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16th March 2021

The Dark Side of Leadership

 

“How can organisations minimise creeping dysfunctionality in their leaders? was the question addressed by Professor Dennis Tourish at the March meeting of the ABP held again online.

Following an MSc in Health and Social Services Management he took a PhD at the University of Ulster.  After experimenting with multiple activities and far left politics, Prof. Tourish developed a strong interest in psychology and notably narcissism, hubris and the dark side of leadership which he had witnessed in his early career.  He has written eight books on the subject and has had published numerous articles.

The presentation looked at hubris, and using the example of Elizabeth Holmes and her biotechnology company Theranos, it reviewed the various ways by which toxic leaders exercise coercion.

There are numerous examples of excessive control in organisations, notably the energy company Enron and Royal Bank of Scotland during its takeover of Dutch bank ABN Amro. Examples abound in politics, with the most recent obvious example of the archetypal cult leader Trump.  What all these leaders have in common is an ability to exploit the efforts of others, escalate levels of commitment amongst managers and staff such that they willingly sacrifice home and family life on the back of a totalistic ideology.

To gain an understanding of hubris, it is important to understand the distinction between hubris and narcissism.  Whereas narcissism is a form of self fascination, hubris is the much more dangerous situationally induced position of power and exploitation over others.   A reflection in the mirror of life conjures up a grandiose sense of self where the assumption of power and greed knows no bounds. The obvious consequence of this is hyper optimism and denial of reality.

The Enron scandal was a case of a leadership structure whose development was exaggerated   While most good leaders will be good listeners, Enron’s leaders went to great lengths to avoid receiving negative feedback and created an environment where the oxygen of the directors was a permanent flow of positive feedback.  Leaders had an exaggerated view of “Decisiveness” and were less inclined to act on advice and denied reality.  All they wanted was to be the “Leading Company in the World”, with an overoptimistic view of one’s capacity and abilities, while at the same time exerting total control over managers and staff, who were sucked into working 70 hour weeks and who were “grateful for the privilege”.  The dark side of this culture, however, was that in this scenario silos, secrecy and paranoia abounded.  One marketing manager was seen to be talking to a CEO of another company dealing with Enron and was severely reprimanded, negating opportunities for promotion.

In the case of Sir Fred Goodwin at RBS, due diligence during the bank’s ill fated acquisition of ABN Amro was so light as to be non-existent, rather like buying a second-hand car without even bothering to drive it.  The culture he built up was one of ruthless performance among managers and staff.  He exploited a “Forced Curve Ranking” in three divisions: top performers tipped for promotion, middle rankers, and a bottom layer of 10% occupied by those who were encouraged to get another job.  Needless to say this did not improve the overall performance at the bank, but the most sinister aspect of this was that the directors and senior level staff had little or no control as they didn’t want to “rock the boat”.  The consequence of the resulting lack of attention to detail in risk management was ultimately the organisation’s undoing.

It could be argued that some of these traits are those which are components of good leadership, such as articulation of a compelling vision and promotion of a common culture.  At a certain level this can work as pressure can enhance work performance and prevent complacency: it most certainly does not work when exercised in the extreme, where there is an aversion to involving outsiders who can offer a different perspective, avoiding diversity of character and thought, and encouragement of “Group Think”.  In these situations all these leaders want is positive feedback without criticism.

Elizabeth Holmes behaved as if she were creating a product that was the equivalent of a modern day antibiotic.  Building on a well cultivated image of uniqueness, employees became ever more “privileged” to be part of the organisation and they escalated their commitment to their leader.  It did not matter that EH owned 99.7% of the voting shares.  It did not matter that employees were forced to sign non-disclosure agreements and were likely to be harassed by lawyers when they left.  They were buoyed by the moment, carried along on the crest of a wave, with no one seeing the need to challenge her.

No one would doubt that EH possessed “charisma” and had the ability to articulate a vision that attracted a wide range of people along the way, including some of the brightest in the country.  Despite the fact that she dropped out of University, she rose to become a feted industrialist widely renowned for her ability to deliver innovation, an entrepreneurial emissary for President Clinton and was on the Advisory Board at Harvard Medical School.   People “volunteered” to work long hours for her, with food served in company restaurants and at desks at 8 pm.   However, the dark side of her activities slowly began to emerge as news leaked out.  Her office had bullet proof windows.  Departments who should have talked to each other were failing to do so.  Any attempt at dissent was immediately squashed and people associated with this activity were summarily sacked.

Rather like Jim Jones who initiated a cult of “True Believers” in his hybrid political establishment/church, employees at Theranos would dutifully follow.  This was an example of “Power Corrupts” and “Absolute Power corrupts absolutely” and employees bought into Holmes’ vision of work being a religion.   The bubble finally burst when Theranos employee Tyler Shultz blew the whistle to the Wall Street Journal that the company’s main technology did not in fact work, and the Theranos share price suddenly collapsed.

Has anything good come out of a review of this?  Organisations can save themselves by building mechanisms for creating porous organisational boundaries, limiting “totalist power of ideology”, and introducing constraints on coercive power.  Perhaps the most useful lesson from a leadership point of view was demonstrated by David Marquet the US submarine commander who decided to change his leadership style so that he did not give people orders.  Rather, he created opportunities for them to make decisions for themselves. Because he was in charge of an unfamiliar vessel he had to delegate to his crew, and found a way to encourage people to think and strive to create team goals through use of “Intent” based management techniques.  He now is a vocal exponent of such participative forms of leadership, and has developed a following for providing a foundation for objective review of management culture against which excessive behaviours can be measured and evaluated.  This is something which consultants, managers and employees can use to exert a form of pressure if necessary.

In conclusion, it is extremely difficult to change toxic behaviours.  Once a toxic culture is embedded in an organisation it tends to perpetuate itself because people are appointed to roles who demonstrate aggression and toxic behaviours, adding fuel to the problem.  Whistleblowing does not work, as it almost always results in the whistleblower being blacklisted not just by the organisation but throughout an entire industry sector.  Better reward systems can help.  But in reality the most effective way is for employees to be aware of risk, and when the level of risk rises above a certain level to the point that something terrible could be about to happen, take action, document the problem and get widespread recognition for linking this to behaviours in the organisation.

In modern working environments there is a surveillance society facilitated by technology.  This makes “Control” and intimidation in the work place so much easier, and pushback so much more difficult, an example being the Amazon project to introduce cameras into delivery vans.   The examples of leadership deficiencies highlighted in this presentation will only multiply but the good news is that because of greater public awareness of these cases, leader behaviour is becoming increasingly subject to widespread scrutiny.

 

Download the slide deck here.

 

RT

16 Mar 21

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