In business and as a leader, you are likely familiar with the term “red flag.”

Red flags are warning signs that surround us in our business. If we don’t look for them and pay attention to them, unexpected and avoidable problems can show up.

When you reflect on how a problem surfaced, chances are you can identify how you missed the early warning sign—the red flag. What can you do?

Leadership Tip

Make better decisions by dramatically increasing your level of attention to red flags. Put an actual red flag on your desk to remind you to watch for them.

Where do you look for red flags in your company? Many places. Here are three example possibilities:

Example 1—New hires. When you are interviewing people to hire, what one or two words did the candidate use that could be a red flag? How about spotting a reference-check red flag or red flags in their résumés?

Example 2—Vendors. Is everything they do in compliance with what you expect them to do? Has there been a shift in their practices? Do they have a high level of turnover in their organization?

Example 3—Customers. Are customers returning your calls promptly? Do they operate with consistency? What changes or shifts have you seen lately?

Only you know where to look, so constantly ask, “Where are my red flags?” Are they in products, services, people, policies, processes, customer complaints, economic factors, competition, or elsewhere?

Once you notice one red flag, act immediately or you run the risk of facing an unwanted problem. Perhaps you simply need more investigation, which you follow up with actions appropriate for the situation.

Exceptional leaders don’t put themselves in the position of having to say, “I never saw that coming.” Instead, they regard red flags as their best friends.