16 types of Dysfunctional Organisations

“Insanity is doing the same thing over and over … and expecting a different result.” Albert Einstein

The professional world in which many of us have to operate, is speeding-up. Laptops and mobile phones with accelerated internet access have resulted in employers expecting employees to be available 24-7. We are living in tempestuous times. Businesses are working in highly competitive environments, always striving for bigger and better results.

People lack job security. Top executive pay is increasing experientially in comparison to the average employee who is seeing wage growth stagnate and a real-terms pay cut.

All of this manifests stress which is then compounded by organisational dysfunction.

Below is a list of the types of dysfunctions commonly found. In compiling the list I was surprised by how many I had personally encountered and not in isolation.  Often there will be a number of different dysfunctions found in one organisation. I have experienced the first 10.

1. No incentive to work hard 

Organisations that have no natural threats to their existence, such as universities, councils or other government bodies, and publicly funded operations, typically evolve into cultures of complacency.

Your capacity to do your job well, is often overshadowed by the relationships you have with your seniors. The organisational structure becomes complicated by many tiers of management. This results in excessive bureaucracy and lots of people with “no-go” power. The rank-and-file only have the power to veto or passively oppose innovation.  Very few people have the capacity to originate and champion initiatives through to completion.

It is often more important to not be wrong than it is to be right. Blame, accountability and authority are syndicated. You can’t take risks, but if anything goes wrong you get to blame the system. The indirect cause of this attitude suggests that events are beyond anyone’s control.

These organisations develop a high tolerance for failure; as long as no blame is apportioned and  “lessons have been learned.”

2.  In a state of constant change 

In a climate where the demand to continually cut costs or increase revenues, senior management can struggle to focus on one primary goal, strategy, or problem long enough to gain momentum in solving it. Knee jerk responses to issues or excessive changes tends to create extra work. Most of which squander resources and dilute  attention from core issues.

Organisations cannot survive in this mode for a long time. People will only work hard for so long. They will eventually burn out or break down, eventually they will give up.

Management must either provide periods of stability or else develop established processes for handling day-to-day requirements without simply applying more pressure on employees who are likely to  be stretched already.

3. Lack of clear leadership

A weak, divided, or distracted senior leadership team can often fail to provide a clear sense of direction. The risk is that department managers will by default start prioritising there own departmental goals and objectives. Ultimately this may be counter to the overall organisational aims.

4. Loss of intellectual capital 

After a series of economic shocks it is common for restructures to take place, where people with talent, drive and insider-knowledge will either be lost through outsourcing, and redundancy, or they will leave for pastures new.

The ones who stay will likely have more at stake in staying put. When conditions start to improve, the organisation will then lack the talent, intellectual capital and dynamism needed to capitalise on better times.

Worse still, if talent is recruited the entrenched deadwood in the organisation will ensure that the new talent is either absorbed into their dysfunction or ousted.

6. Silos – Cultural & Structural

Departmental boundaries don’t align with the natural work flow. The work silos tend to create fracture lines through the organisation, polarising the people who have to interact across them. With little incentive to share information, or cooperate and collaborate to pursue mission-critical outcomes. The various silos develop impervious boundaries that foster a conflict of interests that significantly block work flow.

This dynamic can be incredibly frustrating and exhausting, resulting in a demoralised team with an increase in the turnover of staff who have become fed-up with the status quo created by misaligned departmental boundaries.

7. Despotism

A tyrannical CEO or an overall ideology of oppression that is led from the top will create a culture of fear and cause people to engage in avoidance and self preservation tactics at the expense of goal-seeking behaviour.

After a few episodes in which people experience negative consequences for disagreeing with the head, everyone will soon learn to keep their head down and not to draw attention to themselves.

8. Poor communication 

It is common for senior management to fail to create and maintain any kind of empathic contact with the rank and file, during challenging times. If this happens gossip, anxiety and low morale will abound as the employees try to second guess outcomes.

