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The 7 deadly signs of a less developed company

The 7 deadly signs of a less developed company

Millennials are the canaries in the coal mine - unlike previous generations, they have been taught to have a low tolerance for toxic behaviour and to keep their expectations high.

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The systems in a less developed company are usually proprietary, dated, difficult to use and problematic

Bradley de Souza

We all aspire to lead rich, meaningful lives, with satisfaction and appreciation of the work we do. Unfortunately the work we do is becoming a source of increasing unhappiness. There is no simple reason to explain why people are dissatisfied, but I believe the answer lies in the type of company people work for.

In this competitive, market driven world, a type of 'less developed' company is the culprit behind the dissatisfaction people are experiencing. These companies are surprisingly plentiful and well-known. They are driving the trend to distil and commoditise all professional activity into a 'Mc Job' A job which can be done by anyone, anywhere, at low cost, with no long-term commitment or stability.

Background

Companies don't start out as less developed and modernise over time, instead, they start out as small businesses struggling to survive. They get through the first 10 years, a milestone very few reach and then one way or another success follows. When the company starts to grow and expand, that's when the trouble begins. It can take years for some of the indicators to inevitably emerge:

1. People and behaviour

When trying to identify which companies are less developed, millennials are the canaries in the coal mine. Unlike previous generations, they have been taught to not tolerate toxic behaviour and to keep their expectations high. Consequently, millennials can change roles frequently due to issues which should be taken seriously but instead they are criticised for not being tenacious. I worked with several hard working millennials on a fintech project where one by one they left the company. They cited issues around toxicity, work life balance and difficulties achieving anything. These people didn’t leave the company, they left the managers and colleagues who embodied the culture.

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Less developed companies are siloed and hierarchical, often mirroring the personalities of its leadership

Bradley de Souza

Toxic behaviour has become normalised with most people reporting that they have been the victim of abusive conduct. Less developed companies don’t appreciate the impact this has on productivity, mental health, decision making, performance, and employee retention.

Management in less developed companies is inexperienced as people have secured roles through cronyism, elitism (where social standing and educational are valued over talent and experience) or past performance on a smaller scale. In a 1990 interview, Steve Jobs famously called this the 'Bozo Explosion'. It was something he was wary of because it drowns out and discourages talented people. This is one of the key reasons companies end up in a less developed state. Ironically, even Apple itself can be said to have suffered similar issues in recent times.

2. The modern workplace

The workplace has changed over the years. It has been stripped back to offer a bare bones experience where people are concentrated into high density office space often remotely located to keep costs down. These spaces are filled with hot desks, the bane of the modern workplace. Here a few people have permanent desks and the rest fight for limited space. During one project, a colleague and I moved desks four times in a day to continue working together. Aside from the inconvenience, the impact on our morale was obvious. Hot desks are a failed experiment that is counterintuitive to collaboration, and productivity.

Flexible working is another contentious aspect of workplace 'modernisation'. Being able to work whenever and wherever is a wonderful solution that is frequently listed as a key factor when deciding which company to work for. In less developed companies, those who embrace flexible working are overlooked for promotion, pay rises, downgraded on performance reviews and generally eyed with suspicion.

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Staff appear to be well paid but chronic understaffing results in overworked people, causing the talented to leave. They make staff cuts with no reduction in workload.

Flexible workers report being managed more closely, as management focuses on output and not productivity. One commercial property company uses flexible working to justify poor pay and conditions. Imagine going on holiday only to spend time working because you don't get enough days off. Is that really a benefit?

The modern workplace impacts people on a daily basis with trivial decisions and inconveniences. Good companies look to improve performance across the entire workforce and making good decisions is a focus for these organisations. Individuals like Albert Einstein and Steve Jobs chose to wear a standard outfit every day in order to limit and simplify decisions.

They believed in conserving their cognitive energy to minimise decision fatigue. Less developed companies by contrast, squander cognitive energy on minutiae, thereby reducing performance, increasing stress and leading to poor decisions.

3. Work life

Working life in less developed companies isn’t good. Staff appear to be well paid but chronic understaffing results in overworked people, causing the talented to leave. Companies like these make staff cuts with no reduction in workload. It’s easier for them to reduce headcount to increase profits than to generate more revenue, a classic sign of contempt for staff. Those employees that remain, double or triple hat in order to stay employed.

In such situations, some people will go to extraordinary lengths to keep their jobs. At one less developed organisation I learned about staff going for dinner and then returning to work so that their presence was logged. They would then leave unnoticed a few minutes later. Some people copy managers on late night emails to achieve the same effect because the focus is on activity and not productivity.

4. Arcane systems

The systems in a less developed company are usually proprietary, dated, difficult to use and problematic. 

When new replacements are bought, expensive projects are run to 'customise' the new systems to function and behave in the same way as the old ones. 

This is done to minimise retraining but really it is about keeping things the same. This behaviour confirms that less developed companies don’t know how to evolve and it enables the competitor gap to widen until it’s too big to close. 

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Depending on the individual, the toxicity of working in such businesses can have a lasting and profound impact

Bradley de Souza

Addressing this point, Martin Whitmarsh, former CEO and Team Principal at McLaren Group and McLaren Racing (respectively), told me that we should adapt the business to the system and not the other way around. 

