Why do Fortune 500 companies collapse?
I recall a study published a few years ago that demonstrated that only about 100 companies were common between Fortune 500 List of 1990 and 2015. Most of the other companies were either acquired or filed for bankruptcy. There must be many reasons. But the biggest is politics (popularly known as stakeholder management).
In a close encounter with a Fortune 500 company, I observed that the CEO of one of the businesses created a coterie of leaders around him who invested their time in pleasing him and positioning him as a great leader amongst the team and the bosses. Needless to say that these folks did not have enough time to perform. But they were rewarded for the loyalty towards the CEO.
What happened to the high-performing leaders?
Stifled by the workplace politics, most of the high performing leaders left the company.
๐๐จ๐ฐ ๐๐ข๐ ๐ญ๐ก๐ข๐ฌ ๐ข๐ฆ๐ฉ๐๐๐ญ ๐ญ๐ก๐ ๐ญ๐๐๐ฆ๐ฌ?
The teams realised that success is not in performing but in demonstrating loyalty to the manager, leader, and the CEO. They began focusing more on pleasing their superiors than on high performance. Managers, in turn, rewarded people-pleasing behaviours over actual results, leading to underperformance. Frustrated, the high performers across levels started quitting, resulting in 40% attrition.
๐๐ก๐๐ญ ๐ก๐๐ฉ๐ฉ๐๐ง๐๐ ๐ญ๐จ ๐ญ๐ก๐ ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ?
The business declined. It was eventually sold. Over paid team members, with stagnant skills, found it difficult to obtain suitable new roles.
In summary, excessive workplace politics and a lack of a positive team culture led to the companyโs decline and derailed many careers.
So, what can we learn from this example?
๐๐๐ซ๐ ๐๐ซ๐ ๐ฌ๐จ๐ฆ๐ ๐๐๐ง๐๐๐ข๐ญ๐ฌ ๐จ๐ ๐ ๐ฉ๐จ๐ฅ๐ข๐ญ๐ข๐๐ฌ-๐๐ซ๐๐ ๐๐ง๐ฏ๐ข๐ซ๐จ๐ง๐ฆ๐๐ง๐ญ ๐๐จ๐ซ ๐จ๐ซ๐ ๐๐ง๐ข๐ฌ๐๐ญ๐ข๐จ๐ง๐ฌ:
1. Improved Organisational Success: Promoting positive team dynamics encourages employees to perform well, improving team and organisational success.
2. Fair, Merit-Based Workplace: Minimising office politics ensures employees focus on performance rather than on pleasing superiors.
3. Higher Employee Retention: Employees are likely to stay longer in a supportive, friendly environment where camaraderie thrives.
๐๐๐ง๐๐๐ข๐ญ๐ฌ ๐จ๐ ๐๐จ๐ฅ๐ข๐ญ๐ข๐๐ฌ-๐
๐ซ๐๐ ๐๐จ๐ซ๐ค๐ฉ๐ฅ๐๐๐ ๐๐จ๐ซ ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐๐ฌ:
1. Joy of Working: A positive environment keeps employees motivated & helps avoid syndromes of โThank God itโs Fridayโ or โOh God itโs Mondayโ.
2. Skill Development: A focus on performance improves skills promoting growth both within and outside the organisation.
3. Reduced Negative Stress: Work Politics and favouritism can cause stress that becomes detrimental to employeesโ health, wellness, and career.
Have you noticed politics in your organisation? What steps did your organisation take to manage such behaviours effectively?