November 18, 2002

Drain Circling

I have used the terms "Drain Circling" and "Drain Circler" to describe businesses that are slowly dying for a couple years now. Yet I still have people ask me what it means. Let me explain.

Definition of a Drain Circler

A company that is "Drain Circling", or a "Drain Circler" is one that is slowly heading toward bankruptcy or other failure. The expression relates to the fact that the company is stall afloat, but is heading toward being flushed down the tubes completely. In a quick flush, there isn't much time to swirl around the drain - it's just gone. But a slow drain will have the water, and anything afloat in it, swirl around the drain in ever tightening circles before it finally, slowly, completes its passage out of sight.

This ends up being an apt metaphor for companies that are being slowly mismanaged into oblivion. They are still, technically, afloat in the basin of business, but are slowly headed for the final exit, staying long enough for a few cycles around the drain as they frantically try to salvage their operation.

Signs Of A Drain Circler

In a drain circler, the management doesn't dare tell the employees the truth, for fear they'll bolt, so the environment is one of lies and deceit. Often, upper management leaves line managers in the dark. The first time they find out that there's trouble is when their usual vendors won't sell them stuff because of unpaid invoices, or a consultant comes to them to try to expedite payment of their invoice. Inability to contact or "meet up with" upper management may also be a sign of severe problems.

Another sign of drain circling is massive numbers of meetings, all assigning conflicting priorities and more work than there are manpower resources. If your production or front line staff attends more than two meetings a week, you may be working for a drain circler. Meetings are themselves a drain on resources, and excessive meetings are a sign of mismanagement, and senseless waste of resources.

The biggest indication of drain circling is multiple rounds of layoffs in a year. One round is typical, even understandable, in a normal company if economic realities change drastically. But when the company undergoes multiple waves of staff cuts over the span of a year, especially when whole departments are eliminated, it's not a routine correction or adjustment. Your company is being slowly eaten up by the bean counters, who are trying, and failing, to keep it afloat. Each time you hemorrage people, you figure that you are also hemorraging cash (and can't afford to pay those people), and intellectual assets. Once is surgery, repeatedly in a short time span is corporate hemophilia.

Big Company Drain Circling

Both small and large companies experience this, but truly large companies have a different finish path. The large company can linger longer around the drain, sometimes taking years to shed it's staff, buildings, assets and reputation. Commonly, though, large companies circle for a short while, still remaining relatively large and in severe denial about the problem. Then the company goes out in a shocking finale that leaves upper management with golden parachutes, and the employees (and stockholders) holding the bag of unpaid bills with stunned expressions on their faces.

Ask anyone who worked for, or did business with, Global Crossing or WorldCom, to name a couple. Better yet, read the news.

-- 3 --

Posted by ljl at November 18, 2002 2:4 PM