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How to prevent the rise of Toxic Leadership

Updated: Feb 13

Understanding how it works to learn how to guard against it.


Key take-aways:


  • Complex organisms (like humans or horses) survive because they have a decentralized immune system able to detect and repel most threats (virus, germs, etc.) early and reliably

  • One of the most pervasive threats in business is toxic leadership, and many businesses are infected (56% of American workers claim their boss is mildly or highly toxic)

  • Toxic leaders thrive in businesses where they can take advantage of vulnerabilities embedded in two organizational systems (performance evaluation and conflict resolution) to cultivate an image of high-performer with the higher-ups while harming culture and performance

  • These vulnerabilities create an asymmetry of information between the people who suffer from the impact of toxic leaders and those who could do something about it

  • Businesses that want to build a high-performing culture at scale need to emulate nature and build an organizational immune system able to meet a local threat with a local response

  • To do so, we need to challenge our conception of leadership, innovate with how we organize human collaboration and give teams the tools to autonomously prevent toxic leadership from taking roots

  • The quality of a leader is best assessed by the ones “below”, not the ones “above”



When was the last time you saw a leader being fired by their team?


It rarely happens and that’s one of the reasons why toxic leadership is such a pervasive problem in business.



Lord Acton once wrote that “Power tends to corrupt and absolute power corrupts absolutely” (1887).


However, I prefer Adam Grant’s current take on it “power reveals and absolute power reveals absolutely”.


Either way, toxic leaders are one of the worst threats in business. They create a climate of fear and suspicion, promote office politics and reliably turn star performers into disengaged/disillusioned employees.


According to the US army, a toxic leader is an individual who, by the nature of their self-interest, abuses power and position to promote themselves at the expense of subordinates and the wider organization.


Toxic leaders are often narcissistic, poor listeners, lack empathy, hypersensitive to criticism, often take credit for others’ work, and have an inflated sense of self-importance.


Whatever shape they come in, the bottom line is that such leaders inevitably and durably undermine trust and psychological safety around them, two factors that directly correlate with business performance.


Unfortunately, toxic leadership is not a fringe problem. A study by Life Meets Work found that 56% of American workers claim their boss is mildly or highly toxic. And a study by the American Psychological Association found that 75% of Americans say their “boss is the most stressful part of their workday”.


Companies that want to create and sustain a culture of performance, especially at scale, need to develop an immune system effective against the most dangerous form of toxic leadership, namely toxic leaders that are good at managing up.


And to do that, we need to understand how the virus works.



Toxic leaders thrive when they can take advantage of vulnerabilities embedded in the company’s organizational systems to cultivate a reputation of being a high performer among the “higher-ups” in spite of harming culture and performance.


This is possible when the organization’s immune system is defective at two levels: detection and response.



The detection problem comes from the top-down individual performance evaluation process.


When performance is assessed by the direct manager, what matters is not the actual performance as seen by clients, teams, and peers, but the perception of performance from the manager’s perspective.


The problem is that objectively assessing someone else’s performance can be hard if they are skilled at projecting the version of themselves that they want you to see.



When performance is assessed individually and top-down, there is an incentive to manage perception upward and we are often unable to detect that we are being managed up.


In his article “Why do toxic people get promoted?” Klaus J. Templer explained that “toxic employees whose political skills were highly rated by their supervisors were more likely to have a high-performance rating. In other words, while not all toxic people possess the political skill, those toxic people who use political skill effectively in the eyes of their bosses are seen as better performers


A detection mechanism tied to the ability of a higher authority to identify a toxic leader is slow and unreliable, and a toxic leader who is skilled at managing up will thrive regardless of their actual performance.



Then, the response problem comes from the conflict resolution process.


In many companies, the default conflict resolution process boils down to “go talk to the manager/a higher authority”. That kind of process doesn’t create a safe environment for employees to speak up, especially against someone higher up in the hierarchy.


If someone wants to expose a toxic leader, they have to walk into a “my word against yours” kind of situation which will usually work against the employee and in favor of the toxic leader who is good at managing up.


