The Betrayal: What Leads to the Toxic Quest for Revenge? Part 2

What happened?
What makes trusted friends turn into fatal enemies in business?  There is no single issue at work in the demise of interpersonal relationships. Personal histories show up in the stresses of a start-up business with wildly different sets of assumptions.  Yet there are three variations I have seen in how stresses impact work relationships.  The first and most extreme is the toxic impasse.  The second and more common is the abnormal divorce.  The third and most constructive is the normal conflict toward discovery.  In this installment I will explore the toxic impasse.

I introduced the toxic impasse in part 1 of this series.  The surprising intensity of venom I saw in my replacement in the software company had a history.  The impact of the 9/11 attacks on our sales pipeline was survivable.  My replacement possessed the right credentials and experience to help the owner endure the temporary loss of revenue by restructuring the organization’s functions and debt. So, where did the relationship between these two friends derail?

The First Encounter

Brian had brought the employment paperwork to my second interview.  Both interviews occurred offsite so I never saw the offices prior to my first assignment – a trade show.  Brian gave me tickets for a flight to Orlando were I was to attend was a hospitality trade show.  There I would not only meet the rest of the turn around team but also meet the owner.

I arrived late in the afternoon and caught a taxi to the hotel.  I called Brian to announce my arrival and he asked me to meet the team and the owner for an early breakfast the next day.  I spent the night reviewing the features and technical detail of our software and familiarizing myself with the operational challenges of hotels.

The next morning I met the team.  I fielded questions from the owner with enough familiarity with his product to make a decent first impression.  We left breakfast for the trade show to see the booth the owner had hired workers to erect.  No one on the turn around team had seen the booth before.  If you have not been to a hospitality trade show what I am about to describe loses its impact.   Hospitality trade shows are like attending a Vegas variety show. They are loud, glitzy, and sexy. The graphics were impressive. The light shows were amazing and the multi-media were exhilarating.  We turned the corner to see our booth at the end of the aisle…in fact I did not see it at first because it was so nondescript.  Once the owner had focused our eyes on the booth I blurted out, “well, it won’t take much to raise the bar on this company!”

As soon as the words left my mouth I figured my job was over and my return flight would be a networking opportunity to find new work.  The owner however, turned, looked me in the eye and said, “Brian, I guess you hired the right team.”   We were off to a less than auspicious start.

The booth contained one computer to show the software.  I had no brochures.  I found business cards that looked designed circa 1950. Brian barked at Laura to go gather competitor intelligence.  He turned to the owner and said, “You did set up the meetings with the flags this morning right?” The owner answered yes.  Brian then turned to me and said, “work the booth, here is a technical manual – see if we can sell this software.” They all left.

I never saw any of the team again except Laura who dropped off competitor information, “hide this and bring it back to the room with you tonight,” she said then disappeared down another aisle.  The day was especially grueling.  Talking with technical buyers about software I had never used and only vaguely understood meant that I had to bypass questions and gather leads.  I was exhausted.  Brian had set up the next morning’s breakfast as a debriefing and strategy session for day two so I did not need to talk to any of the team that night.  I just wanted to get some sleep.  I went to my room and found my key card did not work.  The front desk told me the credit card used to reserve my room was over its limit. It took several calls to Brian’s room and conversations with the front desk to get back into my room.

I arrived at the debriefing meeting early to bend Brian’s ear.  “I thought you said this company was well capitalized,” I shot at him the moment we sat down.  “Was yesterday’s circus an indication that this ship has already sunk?”  Brian assured me the company was fine.  “Have you seen the financials?” I asked.

“Not yet, I just completed negotiating our salaries and the turnaround plan days before this show.”

My mouth was now hanging open.

“We’re fine, Ray.” Brian said then pointed with his eyes to the door where the owner had entered the room.

 The Second Impression

We flew back to Southern California after the show on a red-eye flight from Orlando.  Brian wanted to meet first thing the next morning to discuss what we needed to do to position the brand, reorganize the structure and slam through the database to start generating sales.

I arrived before sunrise at the offices the next day.  I could not help but notice the cobwebs that bedecked the main entrance.  I entered the lobby. A receptionist barely glanced up from her computer screen to acknowledge me.   I introduced myself and as I did the receptionist’s demeanor shifted from cranky to surly. “Oh” her voice now had an icy distance to it, “you are one of the new team.  Brian is in the upstairs conference room.”

