jul 28, 2012
updated aug 1, 2013
How language contributes to corporate failure
Corporate Failure By Design
The 13 Golden Rules of Mismanagement
have worked with some really bad managers, and I've watched at least three
promising companies go down the drain. Invariably it has been the fault of
management, not the employees. Based on this experience, I've developed
thirteen golden rules that any manager can use to run his or her company
into the ground.
Many people think businesses fail because their product isn't good enough,
or because they don't do enough marketing, or some such thing. But as long
as your product works and doesn't kill too many of your customers, somebody
will buy it. The companies I knew never got to that point. Mismanagement
killed them long before they got a product out the door. But not before
they had burned through millions of investor dollars.
To a normal person these rules may seem like tautologies. But managers are
not like normal people. I guarantee there are managers who would dispute
every one of them. If you know more rules, or if one of these rules is wrong,
feel free to let me know.
Rightsizing Into Oblivion
If you want to kill creativity, threaten your employees.
Sure, you would never bully your employees. But they might not see it that way.
You can make them work harder by constantly threatening to fire them. Unfortunately,
most jobs also require a certain amount of creative problem-solving. Creativity
means taking risks. When they feel threatened, employees play it safe. They revert
to their "core competencies" and stop innovating, just as a company does.
Neurologists have found that chronic stress also reduces the number of synapses
in the brain. So if you threaten your employees too much, it also can literally
make them less intelligent.
If you get rid of people for expressing their opinion, all that will be
left are yes-men.
In case anyone doesn't know, yes-men are people
who rise in the organization by agreeing with whatever the boss says, no
matter how idiotically stupid it is. Once you start firing people, you will discover
that those who remain will simply start agreeing with whatever you say to avoid the
fate of their friends. This means you stop getting information about what's going
on in your company. Considering what's happening to it, maybe that's for the best.
If you have to fire more than 1/3 of your employees,
you're doing something wrong.
I know one guy who fired three-fourths of his employees, then turned around and
hired new ones. Then he fired all of them, too. If you find yourself doing this,
it might mean it's time to re-evaluate how you're handling your employees. Maybe
you shouldn't have hired them in the first place, or maybe you should have managed
or trained them better. If they're not doing what you want, it's most likely a sign
that you're not communicating effectively. Unfortunately, often a new boss will
start out by firing most of the existing employees just to create chaos or to
send a message to them. It sends a message all right. But maybe not the one you
Anyway, you'll find that if you fire too many of your employees, the Board will
eventually notice. They might even try to stop you—for example, by setting
up a formal procedure for firing somebody. So you have to resort to management
tricks to get around these pesky rules. Here are some of them:
● Force your employees to do dumb stuff. Then nail them for doing dumb stuff.
They can't complain, because they're just disgruntled former employees, right?
● Assign them an impossible task, then nail them for not accomplishing it.
Unfortunately, the smart ones might find a way of doing it anyway, so you're back
to square one. This also requires that you have some knowledge of what constitutes
an impossible task. Otherwise, you might inadvertently help your company. So it
must be used with caution.
● Don't let them do any work, then nail them for not doing any work. They just
sit around all day doing nothing! A variation of this is: don't give them any autonomy,
so they have to sit and wait for you to tell them what to do. Then all you have to do
is ignore them, and they'll just sit around doing nothing. Then you've got 'em!
● Of course, the best way is to make their lives miserable, so they quit
on their own. Give them tasks way below their skill level. Treat them like kindergardeners.
There are a thousand ways, limited only by your ingenuity.
Of course, there are certain risks involved in treating your employees like this.
That's why it's best to delegate to lower-level managers whenever possible. That way,
you can kill two birds with one stone.
For each person you fire, you will lose two.
Most managers know that firing people hurts morale. But often it also causes
the survivors to jump ship. A critical employee might just assume they're next,
or conclude that the company is going under, and quit. It might take a year or
longer if the economy is doing poorly, but rest assured: your employees have
stopped thinking about their jobs when they go home at night, and have started
sending out résumés. The better your employees are, the easier
it is for them to bail out. So you will lose the good ones first.
Honesty, and the Absence Thereof
If you pressure your employees to tell you what you want to hear, don't
be surprised if they say it, even if it's not true.
