The Road to Hell

Winter 2013

Soundings

The Road to Hell

By David Gebler

David Gebler is founder and president of the Skout Group and author of The 3 Power Values: How Commitment, Integrity, and Transparency Clear the Roadblocks to Performance. From Leading Blog: A Leadership Blog.

Good intentions can lead to bad outcomes in business. This is especially true in organizations that have toxic cultures in which leaders tout worthy values—and then put up roadblocks that prevent employees from living those values. For example, if a company claims it welcomes innovation and risk-taking, but then rewards only employees who toe the company line and reinforce the status quo, sooner or later people will simply stop asking questions, innovating, and stretching themselves. Instead, they will conform in order to please their bosses. While the company’s competitive edge plummets, leaders may be left wondering: What happened to our core value of innovation and risk-taking?

When we look at companies that have faced scandals such as recalls, ethical violations, or crimes, the problem often comes down to employees whose surprisingly positive behavior was distorted by a toxic culture and clueless leaders. Here are six seemingly benign behaviors that may come back to bite a company if they become exaggerated and throw the organization out of alignment:

Commitment to meeting deadlines. One would think that a company where employees are encouraged to meet deadlines and rewarded for doing so consistently would lead to super-productivity and efficiency. In fact, it can lead to disaster. At Johnson & Johnson, the understood directive to get product to market on tough deadlines created a culture of “Don’t ask too many questions” and resulted in a series of dangerous drug recalls that badly sullied the company’s reputation.

Excessive optimism. When a person is sick, optimism can buoy his spirits and help healing. When a company is unhealthy, “Everything is going to be OK” is not what you need to hear from those in authority positions. Take David Myers, former controller of WorldCom. By his own account, he saw the problems of the now-defunct company through rose-colored glasses. He simply kept believing—and telling his frightened staff—that the problems would resolve themselves eventually. By the time he came to his senses, he was under arrest for accounting fraud.

Staying focused on a goal. Telling employees to keep their eye on the prize is not intrinsically a bad thing. But when the goal becomes more important to management than the underlying values of the organization, it can lead to a dysfunctional culture. For example, in the 1990s, Sears gave its auto-repair mechanics a mandatory sales goal of $147 per hour. It wasn’t long before customers began to be overcharged or sold unnecessary repairs.

Having a competitive mindset. Boeing is known for its highly competitive employees and work culture. That’s a good thing, right? Not so in 1996, when the company lost billions in government contracts for ethics violations after an employee stole 25,000 pages of proprietary documents from Lockheed. Flash forward to 2005, when employees were still so competitive that their own work teams were known to keep useful information secret from other teams in the company to make sure they stayed on top. Too much competition can erode cultural values, leading to disaster.

Sticking to a budget. Most managers would be thrilled if their employees were doggedly determined to stay on budget and not cost the company any unnecessary money. But a good intention can go bad when financial performance becomes the only metric that matters. That was the case, many believe, behind the fatal mistake made on the BP oil platform in the Gulf. Before the explosion in April 2010 caused by a safety shortcut, BP’s Macondo project was more than $40 million over budget. You know the rest.

Wanting to please higher-ups. What’s more attractive than a hardworking employee who wants his bosses to approve of him, based on high performance and outstanding results? A lot, in the case of French trader Jérôme Kerviel at the Société Générale banking group. His need to be liked led to €4.9 billion in massive financial fraud by means of elaborate computer manipulations. Kerviel is thought not to have profited personally from his crimes. He said he was just working to increase the bank’s profits and make his bosses happy.

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