Dysfunctional Management

Like a car with an engine that can't fire on all cylinders, a business that's dysfunctional may move forward for a while. But eventually it stops running.

Companies don't start out maladjusted, of course. It just tends to happen over time.

The hallmark of a dysfunctional organization is a gap between reality and rhetoric.

When resources are not used effectively or fairly, when plans are heavy on talk but weak on action or when barriers to communication cripple performance, you're dealing with a dysfunctional company.

Once diagnosed, the corrosive effects of such problems can be corrected. But make no mistake: It's neither easy nor immediate. You need to be tough-minded about identifying the source, particularly because it often starts at the top, where the power resides.

Here is a good article highlighting telltale signs that your company is unhealthy and some possible ways to get it well again. Do check out this article from business coaching at http://businesscoaching.typepad.com/the_business_coaching_blo/2008/08/dysfunctional-management-when-management-doesnt-manage.html (paste below) as well as another good article http://www.iim-edu.org/dysfunctionalleadershipdysfunctionalorganizations/index.htm from IIM. I love reading HR issues after Ive completed my part 1 of EMBA which exposed me to HR and OB issues.

DYSFUNCTIONAL MANAGEMENT: When Management Doesn't Manage

I've seen dysfunctional management a few times and it's never a pretty sight. The senior managers run around like headless chickens coming up with initiative after initiative while team members stand around in confusion.

Working back through my old copies of the Accountancy magazine I found an article by Tom Barry, European managing director of BlessingWhite, a global consultancy firm specialising in leadership development.BlessingWhite have identified four signs of dysfunctional management:

1. Silent dissent: The boss says "Everyone always agrees with me and that makes me uneasy."
2. Facts without meaning or context: "All I get is data, but not much insight."
3. Lack of passion. "We focus so much on competence that the senior team never gets emotionally charged up."
4. Inertia. "All we do is talk about results but we don't change the way we do things."

BlessingWhite deal with big companies so it's inevitable that with my focus on small businesses, I have a different perspective.

No Debate

Certainly the first point is interesting and in the owner-manager businesses the situation can be even worse than in a larger corporate environment where there is a proper board with highly competent individuals.

The article makes the point that highly charismatic and driven executives often cause their own difficulties because of a reluctance to enter into a debate about what they firmly believe to be true. While they may complain that no one challenges their thinking, they make it clear that contrary views are not welcome.

Samuel Goldwyn (US movie mogul) is quoted as saying "I don't want yes-man around me. I want everybody to tell me the truth even if it costs them their jobs."

There is also a concept called groupthink which Wikipedia defines as "type of thought exhibited by group members who try to minimize conflict and reach consensus without critically testing, analyzing, and evaluating ideas."

Potentially this will become a much bigger problem as the economy gets tougher and the management teams try to pull together to fight against the world. In the search for a solution in a stressful situation, management teams may rally around one particular idea and unconsciously block out any contradictory evidence.

Irving Janis devised seven ways of preventing groupthink

1. Leaders should assign each member the role of “critical evaluator”so that each member can express objections and doubts.
2. More senior management should not express an opinion when assigning a task to a group.
3. The organization should set up several independent groups to work on the same problem.
4. All effective alternatives should be examined.
5. Each member should discuss the group's ideas with trusted people outside of the group.
6. The group should invite outside experts into meetings to hear their thoughts and answer their questions.
7. At least one group member should be assigned the role of Devil's advocate, which should be a different member for each meeting.

The Importance of the Numbers

Peel away the layers at I'm still an accountant so I do like to see my numbers but too often with small businesses, the numbers do not exist in any meaningful form.Performance is not measured.The key economic drivers of the business are not understood, monitored or managed and this is why I believe in the concept of part time finance directors.

Lack of Passion = Lack of Direction = Inertia

Lack of passion isn't usually a problem for the small businesses I encounter unless the owners have also lost direction for the business.If you don't know where you are going, it is impossible to be passionate about the future. Yes you can certainly still get worked up about the daily frustrations and irritations but without the vision of the future, the business drifts along.

Don't Want Dysfunctional Management? So What Is Management?

Bad management is usually easy to see so it merits revisiting thinking that comes from a management great of the late eighteenth, early twentieth century - Henri Fayol.

Henri Fayol identified six managerial activities

1. Forecasting - predicting what will happen in the future.
2. Planning - devising a course of actions to meet the expected demand.
3. Organising - mobilising resources, allocating tasks.
4. Commanding - providing direction and motivation. Managers must know the tasks and the people.
5. Coordinating - making sure that resources are working towards a common goal.
6. Controlling - monitoring progress to ensure that plans are being carried out properly.

It sounds as sensible now as it must have done one hundred years ago although we would substitute leading for "commanding". The context may have changed, the technology has changed but these six fundamental principles remain the cornerstones of management.

Applying Henri Fayol's Principles to Dysfunctional Management

A management team may be dysfunctional because it fails to look into the future. It doesn't carry out the strategic environmental reviews that would helps it to see the changes on the horizon, identify opportunities and threats and then take the necessary actions.

A management team may be dysfunctional because it fails to decide what it wants to do or even if it knows where it wants to take the business, it doesn't then translate that vision into actions steps and priorities.

A management team may be dysfunctional if it produces the plan but fails to recognise the resource limitations and constraints it has. Knowing what to do but not being able to do it because of a shortage of skilled resources does not move the business forward.

Even with the right people in place, a management will be dysfunctional if it fails to communicate the direction and strategy to the team, doesn't cascade goals down the business and doesn't provide incentives and motivation to achieve the vision.Sometimes dysfunctional management teams will try to communicate to their teams but the messages are twisted in the process, setting one function against another rather than clearly working on a path to the common goal.F

inally a dysfunctional management team may fail in its control function. Without feedback to reinforce proper action and correct inappropriate action, a check that the intended and implemented actions lead to the expected results and monitor to make sure that the competitive environment remains in line with expectations, there is no certainty that goals will be met or the vision achieved.

As German General, Helmuth von Moltke said "No battle plan survives contact with the enemy". It is the control process that keeps you on track, allows you to adapt and even question whether the objectives of the original plan are still relevant.

Avoiding Dysfunctional Management

Henri Fayol's principles of management may be very old but they remain a great place to start when thinking about the management of your business or reviewing the management practices of a client business.