“Thanks,” I said – I felt that sinking feeling I had felt in Orlando at the trade show.  I walked across the office space passed the skeletal remains of a once flourishing company.  The empty cubicles and closed off office space reminded me of dead ocean reef like those that show up on National Geographic specials – stark, empty shells.

“Geez Brian,” I said entering the conference room, “what happened to the receptionist?”

“She’s gone today,” Brian retorted.  “Let’s get to work.”

Laura walked in from the break room with the day’s mail in hand and we started the meeting.

In the months that followed we discovered:

  1. Women on the payroll who had no clear job function in the company.
  2. The financials revealed that the company was leveraged beyond its value – in private loans from the owner’s wife.
  3. Many of our largest customers were in the beginning of legal action against us.
  4. A growing number of significant clients were replacing our software with our competitor’s software.
  5. All but one of our developers (the only male) walked out one day complaining of sexual harassment.
  6. Our customer service manager (a female) was also the keeper of company gossip – which she used to secure her place as a manager and stay protected from termination for incompetence.

I dug around the files and storerooms for something that would give me an sign of what had transpired – my anthropological and ethnographic classes at work. I found that the owner had been a radical innovator in the industry.  He introduced the first commercially viable property management software, but he had not kept up with the technology.  Early successes and enormous revenue from the first sales had given the owner a false sense of security and success.  He lacked the discipline to follow through; he made a series of disastrous mistakes and asked his friend Bob (my replacement) to clean up the results.

Over time Bob restructured the company to protect the assets of the owner’s wife and to provide a profitable division he could manage without interference.  Hence the day I met Bob (to orient him on our operations) was the day Bob had anticipated and planned for years.

Toxic Leaders

The owner had become a toxic leader.  Toxic leaders are persons who, “…first charm but then manipulate, mistreat, undermine, and ultimately leave their followers worse off than they found them.”[1]  The owner was a smooth talking and very charming person.  I watched him in sales meetings with potential clients make promises that I knew we would never be able to keep – we simply did not have the programming budget.  I was seeing the impact of a toxic leader.

How do toxic leaders gain their power?  The fact is that followers often knowingly, “…tolerate, seldom unseat, frequently prefer, and sometimes even create toxic leaders.”[2]  Even good leaders have the seeds of toxicity – humans are inherently frail.  Toxic leaders exhibit observable behaviors such as:[3]

  • Violating basic standards of human rights
  • Consciously feeding their followers illusions that enhance the leader’s power and impair the follower’s capacity to act independently (e.g., persuading followers that they are the only one who can save them or the organization)
  • Playing to the basest fears and needs of followers
  • Stifling constructive criticism and teaching supporters to follow and not question the leader’s judgment and actions
  • Misleading followers through deliberate untruths and misdiagnosis of issues and problems
  • Subverting those structures and processes of the system intended to generate truth, justice, and excellence and engaging in unethical, illegal and criminal acts
  • Building totalitarian or narrowly dynastic regimes, including subverting the legal processes for selecting and supporting new leaders
  • Failing to nurture other leaders, including their own successors
  • Maliciously setting constituents against one another (in my observation this may not be malicious at first but manipulative – either way the damage is extensive)
  • Treating their own followers well, but persuading them to hate and/or destroy others (I have seen this occur between departments such as where one VP instructs his direct reports to undermine the efforts of another VP’s department)
  • Identifying scapegoats and inciting others to castigate them
  • Structuring the costs of overthrowing them as a trigger for the downfall of the system they lead, thus further endangering followers and non-followers alike
  • Ignoring or promoting incompetence, cronyism, and corruption

What is behind the behavior of toxic leaders?  Insatiable ambition, enormous egos, arrogance and lack of integrity all feed the reckless disregard for the consequences of their actions on others.  The more I learned about the company the more I realized the owner was a toxic leader – and the people in the company had allowed him to stay toxic – perhaps even needed him to be toxic for their own needs.

That day in my office I heard Bob’s version of Operation Valkyrie (the failed attempt by German military officers to assassinate Hitler in World War II). Bob was set on figuratively assassinating the owner.

