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One of the casualties of a faltering economy is often the collegiality that exists among employees. Elbows get sharper, whisper campaigns more insidious, and the behind-the-scenes maneuvering more Machiavellian as workers scramble and scratch to maintain their power, prestige, and sometimes even their jobs.
This jockeying can go on at the lowest rungs of a company and continue right on up to the corner suite. Dr. Dee Soder, founder and managing partner of CEO Perspective Group, a New York City-based assessment and advisory firm, runs across some of the most unpleasant outcomes of organizational politics in her work with presidents and CEOs. "Some 15% to 20% of the clients I work with are now in situations in which the company is operating without constraints," she says. "People are being fired without notice and given until the end of the day to clean out their offices. They're being given less severance. I have never seen politics harsher than they are right now."
Other examples of the dark flowers of organizational dynamics include undermining the credibility of others, stifling their voices, and usurping credit for someone else's work. Lawrence B. MacGregor Serven, founder and principal of The Buttonwood Group, a Stamford, Connecticut-based consulting firm, calls such office politics "the enemy within." We experience this enemy "when we don't feel safe," he writes in The End of Office Politics as Usual (AMACOM, 2001). Office politics occur "when we discover that people who play by the rules don't win after all and that people are rewarded for something other than merit." And the memory of someone done in by negative politics can plague a firm for years after the stiletto has been slipped between the ribs.
| Whenever there's a feeling that things aren't fair, you're going to get politics. |
| —Ronna Lichtenberg |
In the gathering uncertainty and gloom of a recession, employees naturally worry that they'll be included in the next round of layoffs. Managers, anxious to secure the necessary financial and human resources for their key projects, fight to keep their units intact. In such an environment, the negative politics intensify at all levels. You can't hope to root it out entirely, but there are steps you can take to dampen it and prevent it from spreading.
Much of the advice you hear presumes that the answer lies in the realm of interpersonal dynamics. The interpersonal advice dispensed here, however, is intended to help you head off the game playing instead of teaching you how to play the game more deviously. But the principal message is that organizational remedies offer the best hope for a widespread resolution of the problem.
Before W. Edwards Deming revolutionized the field of quality management, Serven writes, firms tended to "fix the blame on an individual" when there was a problem with defect rates. Deming showed them how to "fix the system that produced the errors." The challenge with company politics in a downturn is very similar. Companies with infrastructures that minimize internecine jostling have responded to the turbulence of the past year much better than those that have ignored the way that systems can foster negative politics.
But be assured, the turbulence is likely to continue. "The only thing we can predict," says Serven, "is that there will be some kind of economic shock next year and the year after that and the year after that. This is a great time for a company to wake up and get the right infrastructure in place so it doesn't have to suffer the same consequences—or at least to the same degree—when the next shock happens." By addressing the organizational issues now, you'll be in a position to soar when the economy turns around.
The leadership angle
"People's knee-jerk reaction to negative politics is, "What can you ever do about it?" says Serven. "But if your leadership has this mindset, your company is sentenced to perpetuating the behavior."
Office politics fills a leadership void. It's the absence of leadership that fosters a negative political environment. "People are pretty quick to size up a culture," says Serven. "If they determine that there's a benefit to undermining someone else's credibility, they'll do it. In a downturn, fear drives people to act in more overtly political ways. So there's a stronger need for leadership than there was before. The amount of leadership that works in good times is insufficient in a recession."
One of the most important things leadership can do is establish a strong and shared fact base about the company's current competitive position. The problem, writes Serven, is that in many companies there's an "Insider's Rule Book" that says, "‘Keep your head down and keep your boss happy.' It doesn't say anything about learning how your organization works as a company." To bring employees out of their foxholes, you often have to "force them to talk openly about subjects they'd rather not discuss," says Ronna Lichtenberg, president of Clear Peak Communications in New York City. In this respect a downturn presents an opportunity: The burning platform, the sense of a crisis, has already been created for you.
Practice open-book management. "Get financial and operational information out to people and teach them how to use it," writes Serven. Make sure everyone knows what your chief competitors are up to and how your company compares to them—that will subtly reinforce the idea that the enemy is "out there, not in here." In addition, give people a clear idea of how the company got into the situation it's in, says Jean-Francois Manzoni, associate professor at INSEAD in Fontainebleau, France. "This is a good opportunity to bring up important lessons you may want to underscore about any failures that have occurred, and also to highlight the fact that while some components of the business need substantial work, others are functioning well. Moreover, it allows top management to acknowledge some responsibility for how things got this way—if that's appropriate—and to report on how plans to fix the problems are progressing."
