The management team is in denial.
When managers pretend a business is doing fine when it's not, that's a problem.
It's "important to ensure issues are addressed and solved rather than playing Pollyanna and ignoring the realities of business trends," said Lori Scherwin, founder of New York City-based Strategize That, a career management advisory firm that works with corporate executives. She was also a manager at Goldman Sachs and the Boston Consulting Group.
"This has a huge impact on a public company if a management team is ignoring major issues presented by investors and continues to underperform. Not only will near-term company financials suffer, but an unrealistic management team can cause long-term damage to reputation and trust," she added.
New ideas are dismissed.
"When employees' ideas and suggestions are ignored, it could be signs of a complacent and unsupportive team," Scherwin said. "This could lead to stagnation in growth potential, especially if management is saying, 'This is the way we've always done it.' Any company, organization or manager that defaults to the past as gospel will get hurt in the long run. You'll miss key changes in trends and lose out on new opportunities."
Instead, promote project innovation and new ideas. "Set up a team focused on this initiative," Scherwin said. "Encourage open dialogue across the organization, and reward staff for new ideas." A company that does not do this could lose talented people who feel their value isn't appreciated.