In that kind of environment, going to a higher authority is a risky gamble, and is likely to backfire if the toxic leader established a solid reputation among the higher-ups and can later retaliate by influencing the employee’s performance reviews, promotion opportunities, and compensation reviews.


What if the leader is unanimously known to be toxic by their teams? Why not act as a group?


That is also hard because of the coordination problem.


Everyone would be better off if they acted together and all spoke up at the same time, but it’s in nobody’s interest to act first.


Without an explicit process that gives the group the means to act together, coordinated action is difficult to pull off.



The combination of the detection and response problems leads to an asymmetry of information between the people who suffer from the impact of a toxic leader and those who could do something about it.

One group has the information, but not the power while the other group has the power but struggles to access the information.


The tragic irony here is that even though the information about the problem is present inside the company, no reaction can be triggered unless it reaches a “higher level of consciousness”, meaning a higher authority.


In evolutionary terms, it makes no sense.


A complex organism that couldn’t detect and quickly react to a threat wouldn’t survive for long. If our body wasn’t able to trigger a rapid response to a known threat (virus, germs or others) we would all die in a matter of weeks.


The solution, found in nature, is simple and powerful, a local threat needs to be met with a local response.


The same logic can be applied to companies.


Instead of trying to move the information to where the authority is (create awareness at the top) we need to move the authority to where the information is (give teams the tools to repel the toxic leadership virus).


This is an organizational design challenge that can be solved by challenging established leadership models and innovate with how we organize human collaboration.

How?


While every organization needs to find its own way of doing it, some inspiration and insights can be found by looking at how pioneer organizations have tackled this problem.



HAIER — Chinese Home Appliance Manufacturer



Haier is now the largest home appliances manufacturer in the world after its acquisition of GE appliances in 2016. Their 70,000 employees are organized in 4000 micro-enterprises.


Each micro-enterprise has a leader, a mini-CEO, who is chosen by the team.


In the Haier model, the leader is accountable to their team first, not to the higher-ups. And since each micro-enterprise has shared, explicit and transparent performance metrics at the team level, they can self-assess their performance as a group and the performance of the leader based on her or his contribution to the team’s success.


If the leader of one of those micro-enterprise is under-performing, the team can fire them and either promote a new leader from within, find one in the larger organization or even hire one from outside the company.


To understand better the Haier model and why it works at such a large scale, the HBR article “The End of Bureaucracy” is a must-read.


W.L. Gore & Associates — US Material Science Company



W.L. Gore and Associates, the maker of Gore-Tex fabric (among many other things), employs over 10,000 associates in 50+ workplaces spread in over 20 countries and is consistently ranked as one of the United States’ top places to work by the Great Places to Work Institute.

At the company, there are no titles, everybody is an associate.


Every associate chooses the work they do and make commitments to their colleagues on what they will accomplish. Since the organization has no formal managers, “leaders” emerge organically based on a project’s needs and the qualities required of a team leader in that circumstance. Leaders are made because other associates want to follow them.



In that environment, no leader can maintain control over a group through the use of power and status. When people are free to self-organize into teams, a toxic leader can’t thrive since they can't attract any followers.


For more on W.L. Gore and Associates, check out HBR’s deep dive “Nimble Leadership”.



How do you grow effective organizational antibodies against Toxic Leadership?


The reality is that there is no recipe, you can’t merely copy what other organizations have done. You need to find your own way of tackling this problem.


That being said, there are a few principles that are consistent across the organizations that we have studied:

  • Embed the building blocks of your company’s immune system into the fabric of day-to-day work: leadership models, processes & team structures, not just aspirational statements and leadership training

  • Replace top-down individual performance assessment with team-based performance assessment based on shared, explicit and transparent performance metrics

  • Enable a local response to a local problem by pushing authority to where the information is instead of pulling information where the authority is

  • Make leadership structures fluid and context-relevant, make leaders accountable to their teams and give the teams the tools to hold leaders accountable



Can you detect and get rid of toxic leaders that are good at managing up?


Not finding toxic leaders in your organization is not proof that they aren’t there, it might just be evidence that you can’t detect them.


And the unseen blade is the deadliest.

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