept criticism from within his/her business. If a manager thinks that he/she is a master of all and does not seem to think that mistakes are not part and parcel of the progress of the business enterprise, them the person is making a gracious error. This is because you learn from your mistakes and this helps you make progress. Furthermore, competent employees under this kind of manager cannot contribute their ideas to help the organization profit as the cost of such competent employee who attempts to force their ideas through could be fired by this type of management and this could cost the business since important and competent employees could loose their jobs.

Additionally, incompetent managers do not always win enough confidence from their employees in the business set up. This is because; employees normally think that their manager does this from the onset through their interaction with the manager on daily bases. The manager’s attitude and his ability to contribute to certain important decision in the business will normally inform his employees about his/her competence. In this case, they always believe that the manager is being recruited into that position or promoted to the top because of some affiliations with some board members of the business owners but not on merit or by outstanding performance and output in the business and this could cost the business. In short employees become disillusion and have apathy towards the business.


Bias against action: For the purposes of fear it is always good to make a decision today than tomorrow without given so many excuses as to why something is not done. It is said that good leaders are the ones that are ready to take action and make a mistake for correction and seek other views or more information to get it fix.

Secrecy: The habit of hiding information from employees where they are suppose to have such a vital information to enhance their decision making process or increase productivity but the information remaining in one person like a manager keeping it as secrete will jeopardize the business environment. There are some managers in business that treat their employees as if they are like his/her children at home turn to deviate from the corporate objective attainment since vital information will be kept away from the workers for fear of leaking secrecy.

Over-Sensitivity: Some incompetent managers are the ones who fears to correct an employee straight forward for fear of hurting them and will over-brood on issues that needed immediate attention. These are the managers that will never get things done as such leaders have little chance of mastering his/her weakness.

Love of Procedure: These are the managers who for any reasons think that it is the laws that do everything other than the human being. A manager that stick or glue to the rules and procedure rather than the human being will have businesses in trouble since there will be no flexibility for the workers, productivity turn to decrease as the workers will seems to be working but at zero rate by increasing cost to employers.

Preference for weak candidates: An incompetent manager is the one that will ever hire a labor or an employee with lesser skills for fear of losing his/her job if the right skilled labor is employed. Incompetent managers do not know that hiring competent employees will enhance and cover up their weaknesses in business.



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Atlantic International University – BUSINESS FINANCE
causes business failure incompetent managers




Title: Causes of Business Failure by Incompetent Managers