10 Ways That Managers Allow Their Companies to Rot From the Inside

Rotting trees are a funny thing. They look healthy enough until a storm hits. That's when branches fall or, in the worst case, the whole thing comes crashing down. I think that companies behave in a similar way. To that end, here are 10 ways that managers allow their companies to rot.

10. Ignoring Communication Issues

Would you feel comfortable if every department in your company spoke a different language? It may be that way now. Here's a pretend conversation in a media company:

Editor: All of our articles are showing up as a blank white screen except for the Hed and the Dek!

Salesperson: This needs to get fixed immediately or we may lose an RFP!

Engineer: We're investigating issues with the CDN, the API and the CMS.

Technical Marketer: Can we return a 503 until the issue is fixed?

Ad Operations: This will lower our RPV if it recurs.

Financial Analyst: That will directly impact our EBITDA.

Executive: Heaven help us, our IPO is just around the corner. Should I list this as a risk in our S-1?

Kudos if you can follow that conversation, but most people can't and a chunk of your employees may be in the dark at any given time.

Jargon and acronyms may speed a conversation up, but they slow collaboration down and can make smart employees feel dumb or marginalized. Explaining things may seem slow or condescending, but in my experience, a person is comfortable saying "Yes, I already know what that means," but is reluctant to say, "I don't understand." (This holds even truer in large groups.)

9. Adding Responsibilities Without Subtracting Any

Focus and attention are finite resources just like sunlight and water. I say that because growing a company is like growing a plant. You keep a plant healthy by pruning it to allow newer, stronger shoots to grow. Sure, some old stems may fall off naturally. But, if they don't, the dying branches may steal enough resources to kill the growing ones.

Chances are, there is something that you (or your employees) spend time on that is stealing attention away from something more valuable.

8. Managing for the Quarter

Would you rather have $100K today or $400K in three months? Unless you're paying a ransom or the world is ending in 91 days, I hope you'd take the $400K. And yet, my experience is that many management teams will take the $100K if it means they'll make their quarterly numbers and look good at a board meeting or on an investor call. I suspect these managers would be fired if their board learned that decisions were being made this way.

7. Promoting People Away From Their Skills

It's not possible nor desirable for everyone to be a manager, but sadly, taking a managerial role is the only way to score a promotion in many companies. For example, your best engineer may be great at solving technical challenges, but no better at managing a team than a mediocre engineer. Let me highlight the silliness of this situation using a baseball analogy.

If a baseball player hits 50 home runs in his rookie year (that's really good), should he be promoted to hitting coach? No, that would be incredibly foolish! A talented hitter deserves more money, a prime position in the batting order and maybe some sway in making strategic decisions. You want to keep a player like that happily hitting for many years.

There is an implied ultimatum in many companies: become the hitting coach or go play for another team.

6. Telling White Lies

"I know the name of every person in the company," said a CEO in an interview. I laughed as he said it because it wasn't remotely true. Nevertheless, the next day at work, I noticed that some of my co-workers hadn't dismissed the statement as puffery like I had. They knew that the CEO didn't know their names and it made them feel diminished and unimportant. White lies seem harmless, but they can breed a culture of dishonesty and resentment

5. Adopting a Policy Without Understanding Its Spirit

The road to hell is paved with misunderstood intentions.

I've heard senior executives sing the praises of an open floorplan, citing Bloomberg and Facebook as success stories. Then those same executives retreated back to their offices and shut the door. (Mike Bloomberg and Mark Zuckerberg, both billionaires, sit amongst their employees.) This is a bit like parents telling their children how important family dinners are and then excusing themselves each night to eat privately at a restaurant.

Similarly, an open door policy should mean that anyone can confidently raise a concern up- or across-the-company in confidence and without fear of reprisal. Nevertheless, I've seen open door policies turn into a sad game of telephone where the concerned employee is later warned about going above someone's head or behind someone's back. This effectively leads to a closed lip policy.

4. Keeping Bad Employees Around

Super workers are amazing. They accomplish 3-4 times more than very good workers and are 12-16 times more effective than underperformers. (I'm not pulling these numbers out of thin air: part of my job is to quantify teams.) Imagine a simple team with only two members: an underperformer and a super worker who is 12 times more effective. The super worker spends one-third of her time coaching and managing her struggling colleague, and maybe he doubles his output as a result. Big win, right? Wrong! The super worker alone is 20% more effective than the two-person team and costs the company only one salary instead of two. 

I understand, of course, that a single person isn't a team and that coaching new or struggling employees is an important investment. My point is to show that bigger teams aren't always better. Keeping underperformers around saps the productivity and morale of a team, and in extreme cases, the whole company.

3. Celebrating Too Early (aka, The Redesign Problem)

From: CEO

To: Company

Today is a big day for the company. Open your browser and you'll see a sleeker, faster and all-around better version of our website. This is cutting edge work and a hearty congratulations is deserved for all involved, so please join me in saying great job!

From: Joe User

To: Customer Service

Your new website is terrible! It's slow as molasses, all the stuff I use disappeared, I have to scroll endlessly to find things, the page dances around as it loads and the site search is broken. Fix it or I'm gone!

It's not easy (nor advisable) to tell your CEO that "everything you said in public is wrong," so most employees say nothing instead. I once saw 70% of paying customers cancel their subscriptions (yes 70%!) after a website redesign. Many executives and managers desperately clung to the belief that the redesign was a success, even as thousands of complaints piled up. By the time people had the guts to admit the truth, it was too late. Jobs were lost.

It's hard to admit mistakes, that's human nature. But, it's even harder to admit a mistake when you've broadcast how perfect everything is.

2. Throwing Good Money After Bad

Problematic employees, struggling divisions, failed acquisitions: Most companies face challenges like these. The trick is knowing when to invest through the trouble and when to call it quits.

I don't have guidance to share because every situation is different. But, I will say that struggling companies tend to ignore successes, or take them for granted, while investing time, energy and money in things that aren't working.

1. Turning a Blind Eye

Incompetence. Absenteeism. Malfeasance. These things are a cancer that will drive away your best employees if left unchecked.

I understand why employees might be reluctant to speak up about bad managers, but I cannot fathom how managers let employees get away with horrible behavior. Pretending a problem doesn't exist is a dangerous form of lying with serious consequences for an entire company. This might be the worst kind of rot.

If any of the things that I mentioned above sound familiar, don't panic. Every company suffers a little rot, but a good corporate culture will fight it off like your body fights a small infection. On the other hand, if your company is sluggish or struggling to do things that it once did well, resist the urge to blame your competition and, firstly, look for signs of rot within.