There are only two problems in any organization

After my assessment, I am frequently asked, “How many problems do we have?” Or the question might take the form of, “Can this be fixed?”  I generally get a shocked reaction when I respond that this is easy, “You only have one or both of two problems.”  After the initial surprise subsides, I explain that my practice has shown me that organizations  have only two problems.  Of course, my relieved client wants to know what the two problems are to which I answer, “Your problems are governance, culture or both.”  I look forward to the puzzled look this answer brings.

Organizational leaders tend to be problem oriented.  They frequently act in a reactive mode to the crisis de jour.  Organizations experience executive turnover when the leaders are overwhelmed with problems faster than they can be fixed leading to a decline in performance that inevitably leads to executive succession.  I explain that focus on the ‘problems’ is not the correct response.  The correct response is to focus on the governance or culture that allowed the problems to develop, exist and persist in the organization.  When the issues related to the governance and culture are addressed, the ‘problems’ usually go away.  This is why it is so important to get the leadership team focused on the right things during the confusing cloud of uncertainty that surrounds a succession event.

Governance is the tone and direction for the organization set in the Board Room.  If the course of action for the organization emanating from the Board Room lacks direction, is insufficiently supportive,  if the Board is divided and lacks resolve; the leadership team does not stand a chance.  Their activities will be diluted by controversy over taking the organization in any direction without affirmation from the Board they are on the right track.  I worked in a hospital system that had a Board that had been constructed in a representative fashion.  Instead of these Board members representing their fiduciary duty to the mission of the organization, they represented diverse factions and were frequently at cross purposes.  The factions of the Board were divisive and they could not understand why they could not recruit and retain executive leadership.  The organization was ‘recognized’ by a rating agency for having the highest CEO turnover problem in the US healthcare industry.  Any time an organization has individuals in leadership positions in the organization that are pursuing their self interests instead of the organization’s mission, there are going to be problems.

Culture is defined as “the attitudes and behavior characteristic of a particular social group.”  The culture in an origination is its values and mores.  A mentor of mine described the culture in an organization we worked in as ‘toxic.’  At first this did not make sense to me.  Then as I gained experience working in challenged organizations, I came to realize that toxicity of the culture was at the root of most if not all of the operational problems we found.  A lot of things start happening when the culture begins to become toxic.  A toxic culture in this context is a culture that has become dysfunctional to the point that the dysfunction has become the organization’s sense of normalcy.  Work ethics decline when employees see tolerance of substandard performance and bad outcomes among peer leaders.  “If the organization is not going to hold anyone accountable for anything, why should I take risks and work above the minimum requirement,” they ask?  I tell leaders and Boards that the performance of an organization is nothing more complicated than the aggregate performance of every person in the organization, especially the leaders.  If the performance of this group goes into decline, eventually the performance of the entire organization will begin to exhibit symptoms of decline.  The symptoms of decline include the manifestation of increasingly complex and expensive problems like material, unfavorable accounting adjustments and restatement of audits.  The decline will also show up in JCAHO citations and reductions in employee, patient and physician satisfaction, not to mention poorer clinical outcomes.  Ultimately, decline leads to the turnover events that cause organizations to have the opportunity of meeting people like me.  A CEO that fails to recognize this dynamic has a predictably short future.

Another aspect of culture in my experience is that it develops momentum.  When the culture is good, the momentum builds upon itself as leaders in the organization perform at improving levels and are challenged by their peers and the organization to continue their improvement.  The organization increasingly becomes a place where people want to be.  People like to win and they like to be on a winning team.  A winning team will cleanse itself of losers because they poison the organizational culture well and drag the entire team down.

My unfortunate experience in dealing with toxic culture in organizations is that I have learned that changing the culture without changing the cast of characters in the organization is a fool’s errand.  In order for culture to change, people must change.  My practice has led me to the conclusion that the most change resistant organism created by God is the human being.  All of us for better or worse are pretty much who we are and most of us naturally resist change.  The TV character Adrian Monk said, “I don’t mind change, I just don’t want to be there when it happens.”  Along these lines, I highly recommend a book by Alan Deutschman titled, “Change or Die.”  This book documents the research of Dr. Dean Ornish that found that even when faced with a virtually certain prognosis of death, only a very small proportion of people will change destructive lifestyle habits.  The question I ask leadership teams is that if a human being will not change their ways when faced with a death sentence, what right do we have to expect that they will change their ways when the only thing involved is a job?

The take-away from this is to stop chasing problems.  Look at what is coming from your Board Room and leadership team.  What is the level of accountability in the organization?  Fix the governance and culture in the organization and you will find that the problems will ‘magically’ go away.  How can I make this assertion?  It is easy.  Get the right team on the field, support, encourage, hold them accountable and watch them fix all of your ‘problems’ on their own.  As this occurs, you will see the performance of your organization improve as if by magic.  Not only that, you will likely get credit for engineering a turn-around. 

I have mixed feelings about this article.  The downside is that I am revealing one of my most powerful ‘secret’ tools for effecting transformational change in an organization.  If you adopt this mantra, there is a very good chance that we will not have the opportunity to meet in a business situation.  However, I am not too worried because of the caliber of governance and leadership I have seen in many organizations.  I am reasonably confident that things will continue to evolve in such a way as to insure that I remain as busy as I like for as long as I wish to work.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two you would find value in.  I can also help with career transitions or career planning.
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This is original work.  I have not seen content of this nature in my extensive dissertation research.  This material is copyrighted by me with reproduction prohibited without prior permission.  I always note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

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