9 Examples of Mismanagement

John Spacey, May 02, 2020

Mismanagement is a significant failure to fulfill a duty to direct and control an organization or government. The following are illustrative examples.

Fiduciary Duty

Fiduciary duty is the duty to represent the interests of stakeholders such as clients, customers, investors, sponsors, employees or communities. Fiduciary duty fails where you serve your own interests with the resources of an organization or society. For example, an international organization that spends money in an uncontrolled fashion on luxurious and unnecessary travel.

Due Diligence

Due diligence is reasonable care to investigate things that are material to your accountability. For example, a board of directors that fails to monitor executive compensation.

Risk Management

A failure to identify or manage risk in some reasonable way. For example, a firm with a product that is likely to be regulated out of existence due to its negative value to society that doesn't take steps to diversify into a sustainable product.

Communication

A failure to communicate information to stakeholders that they need. For example, a failure to communicate a risk to investors.

Compliance

Failure to comply with laws and regulations. For example, a manager who fails to comply with employment laws regarding minimum working conditions.

Productivity & Efficiency

A failure to use labor and resources to produce value. For example, a manager who doesn't notice or doesn't care that an employee hasn't produced any meaningful work in years.

Destruction of Value

Destroying tangible or intangible value intentionally or through negligence. For example, poor public behavior by an executive that damages reputation, brand value and relational capital.

Delegation

Delegating responsibility without maintaining accountability. For example, a CFO who delegates financial management to an accountant without monitoring anything or recognizing their accountability. When something goes wrong, blame can't be fully transferred to the delegatee.

Disconnection

Not being aware of the information required to do your job. For example, a politician who doesn't know basic facts regarding a problem they are supposed to solve.

Overview: Mismanagement
Type	Management Failure
Definition (1)	A significant failure to fulfill a duty to direct and control an organization or government.
Definition	Unacceptable performance by a manager or management team.
Related Concepts	Management Failure » Fiduciary Duty » Stakeholders » Due Diligence » Accountability » Manage Risk »

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