He cited his own experience when he implemented SAP at Mercedes Engines. He aligned the business to the way SAP functioned because he believed SAP had invested money to develop the best solution. Given Mercedes dominance at the top of Formula 1 since 2014, one can only assume that this approach contributed in some part to that success.

5. Siloed and hierarchical

Less developed companies are siloed and hierarchical, often mirroring the personalities of its leadership.

On one occasion I made the mistake of letting an intern send an email to the group COO of a well-known insurance company. The email, which I reviewed beforehand, was a simple but necessary administrative request. It was perfectly fine but represented a breach of unofficial protocol because the enforced hierarchy meant that only senior people should send emails to the COO. I chose not to explain this to the 19-year-old intern for fear of ruining the dream of working in such a well-known company. Ironically, after the 6 month internship, tears on day 3 and enduring toxic behaviour from others, the dream was over.

During a panel discussion, the CEO and founder of Gogovan, a Hong Kong startup, talked about his concerns that a siloed culture could develop as the company grew. To avoid this, a unique employee handbook was developed. It contained tasks to be completed by new employees including 'play tic-tac-toe with a person from another department'. The tasks were designed to create relationships, help integration between departments and prevent silos from developing.

They have bureaucratic departments which go untouched by organisational change. HR, finance and procurement are prime examples of these. Conversely, departments which employees rely on for productivity such as IT and facilities management, are constantly subject to restructuring, cost cutting and outsourcing.

Steve Rowe, the incoming CEO of Marks and Spencer, said that the company was too 'inward looking' and 'corporate'. 

Read more: Agility comes with maturity

After many years of losing market share and declining profitability, his conclusion was that it had lost touch with younger customers and alienated its core customer base. The new CEO's response was to cut staff numbers and close stores, the standard response by less developed companies to competition. It's the equivalent of yo-yo dieting, something we know doesn’t work for making lasting change.

6. Bureaucracy

Less developed companies have bureaucratic departments which go untouched by organisational change. HR, finance and procurement are prime examples of these. Conversely, departments which employees rely on for productivity e.g. IT and facilities management, are constantly subject to restructuring, cost cutting and outsourcing.

Hiring practices at these companies reflect the inefficiencies and act as red flags to potential employees. Prospective candidates face a lengthy and dysfunctional recruitment process. A well-known insurance company took 12 months to hire a candidate who had been rejected once, only to succeed at the third attempt, for the same vacancy, in the same department, working for the same hiring manager.

Read more: How to work with the Board and be effective at the top table

Instead of addressing problems like these, one major bank chose to increase the bounties (referral fees paid to employees) to improve its hiring prospects. The company projected a tarnished image to potential employees but the detached management remained uninformed and bewildered.

Ask any vendor or supplier about getting invoices paid by such companies and you'll be told anecdotes of companies taking months to pay. Selling to less developed companies is an achievement many come to regret.

7. Style over substance

Less developed companies have a high opinion of themselves, particularly in the face of changing conditions. They underestimate and dismiss market changes, believing that things will go back to 'normal'. They no longer lead the market, are slow to compete and justify poor pay and conditions because it is a 'privilege' to work for them. Under these circumstances they respond by spending money on marketing and branding, whilst neglecting beleaguered employees.

The fintech/Insurtech revolution is a prime example of this type of behaviour. The arrogance and complacency of these companies has opened the door to challengers whose sole focus is a great customer experience supported by technology. This arrogance can lead to the acquisition of competing companies only to have their value and culture destroyed in time.

Solutions

Less developed companies are best avoided but if you cannot then it’s wise to come up with a plan and stick to it:

  • Focus on what you want to get out of your time there e.g. skills, experience, promotion, training, etc.

  • Cultivate a resilient mindset, using coping strategies to maintain your health - avoid becoming institutionalised.

  • Decide how long you think you can cope and get out if you can’t - don’t fall for allusions of promotion or pay rises designed to keep you waiting forever.

Avoid getting trapped

There are other signs to consider when trying to decide if a company is less developed e.g. a lack of diversity, high staff turnover and poor financial performance. Online forums and reviews can also be a good honest source of information from past and present employees. The more obvious the signs, the more likely the company is less developed.

Cultivate a resilient mindset, using coping strategies to maintain your health

We cannot always avoid less developed organisations but we should avoid getting trapped in them. 

Depending on the individual, the toxicity of working in such businesses can have a lasting and profound impact. Spending too long working for less developed companies can result in undesirable institutionalised behaviour. People should develop a conscious plan to survive and prosper whilst gaining knowledge and experience. If this can be done without losing dignity and integrity, then we improve our chances of succeeding when better opportunities arise.

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Bradley de Souza (bradley@xtanz.com) is an internationally recognised CIO/CTO/COO who has specialised in changetransformation and recovery across industries around the world. 

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Tags strategyskills shortageCIO roleagileC-SuiteworkplacemillennialsmentoringglobalisationStartupceo and cioBradley de Souzaresiliencechief people officerinclusioncontinuous learningfuture workplaceleadershipdiversity

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