Contrary to popular belief, most managers do not fail because they lack financial acumen, marketing knowledge or management skills. In his research, Dr Laferla has found that the most common reason for management failure is an excessive ego drive characterized by misplaced ambition that is narcissistic and self serving.
Some time ago, some business colleagues and I were discussing corporate failures over lunch. We talked about the recent failure of PepsiCo in South Africa as well as other companies that were once highly thought of but are here no more. Companies such as Triomf Fertilisers, AA Mutual, IGI Insurance, Masterbond and many others. Ultimately management must take responsibility for corporate failures. So, what is it that managers do, or don’t do, that cause companies to fail?
During the course of our lunch we spoke about the usual things such as marketing, financial control, management expertise, but didn’t really come to any conclusion. Driving back to the office my mind would not let go of the subject. Corporate failures are really management failures, so why do managers fail? Is there a common denominator?
The more I thought about it, the more convinced I became that, if there is a common denominator, it is not a lack of skills. Many business failures were led by very knowledgeable managers; managers with degrees and diplomas from reputable business schools.
Also, when do managers fail? Is it only when a company is liquidated?
I decided to research this matter but I first needed to qualify what is meant by management failure, then the reasons for it.
Few would argue that the job of a manager is to achieve business results through the effective use of human and other resources. Taking this further we can argue that, in the vast majority of companies, it is people that ultimately produce the needed results. Therefore, even though other resources are employed, be they financial, technological or anything else, these resources are managed or used by people. The expertise of people and the way in which they apply themselves to the job will, in the end, determine the success or failure of a company.
If we agree that the most important business resource is the effective use of human and intellectual capital, we can conclude that a successful manager is one who gets the best possible results from his or her people. Conversely, the unsuccessful manager may be described as one who fails to harness the potential of his or her subordinates and who therefore achieves a relatively low level of productivity.
With this in mind, over 200 South African managers were asked to participate in a study that comprised two parts. First, each manager was appraised in terms of his or her style and managerial behaviours. Second, the department, unit or company headed by each manager was surveyed to determine how effectively people were performing and how productive they were. Scientifically valid and reliable instruments, such as the Management Style Indicator (MSI), and the Organizational Competence Index were used.
The results of this study, on the face of it, produced a surprise. It revealed that managers who fail in terms of our definition (i.e. who do not get the best results from their people in terms of performance and productivity) are aggressively ego-driven. Their primary concern is for themselves, not the good of the organization or even customers. Their orientation is one of self-aggrandisement and self-centredness. Their decisions reflect what they want, or how good it will make them look, or what they will get out of it. Status, position and control are their sole preoccupations.
Managers who fail also tend to be very ambitious and competitive with a high need to achieve. These qualities are often sought after and, in themselves, appear to be praiseworthy. However, it is the manner in which they are applied that reveals whether they are counterproductive. Thus, if ambition is fuelled by a determination to manipulate others, to engage in corporate politics and employ unethical tactics to climb the corporate ladder, that ambition can hardly be said to be desirable. Similarly, a highly competitive nature appears to be valued. But, if the will to win means that a manager works against others in a bid to upstage his or her colleagues, few thinking people would regard it as a strength. Yet these traits came through consistently in the behaviours of unsuccessful managers.
Managers who fail to harness the potential of their subordinates reveal other characteristics as well. They have a deep-rooted fear of failure and, when things go wrong, they shift blame or find a reason outside of themselves to which they can attribute the cause. They seldom take responsibility, for to do so would make them feel vulnerable.
Yet another characteristic of the poorly performing manager is a rugged individualism. Winning, and being seen as superior, are always in the minds of these managers. When threatened, their method of defense is attack. Consequently, they will vigorously set upon anybody who gets in their way. If subordinates pose a challenge, they will quickly be coerced into compliance and submission.
Finally, the manager who fails misuses power. Instead of employing it to influence for the common good, to empower others and create a service ethic supported by high quality standards, they use power to serve themselves and achieve their personal ends at the expense of others. In their quest for personal power these managers crush the will of subordinates.
Putting all these qualities together, we can conclude that the majority of managers who fail have been found to be self-serving, with an uncompromising will to dominate and control. They act in a highly authoritarian manner and, in so doing, stifle subordinates. Is it no wonder that people under this management style are relatively unproductive? To survive subordinates must do what the boss says and jump, without question, to his or her decrees. Only those who submissively accommodate to the manager’s demands come through. But the cost of compliance is heavy in terms of morale, personal initiative, commitment and creativity. Hence the reason for less than optimal performance.
Earlier, I commented that the results of this study came somewhat as a surprise. We thought we had come up with something new. On closer examination, however, we found that behavioural scientists have been informing us of these facts for many years. In different words perhaps, and maybe from a slightly different perspective, but nevertheless the same basic truths. For example, approximately forty years ago Chris Argyris of Harvard University predicted that the effects of authoritarian management would ultimately be revealed in a workforce that is submissive, dependent, passive and incapable of creative problem solving. “The reason” Argyris said, “was that mature and competent personnel were, under authoritarian rule, being forced to behave in immature and incompetent ways in order to stay in their organizations. Over time workers could be expected to adapt themselves to organizational pressures and become the compliant, unthinking and obedient children top management always wanted.”
Numerous studies have confirmed Argyris’s words. The “power” studies of Blake and Mouton, the “organizational competence” research of Jay Hall, our own surveys, and many hundreds more, confirm that the traditional, authoritarian managers ultimately fail. These are the managers who are aggressively ego-driven, who seek power to dominate and control, who are adversarial and antagonistic and who fail to get the best possible results from people.