Lunatics have taken over the boardroom

First published in the Financial Times on 6th March 2012.

Crazed office politics are a sign of midlife crises

Sometimes it can seem as if the executive suites of large organisations are actually lunatic asylums.

A director of one of the US’s biggest companies recently regaled me with stories from the front line of corporate madness. Its boardroom has been dominated by infighting for years. Chief executives come and go, the business blunders on, but politics overshadows everything.

This company is so large it would take a nuclear attack to sink it. Yet its very scale means those jockeying to be captain of the ship can afford to spend their entire time backstabbing, stealing credit from rivals and waging turf wars. Shareholders, customers, staff – they are almost ignored while the various leaders seek status at any cost.

Possibly in previous eras, bosses were less selfish. Even ambitious types, who clawed their way up the corporate ladder, seemed to care more for the institution where they worked. Now their personal career
is all that matters. The individual’s priorities are the only agenda, even if that conflicts with the workplace. Perhaps this is revenge for the way modern capitalism has dispensed with much loyalty towards personnel, how the traditional relationship between employee and employer has frayed and become highly legalistic and hollow.

Of course throughout history there have been epic power struggles at the top. From plots in the senate against Caesar in Ancient Rome to Machiavelli in Renaissance Italy, jealousy, cliques, sycophants and nepotism have been rife. It is part of human nature to indulge in such behaviour.

I suspect such manipulations and intrigues increase in proportion to the size of the undertaking. In the 21st century, multinationals are larger than before – hence my impression that managerial manoeuvres are more prevalent than in the past. Moreover, the rewards for the victorious are greater than ever.

It might be that once they reach the summit, executives get so bored they carry out such games as a form of amusement, a diversion from the drudgery of day-to-day duties.

More likely though, demented office politics represent an external manifestation of various midlife crises. Boardrooms are overwhelmingly populated by men aged 45 to 60. By this age, most of the players have worked out that more money doesn’t bring happiness; time is taking its toll; maybe the striving and sacrifices weren’t really worth it; and the participants tend to become more acutely aware of their mortality, shortcomings and missed opportunities. Regrets and anger can become the dominant emotions, as optimism and hope gradually diminish.

Thus the boardroom can end up resembling a psychiatric ward. Motivations diverge violently, and maintaining a rational sense of purpose can become impossible. Meanwhile, new technology, changing demographics, the rise of emerging economies, the financial emergency and other threats mean many western organisations face an existential reckoning. Plenty are standing on a “burning platform”, as the CEO of Nokia put it – yet those in charge bitch and scheme even as the flames lick their boots.

There is a vast amount of literature on this general subject – so-called organisation theory. When doing an MBA, my wife had to study such texts. I found these academic analyses to be dry and unrealistic – they attempt to bring logic to matters that are typically
determined by egomaniacs and dysfunction.

The greatest advantage entrepreneurs possess over large organisations is their lack of space and time for office politics.

It is a myth that the majority of big companies are scientifically run, efficient places. In reality they are often shambolic, crawling with would-be dictators and damaging feuds. Despite all the most intelligent supervision, delegation and incentives ever devised, subordinates and hierarchies are in persistent turmoil.

I suspect board chaos is a key underlying reason why future performance of companies is so hard to predict. If central command is driven by testosterone, then is it surprising that decision-making is erratic?

All this is a strong argument in favour of a diversified management cadre – by age, sex and type. It might just help to reduce the insanity, and make industry more productive and sustainable.