In The Seven Signs of Ethical Collapse: How to Spot Moral Meltdowns in Companies… Before It’s Too Late (Amazon affiliate link), Marianne Jennings defined the warning signs of a dysfunctional organization:
- Pressure to “meet the numbers.” And those numbers are often wildly unreasonable.
- Fear, silence, and sycophancy. If you are new to an organization – check your vibes and the body language of the line staff.
- A larger-than-life CEO and suspiciously young or inexperienced direct reports. I tend to be suspicious of “cult-leaders” anyway. Too many years as a grad student will do that. As a result, I haven’t personally seen this dynamic in action in an organization. Frankly, in this day and age, “larger-than-life” CEO should at least be a trigger for some significant investigation into a company before joining them.
- A weak board. I would also add a board focused on “meeting the numbers.” The organizations I’ve worked for have typically been purpose-driven. When the board moves away from a focus on the purpose (say…improving the student experience) and begins to focus on numbers (e.g. cutting costs) – I’ve found that signs of dysfunction show up in that organization quickly.
- A culture of conflicts (of interest). Too many relatives in one place sitting in key positions raises red flags in my head. I’ve seen that work well…once. Nepotism policies exist for a reason. If you are coming in as an outsider and you are not in complete agreement with one of the “core team” – good luck.
- “Innovation like no other.” Jennings defines this as company leadership who see themselves as the “visionaries who can reinvent business.” I’ve learned that any organization that thinks they are that special and different have a lot of waste and organizational bleed. And good luck trying to make any business process improvements, or getting through a technology implementation or upgrade without blowing your budget and customizing your solution past the point of usefulness. I treat companies that claim to be innovative with the same suspicion I treat people who claim to be professional if they haven’t provided evidence.
- “Goodness in some areas atones for evil in others.” Jennings notes this as companies using faux philanthropy and social goodness – hoping it will offset cooked books, fraud, etc. I think it’s deeper than that. For me, this sign is about looking at what the day-to-day is like vs. the special events. How does the organization treat their employees on a daily basis vs. during the designated celebration times and special events (like the annual employee of the year ceremony). What does recognition look like? Who gets recognized and rewarded with promotions, raises, interesting projects etc. vs a shiny plaque? What behaviors are reinforced daily?
Looking back at my career, it struck me as I read this that seeing changes in one of these areas is a key sign that the organization is changing. Either for the good, such as working to standardize processes and focusing on improving the day-to-day, or the bad, such as a new leader who only listens to sycophants.
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