The End Game

Toxic leaders stay in power because they are allowed to stay, perhaps even needed to remain in power by those who follow them.  Follower needs for safety, security, self-esteem affirmation, love, belonging, aesthetics, self-actualization, purpose and transcendence all factor into beliefs or myths that inform and calcify our behaviors. We see what we want to see.  In the extreme people wonder how so many Germans could be duped by the evil foisted upon them by Hitler…yet toxic leaders remain unchallenged for a variety of reasons in public, private and religious organizations today all around the globe.

Something about the owner’s last attempt to subvert his existing team by bringing in Brian’s turn around team had caused Bob to snap, to respond not with a healthy challenge but a toxic challenge of his own. Since my last meeting with Bob I have seen the pattern repeat itself again and again.  Toxic leaders charm and manipulate.  Toxic followers ignore the abuse for the promise of some need being fulfilled by the leader.  So what strategies are available to followers?  Followers are not passive victims; they are passive or active contributors to toxicity by leaders.   There are several actions an individual can take.

Counsel the toxic leader, help that leader improve.  This requires honest feedback and a level of vulnerability.  Many leaders express the need for feedback and personal insight (even if they resist it simultaneously). In fact the higher a leader moves up in organizational hierarchy the less likely it is that they will find honest feedback…why?  Followers need the leader to provide certain needs.  Evaluate your own needs, use self-awareness.  What do you need from the leader you consider toxic?  Is this leader the only way to meet this need?  Is the price worth it to you…or to them as a person?

Quietly work to undermine the leader.  This choice is a difficult one because it opens the temptation to become toxic to address toxicity.  This strategy can work if the toxicity of the leader has surpassed what the organization typically endures or you can form an alliance with people who have the organization power to withstand the backlash that may result.  A friend of mine once tried to have a toxic leader quietly removed from their role.  He built an alliance of those in the company who also recognized the negative impact this leader was greater than any benefit he brought to the company.  What they failed to calculate was the needs of the owner in this privately held company.  The owner needed the toxic leader because he had quadrupled revenue through engineered processes.  Losing the toxic leader threatened the income of the owner…my friend was eventually forced out of the company.

Join with others to confront the leader. There are internal politics to consider.  I once formed an alliance to address a toxic leader only to have the alliance blow up on my face as my “friends” denied their role in the alliance and sacrificed me to meet their own needs.  They hated the toxic leader…but that leader provided the security, belonging and esteem they needed and were afraid of losing.

Leave.  There are toxic environments that will not change…they meet or promise to meet needs the followers desperately want.  The only choice in this instance is to leave.  As one who once made this choice, and left a 25 year career behind to start all over in an entirely different field, I can tell you this is not easy.  However, if my own experience is any indication it is far better than staying in a toxic environment.  I have, even as a novice in my new career experienced far more of the type of work I wanted to do since I left than I ever had the opportunity to engage by staying.  Why did I stay so long?  Because the toxic leader dangled the promise of meeting my own needs in front of me repeatedly.  I needed the toxic leader until I discovered that what I needed had nothing to do with that leader or organization.

What if toxicity does not quite describe the challenges you face?  Organizations face predictable points of conflict (that may open the way to toxicity) at various points in their own development.  By anticipating the development life-cycle of the organization it is possible to predict points of conflict and design strategies to discuss this conflict. In Part 3 I explore ways to diagnose and address some of the more common sources of conflict organizations meet.  The challenge for all of us as leaders and followers is to honestly face the reality that toxic behavior is often motivated by valid needs clothed in the fear of loss.  Two questions help me reconsider my own behavior as a leader: (1) what am I willing to pay emotionally and relationally to meet this need; (2) have I been honest about my need and am I looking in the right place to meet it?

[1] Jean Lipman-Blumen. The Allure of Toxic Leaders: Why We Follow Destructive Bosses and Corrupt Politicians – and How We Can Survive Them (New York, NY: Oxford University Press, 2005), 3.

[2] Ibid 5

[3] Ibid 19-20

The Betrayal: When Broken Trust Turns Toxic Part 1

Surprising Venom
“Look Ray,” he said, “I know you have your stuff together.  Sit here, gather your consulting fee and look for another job while you do. This is not about you.  This guy does not deserve to be in business.  I am going to take him down, take what cash I can and move to the job I already have lined up.”