If you base your business decisions on the data they're giving you, your
company's survival depends on whether they can deliver unpleasant information
without risking their careers. I once saw a boss pressure employees to
give him falsified numbers so he could put them into a company's business plan
to make it seem rosier. They did. That company later went bust, because their
business plan, which was based on those numbers, sucked. A corollary to this
is: if you force your employees to
lie to your customers or business partners, don't be surprised
when they start lying to you as well.
If you lie to your employees, they will not believe you when you praise
When employees discover that the boss is willing to lie to achieve his or
her goals, they will regard even glowing praise with suspicion. In fact,
one of the most common complaints of employees is management dishonesty.
If you mislead your staff about how well the company is doing, or if you withhold
information that they need, don't be surprised if they're skeptical when you
tell them they need to do special tasks to keep the company afloat. They might
just assume you're just lying to justify a raise for yourself. Which is
As for employees not believing you when you praise their work, that's not
really much of an issue. I mean, how often does that ever happen?
If you evaluate people according to a formalized list, they will
work for the list instead of the organization.
Congratulations. You've outsourced yourself to a piece of paper.
I don't know if Pfizer uses this system, but if they did, the employees
might never have discovered Viagra. They weren't supposed to do that.
It wasn't on the list.
Problems and How to Create More of Them
If you criticize people for complaining, they
will conclude you don't want to know when there's a problem.
If employees complain, it means they have confidence in your ability
to fix the problem. If they don't complain, it means they think either
you can't fix anything, or you don't want things to get better. Eventually
they will conclude you con't care whether they can do their job.
Your employees may not have the full picture—how could they, since
you never tell them anything—but they know a lot more about their
specialty than any boss ever will. If you criticize them for expresssing
an opinion, or if you ignore their advice, they'll conclude that your real
goal is not to fix things, but to create a disaster in order to have an
excuse for firing them. They will sit there passively, knowing you are
making a catastrophic mistake, and watch as you run your company into
I know of one boss who always dropped clever aphorisms, not realizing that
they were actually quoting Josef Stalin. The employees knew, but they assumed
that was the boss's message, because the boss already knew everything about
everything. The message was: disagree with me, and you go to Siberia.
Nobody dared question that. And no one ever volunteered any
information, either. That company was one disaster after another. The
boss never understood why.
If your smartest people never tell you that there's a problem,
you have a problem.
Smart people are always seeing ways to improve things. If they never
mention them to you, it means their level of trust is so low that the
lines of communication have broken down. This is tough to repair,
because they will always be skeptical that you have really changed
your policies. Example: Mao Tse-Tung's Hundred Flowers campaign. The
naïve ones who thought Mao really wanted openness discovered the
truth the hard way. The smart ones learned they were supposed to lie
and tell everyone what a wonderful system Mao had created.
If your smartest people leave, it means your organization is doomed.
They're the ones who can see where the problems are. If they leave, it means
they either don't believe you care about the product(s) being no good, or
they're afraid to tell you.
If the employees fight among themselves, it means you are not treating
People don't fight without a reason. They may be fighting over resources,
or because of resentments caused by favoritism. If they fight, it's a valuable
clue that you're doing something wrong. Unfortunately, most bosses just treat
the symptom and get rid of the "troublemakers." Those who are left are usually
the ones who don't give a sh*t. If you want your company to survive, you need
troublemakers. They're the ones who aren't afraid to think for themselves.
I often hear managers say they need to get rid of anyone who expresses
negativity. Negativity, it is said, is a disease that needs to be rooted
out. But if people are pessimistic, it's because they're worried about the
direction you're taking, and they think you're ignoring the problem.
Pessimism is a symptom—a valuable clue that you're doing something
wrong. Firing people won't cure it. It will just cover up the real problem.
Other Great Ways to Flush Your Company Down the Drain
If you don't understand what the employees do, or the technology they
use, your employees will lose respect for you.
Only a manager
would need to be told that this is a bad thing.
If you hire people for a specific skill instead of their intelligence,
you will eventually end up with people who can only do one
thing, and can't learn anything else.
Some people can learn new skills very quickly. Others become anxious and
frustrated when facing a new task, and will only do what they already know.
Once you get the second type, it becomes self-perpetuating because they will
recruit more people like themselves. So you end up with high turnover, low
morale, and excessive staff. Or you have to spend money to train them.
Unfortunately, it's illegal to give intelligence tests when hiring people.
The only other way to tell if a candidate is intelligent is to have people
around who are smart enough to recognize them. Once you start down the other
path, forever will it guide your destiny.