white paper
This is the era of organizational thrashing. Business
results are falling short while executive pay and bonuses are increasing. Strategies are
executed in fits and starts. Single companies are merging, holding companies are
divesting. When businesses are acquired, excess resources are shed and then the business
is sold off at a loss. New employees are hired months after an expensive layoff. Progress
is no more lasting than the previous quarter’s budget or profit numbers.
What makes one organization a success and another a failure in this chaotic
business environment?
CooperComm is in its third decade of helping organizations to develop their people and to
achieve desired business results. In interacting with hundreds of organizations –
public and private, large and small, growing and fighting for survival – we have
identified common characteristics of organizations that are in trouble. These indicators
of dysfunction can be used to identify areas where the organization can be improved.
NOTE: Although this paper addresses workplace issues, our research has shown that
the dysfunction indicators are also useful in other “organizations” such as the
family, church, community groups and so on. Lessons from the workplace can readily be
applied in these other areas.
1. constant crisis
In the early days before personal computing,
organizations had “word processing centers” responsible for churning out the
paperwork that keeps an organization running. There were supposedly two classes of work
going through the center, normal work with a two-day turnaround and “rush” work
that had to completed ASAP.
It became a quick indicator of how well an organization was run to merely ask the Center
Manager, “What percentage of your work comes in as a ‘rush’ job?” In
many workgroups, it hovered around 20 percent, but in some it ran as high as 80 percent.
In today’s harried business climate, running on accelerated “internet
time,” many organizations have settled into a permanent crisis mode. Management is
continually unhappy with performance, everything is always over budget, all projects need
to be done faster and cheaper, people’s jobs are constantly in jeopardy, etc.
Stress management experts tell us that, to stay healthy, for every period of stress, there
must be an equal period of “Whew!” to break the pressure. The predicable
consequences of unremitting stress are: (1) people try harder as long as they can, (2)
people burn out or break down and (3) people ultimately give up. A fear-driven, unhappy,
pressured, can’t-win environment generates employees who check their brains at the
door.
The problem is a total lack of balance. Organizations cannot survive in a continuous
crisis mode. Management must either provide breaks in the crisis or else develop
established processes for handling day-to-day requirements without merely applying more
pressure to workers.
2. organizational Insanity
Bill Walsh, coach of the Superbowl Champion 49ers, has
an interesting definition:
“Insanity is doing the same thing
over and over ...
and expecting a different result.”
Many organizations are locked into this form
of insanity. The motto seems to be, “If it doesn’t work, don’t fix
it.” No matter how many business gurus urge managers to encourage change, produce
paradigm shifts, pursue the Wow! or get a creative whack on the side of the head, things
stay the same.
This stay-the-course approach is like the New England farmer who had won the lottery. When
asked what he was going to do with the money he responded, “I’m goin’ to
keep on fahmin’ until it’s all gone.”
Leaders must quit worrying about leading edge concepts such as, “If it ain’t
broke, break it.” It’s hard enough for most organizations to address what is
wrong and to fix it.
3. pluralistic Ignorance
It’s amazing in dysfunctional organizations how
many people just “don’t get it.” Using a teenage term popularized in the
movie of the same name, they are ‘clueless.” In many organizations nearly
everyone is clueless, i.e., pluralistic ignorance.
Speaker Joel Barker, popularizer of the term “paradigm,” quotes research by
Thomas Kuhn that showed scientists were physically unable to perceive data that
didn’t agree with their preestablished ideas. Managers and workers encounter similar
difficulties.
Effective organizations are open to reality. As a banker who specialized in helping
companies work through loan defaults said, “No matter how bad it looks, it’s
always worse.” He was an expert at getting clients to pay attention to the facts and
draw rational conclusions from them. His job was to make certain executives “got
it.”
4. relative success
It’s easy for managers to fool themselves by
comparing their operations to other, more dysfunctional organizations. “You think
we’re bad, you ought to be working for Crack-the-Whip Enterprises.” They make
the mistake of looking at relative success rather than absolute success.
Teenagers have a wonderful term for this self-deception: “We suck less.” Being
less bad is not good. Teens recognize, rightfully, that being better off than terrible is
still fairly terrible.
Dysfunctional organizations look externally with a sense of accomplishment,
“We’re losing less money than anyone in our industry” and ignore the fact
that investors can find numerous opportunities in other industries that are actually
making money. Or they compare themselves to their former internal condition,
“We’re better than we used to be – at least we’re moving in the right
direction” even though the internal work environment is thoroughly demotivating.
The problem is a lack of absolute standards. Measures such as specific business results
and trends, internal process efficiencies, employee and customer satisfaction, and
strategic goals and plans are not used.
5. sub-optimizing
In his seminars on reengineering, author Michael Hammer
talks about the problems of sub-optimization of processes. Common wisdom says that
“the sum of the parts is greater than the whole.” Sub-optimization suggests that
the sum of the parts is less than the whole. In many organizations, there is a fundamental
assumption that if each department is maximizing its effectiveness (sub-optimizing), then
the organization as a whole is optimized.
This explains how management can cut the IS technical support budget and believe there has
been a savings. What actually occurs is that end user technical support needs don’t
disappear, they are now addressed out in user departments by (more highly paid)
professionals helping their co-workers. Although the IS budget has been reduced, overall
organizational support costs actually increase. But they are now hidden throughout
everyone else’s budgets.