Next, lay out any cuts or restructurings that will be necessary, framing the sacrifices you're asking for in terms of how they'll help the company be successful in the future. "It's easier to sell temporary pain as part of a strong recovery plan," says Manzoni, "than it is to present unbounded prospects for continuous pain with no clear and strong way out."
Establishing fair processes
"Americans are fond of saying that turkeys don't vote for Thanksgiving—in other words, that people don't like to support measures that are costly to them," Manzoni continues.
But actually, there's strong evidence that employees will support tough restructuring programs—provided they perceive the process that leads to the restructuring decision as fair. In one study, employees who were involved in a performance appraisal system emphasizing fair procedures displayed favorable reactions toward the appraisal system and the managers who administered it, as well as a greater intention to remain with the organization, even though they received significantly lower performance evaluations than the control group.
But "people become bitter and resentful when they believe that whatever cuts need to happen are being made on the basis of who's politically connected rather than on the basis of merit," says Lichtenberg. "Whenever there's a feeling that things aren't fair, you're going to get politics." So what constitutes a fair process?
- An adequate consideration of others' viewpoints. "People don't demand votes on each and every issue," says Manzoni, "but they generally want to be heard regarding the diagnosis of the current situation and/or the potential cures."
- The consistent application of the decision criteria across individuals and time periods.
- Communication of the decision in a timely manner.
- Sufficient explanation of the basis for the decision. Says Manzoni: "The decision must be perceived to be based on sound facts and reasoning."
When these conditions obtain, tough cost-cutting programs have a much greater likelihood of being accepted and less chance of triggering negative political behavior. The divisions—and people—that lose out in the competition for limited internal investment funds are more likely to agree that the winning proposal best meets the company's strategic goals.
But for other circumstances—say, when the managers of two separate product lines both want to launch a new product in the same quarter and can't reach an agreement about which one should take precedence—a formal conflict resolution process can help, says Serven. The product managers and their bosses meet. Each manager has ten minutes to present her case, after which the other manager paraphrases what she's heard. Next, the group tries to reach a collective agreement; if it can't, the issue is bumped up to the next organizational level for a decision. Such a process reinforces the belief that decisions will be made on the basis of what's best for the company.
"Structure the company so people can act on what they know"
This advice from Serven underscores the security that comes from knowing the goals of the business and how you can help the business achieve those goals. When employees don't have a clear idea of what they need to do to succeed, what the venerable investor Warren Buffett calls "the institutional imperative," the political force that leads otherwise intelligent managers to make decisions that don't reflect the company's best interests takes over. And that's when people become fixated on the advantage that comes from personal relationships, says Lichtenberg.
As a manager, you already know that clarity starts with your articulating for direct reports exactly what they need to do to excel. But there's more that you can do: Crafting a linked system of evaluation and rewards helps reinforce your messages by creating disincentives for the political shenanigans to proliferate. Research shows that value-based management (VBM—a system that integrates strategic planning, operations planning, performance management, reporting, compensation, and rewards—creates "a new language rooted in value that improves communication…and reduces politicking and gamesmanship," write INSEAD professors Fares Boulos, Philippe Haspeslagh, and Tomo Noda in "Getting the Value Out of Value-Based Management." Value-based Management makes employees "more accountable, more motivated, and more likely to take initiative."
Microsoft's VBM system entails six months of strategic assessment. After that, says Serven, "what's strategically important, and what individuals' roles are, are so clear that Microsoft is able to do its budget—a politically charged process in most companies—in six weeks. The resource allocation priorities just fall out of the strategic assessment." VBM, in other words, can depoliticize the budget process.
If you have a VBM system in place, look first at your metrics whenever the politicking seems to be on the rise. "Your cultural and your financial incentives may be in conflict," says Lichtenberg. "You may be paying for one thing but talking about another. For example, you may espouse the notion of teamwork, but you're not going to get that behavior if everyone's bonus is dependent on individual sales results. To change that, you need to make some percentage of employees' compensation tied to team performance."
It takes a while for the benefits of changing compensation plans and bonus structures to kick in, however. Not to worry: Your efforts to establish a shared fact base about the company's competitive position and ensure that all your direct reports know precisely what they must do to help improve the situation constitute the most valuable short-term interventions you can make.