9. Wilful blindness

When a CEO has failed to realise that they are past their usefulness to the enterprise by refusing to engage with new ideas, or bring in fresh talent.

This dynamic can extend to the entire senior management team. Even in the face of an imminent threat to the basic business model, the executives cannot come to consensus on the how to reinvent the business, to save it. People become committed to culture and way of doing things that are obsolete and now threaten to sink the company.

10. Secretiveness 

When the manager, feels that they don’t have a responsibility to share information with the rest of the organisation. This can be anything from the banal of daily operations to the master plan. The manager sees knowledge as power. They keep everybody in the organisation guessing about the next move. This can result in gossip and conjecture, as the teams try to come-up with their own justifications or understanding of what is or is not going on.

A lack of communication down the ranks is sure fire way to make the team feel under valued, demotivated, and disinclined to support the manager in charge.

11. Pluralistic Ignorance

When a manager’s behaviour goes beyond the merely colourful and verges on the maladjusted or even illegal, such as Harvey Weinstein. This happens more often then you think, where by everyone in the business is clueless, or wilfully colludes with the organisational or leadership dysfunction.

It is easier to go along with whats happening then rock the boat.  The team in the inner circle can become complacent either start to mirror the behaviour of their boss or become culpable in supporting it.

This can be extremely difficult as an employee, as they may find it very difficult to challenge the behaviour?

12.  Complacency

When an organisation has long enjoyed a dominant position in its market place, either because of a natural monopoly or circumstantial upper hand. Leadership can become complacent, unable or unwilling to think in competitive terms, unable to innovate or even reinvent the business model. The business becomes sitting duck for invading competitors who want their piece of the pie.

This is common in the highly competitive world of retail such as Marks and Spencer’s, who’s women’s fashion continually struggles to appeal. Or London black cabs, who dominated the market for decades, but resent times they have significantly lost market ground due to Uber.

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13. Comparing down

It is easy for managers to fool themselves by comparing their operations to other more dysfunctional organisations. They look externally, seeking to affirm their sense of accomplishment (“We’re losing less money than anyone in our industry”), but ignore the fact that there are numerous opportunities in other industries that could help them increase their revenue more. Or they compare themselves to their former internal condition (“We’re better than we used to b. We are moving in the right direction”) even though the internal work environment is  far from good and thoroughly demotivating.

These businesses make the mistake of looking at relative success rather than absolute success. The problem is a lack of ‘base-line’ standards. Measures such as specific business results and trends, internal process efficiencies, employee and customer satisfaction, and strategic goals and plans are not being used.

14. Sub-optimising

In many organisations, there is a fundamental assumption that if each department is maximising its effectiveness (sub-optimising), then the organisation as a whole is optimised. For example Management cut the I.T. technical support budget and believe there has been a saving. But PC support needs don’t disappear. They now get addressed in the departments by (more highly paid) professionals  who have to take time out to help their co-workers. Although the I.T. budget has been reduced, overall organisational support costs actually increase. But the costs are now buried because the time spent looking after IT needs is not accounted for in anyone else’s budgets.

15. Segmented morals

The morality of selective absolutes. This is when the stated values and actual behaviours, (usually self-serving), are in direct opposition to each other. This generates a conflicting set of behavioural guidelines that destroy management’s credibility.

The London School of Economics is a university that prides itself on being a forum for debate about social injustice and inequality. But like many universities, LSE outsourced its cleaners years ago. It’s saves the university money, but in the process the outsourced staff  are treated like second class citizens.The cleaners are employed with worse terms and conditions than in-house staff.

16. Hierarchy or privilege

Some organisations have rigid caste systems of status with in the structure, such as hospitals and universities. These organisations tend to have very clearly defined categories of status, usually based on tenure or standing in one’s field. These castes never appear on the organisation chart, but they dominate collective behaviour every day. This sets up de facto boundaries, promotes factionalism, where in-group members serve their own social and political needs at the expense of the organisation.


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