These are the last words I heard upon exiting my first job after graduate school.  How in the world had this company come to such a venomous end?  The guy speaking was a man the owner trusted completely.  Upon receiving news that I would  be let go in the downsizing after the 9/11 attack on the World Trade Center I was told that based on performance I was a good choice.  However, the owner preferred to bring his longtime friend and director of the manufacturing division in to restructure the company to survive the hit we had taken in our cash flow as a result of a vanishing sales pipeline.

How did I get here?  Why was this guy so filled with poison toward this owner?  Why was the owner so clueless?

 The Back Story

I completed a master’s degree in intercultural studies with an emphasis on organizational development and leadership development.   I became more and more enamored with the subject of organizational design and leadership development. I knew I wanted to take this new knowledge into business and work to improve personal and organizational performance.   I did not know how to make the transition from directing and leading in the religious non-profit world to the business world.  I knew two things, I had something very valuable to offer and a lot to learn (the curse of graduate education is that it provides new knowledge and in so doing also catalogues every students ignorance).

I alerted several mentors and close friends that I was not interested in another non-profit role but wanted to enter the business world to test the wings of my newly acquired expertise.   Brian, a friend of mine (a recently minted MBA on his second post-graduate role) asked me to join his turn around team.  I remember his pitch.  The company he was hired to lead had a pioneering software product for managing the front desk operations of hotel and other hospitality property.  The company had developed and protected an innovation the big guys had not yet thought of.  The company was strongly capitalized.  The owner had made a poor hiring decision and was ready to listen to business/organizational talent that could structure and propel his innovation forward.  The owner would back away from daily operations and give Brian and his team the opportunity to lead forward. Brian recruited me to serve as director of operations, another experienced friend to lead sales.  We rebranded, reorganized, restructured our way through the first three months and began to see the promise of building sales momentum.

I went to work understanding the operational functions of programming, customer service, human resources, and sales.  I mapped a new organic organizational structure designed to leverage Brian’s business plan forward and began recruiting and retraining across all departments.   Lora went to work restructuring the sales department.  She worked through our database like a lioness stalking a herd of gazelle. Brian went to work rebranding the company and analyzing financials.  These were heady days. We were succeeding in turning things around.  The owner was happy, our customers were either happy or becoming happier and our innovation was protected and winning us sales from our bigger and more established competitors.

I was on the freeway traveling to the office in Anaheim, California before sunlight on the morning of 9/11 and heard the news of the first plan hitting the tower of the World Trade Center.  I drove to work glued to the radio and stunned at what I was hearing.  When I walked into the office instead of seeing the sales team on the phones to our Caribbean and east coast customers they were in the lunch room standing around a television set watching the horrifying drama unfold.  Before the day was even over potential customers started calling to cancel their orders for our software.  In the first 48 hours following 9/11 we lost our entire sales pipeline and began analyzing how long we could keep the doors open without any sales revenue.

The End – The Enigma of Human Relations

What a contrast to my first meeting with Brian. My last meeting with the owner ten months later was a dirge. “Ray,” the owner announced “I would like you to orient Bob (the director of operations at the company’s manufacturing division) on operations in the software division.  Bob will take over operations of both divisions as we merge to survive this set back.  I have known Bob for a long time and his law degree and experience are just what I think we need to survive.  If there were any way financially I could keep you and your skills I would but without sales we are going into a hole at an unrecoverable rate.”

We negotiated a consulting role that would last for two weeks.  I would have two weeks to find something new and turn over the reins of the software division.

I showed up to the office on my first day as an ex-employee turned consultant.  When Bob walked into my office and described in detail how he was going to destroy the owner financially and why.

What happened?

If you have insights into this catastrophic dynamic write your comments here.  Over the next several weeks I intend to write on how business relationships disintegrate to the point that trusted friends turn into fatal enemies.  The subject of betrayal and situations leading to betrayal are not new nor are they simply the fodder of English literature classes studying Julius Caesar.  Do strategies exist that help owners and managers avoid this collapse of trust? What are your insights?  Have you experienced a similar collapse of relationship?  Have you seen it?  Have you studied it?

2011 in Review

The most popular blogs written included some prior to 2011. The 2011 annual report for my blog is fascinating.

Here’s an excerpt:

A San Francisco cable car holds 60 people. This blog was viewed about 3,000 times in 2011. If it were a cable car, it would take about 50 trips to carry that many people.

Click here to see the complete report.