Seamen have a saying about problems that is related to sub-optimization, “Not on my
watch.” In dysfunctional organizations, everyone is worried about his or her own
“watch” to the overall detriment of the organization.
6. indirect causes
An early warning sign is when the sentences in a conversation
shift to passive verbs – particularly when talking about problems. Someone will
say, “Sales are down.” While this may be true, the passive nature of the
sentence omits any causal information. It’s as if “sales” have an
independent life of their own.
In TQM, finding the “root cause” is a critical step in understanding defects and
in improving processes. Passive verb sentences need to be replaced by active ones such as,
“The sales force is not meeting quota” or “Manufacturing is sending out too
many DOA products.” There has to be a who and what in there somewhere in order to
understand responsibility.
In too many organizations, “things happen” rather than “people and
processes produce results.” The indirect cause attitude suggests that events are
beyond anyone’s control. The root cause approach means people skills and process
designs can be improved to address the issues.
7. OK sorry’s
There is a big shift in moving from the World of Kids
to the World of Adults. If you swing a bat in a crowd of kids and plunk someone,
you’re off the hook with a sincere, “I’m sorry.” Run a red light and
plow into another car, and being sorry for the resulting injuries isn’t enough.
Dysfunctional organizations can get locked into a “Sorry is OK” mentality. This
is not to suggest that being sorry for mistakes is wrong, or that blame is even a primary
concern. But there are a myriad of actions for which it is not acceptable to be sorry.
One example is sexual harassment. Courts had established the “should have known”
principle that some behaviors are so obviously out of line, some situations so clearly
inappropriate, that managers should have known better. Contrition and remediation after
the fact isn’t sufficient.
Dysfunctional organizations have a high tolerance for failure, as long as the attitude is
right and “lessons have been learned.”
Successful organizations realize that the higher you get in an organization, the fewer
lessons should be learned. Executives are expected to bring with them certain experiences
and skills to perform at a high level. Individuals who don’t possess these
capabilities are probably not in the right position.
8. segmented morals
A small business owner once remarked wryly,
“Honesty as a policy only applies to the first $10,000. After that, the phrase is
‘good business.’”
Dysfunctional organizations are infected with a morality of selective absolutes. The
stated values and actual behaviors, usually self-serving, are often in direct conflict
with each other. This situational ethics approach to organizational values generates a
conflicting set of behavioral guidelines that destroy management’s credibility.
For example, “Employees are our greatest resource, and that’s why we’re
lowering their medical benefits and laying off about 10 percent of them due to a new
outsourcing arrangement.” Or, “Honesty and integrity are our greatest strengths,
but we’re reneging on our building agreement with the city unless it can come up with
bigger tax abatements.”
Healthy organizations have a set of values and a behavioral culture that is consistent.
The “do as I say” and “do as I do” formal and informal messages are in
agreement.
9. multi-class society
Many organizations are heavily segmented by class. The
signs are everywhere: executive stock bonuses, golden parachutes, executive dining room,
executive health club, country club membership, chauffeurs, special parking, and so on. In
the interests of “executive productivity,” employees are quickly shown who is
important and who is not.
In other organizations, even very large ones, the company President can be seen lugging
his plastic tray at lunch in the company cafeteria. Executives park out with everyone
else. Everyone is on a first-name basis. While there are obvious organizational
differences in title, pay and power, the overall impression is one of a class-free society
and culture.
Remember the lesson of Sam Walton. He made billions using near-minimum wage workers,
helping to destroy their local economy and taking its former profits out of town. Yet
these same employees loved him because he (1) dressed casually, (2) treated everyone as an
important person, and (3) drove an old pickup truck.
10. broken behavior-consequence chain
According to the best motivational speakers, the path
to success is simple. Believe in yourself, work hard and well, and you will succeed.
Conversely, lack confidence, do less than your best and lower than maximum effort, and you
will fall back.
Today cynics say, “Work hard and keep your nose to the grindstone, and you’ll
end up with a short nose.” The Peter Principle states that people move up until
they’re incompetent and then stay there. In government, the joke is, “Screw up
and move up.” The worst mistake is to become invaluable. Bestsellers tout
“winning through intimidation” and leveraging secrets of everyone from
Machiavelli to Star Trek’s Captain Picard. Groups are “on the road to
Abilene” despite everyone agreeing that they don’t want to go there.
The problem is the one-joke premise of Scott Adams’ Dilbert cartoon. Workplace
behaviors don’t generate the expected consequence. (The proof is, despite all the
idiocies, Dilbert’s company is still in business.)
In functional organizations, there is a rational action-reward system in operation. People
are incented to achieve because there is a commensurate payoff to be gained.
summary: slaves to the process
A common theme through these symptoms of dysfunction is
one of continuing the status quo. Organizations, large or small, follow Newton’s Law
of Momentum paraphrased here: “A body in motion tends to stay in motion and tends to
continue in the same direction.”
To be effective, leaders must first take an outside view of the organization. The ten
symptoms above are helpful in recognizing and communicating what is happening. They
provide, with succinct phrases, a terminology that can be used to discuss problems. They
provide a first step in analyzing why something is not working, and provide a basic
approach for remediation.
If these are the symptoms of dysfunctional organizations, then there is one symptom of a
functional organization. The latter never tolerates dysfunction. The alternative is
“organizational insanity.”
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