During the research for a task I found several information about the Smartphone manufacturer HTC who was and still is in a crisis. HTC had numerous problems, originating form different, internal and external sources. One of the reasons for the crisis was a tarnished company culture and employee morale. Confidential information were declassified and leaked, not only by low level employees but even by high ranking managers. Further, employees colluded with suppliers to make false expense claims and had in general little to no loyalty towards the HTC.
So where did these cultural and loyalty problems originate from? The main reason was the leadership approach HTC’s CEO Peter Chou was following. From internal sources one hears a lot of criticism on his abrasive management style. If others did not agree with his strategy he “openly berated manager and overrode their decisions, often with little discussion,” as insiders told Reuters. The fact that Chou is neither willing to change, nor to step down, and that there is no successor to replace him as CEO is additionally pushing down the morale within HTC. In HTC’s case this further led to poor performance.
This is a real world example of the negative consequences and implications of bad leadership and management on employee morale and on company culture. I would like to present some explanations for the loss of morale, culture and performance due to bad leadership.
Firstly, one needs to define what is considered bad leadership. We need to distinguish it from so called “Toxic Leadership” where the manager or leader of a group or company consciously abuses his position for his own advantage. Rather, managers practicing bad leadership actually try to do the very best for their company, they are just not aware of their mistakes or the fact that their managerial style is the wrong one, at least for their specific company.
Leaders are role models which should set their employees an example of dedication to their work. As soon as employees see that their employer is not acting rational and effective, they lose trust into the leaders skills and his vision and reduce their work effort.
The employee morale is also lowered if the company is situated in a bad position due to bad leadership. The organization failing not only because of wrong but poorly made decisions, makes it hard for employees to preserve a positive perspective on their work. Resulting from a domino effect, as soon one employees morale dropped, further usually follow. Low morale in an organization is like a cancerous ulcer and can destroy the company form within if it is now fought properly. Therefore, reasonable decision making is an important variable in this situation. A decision discussed properly in a productive and fair environment is easier to accept and to understand for an employee than a resolution just made by the manager himself. Even if the outcome is not as anticipated, due to reasoning the employees can see the managers idea behind his decision and are not just affected by the result.
HTC’s case shows incompetent leadership has far-reaching implications on the company, because immoral behavior is shaking the organizations very foundations and may crack the cultural unity into pieces. This effect is intensified by employees searching for new jobs as soon as they lose their trust in their leaders. Especially those members of an organization, who take pride out of their effort at work – mostly eager, well-performing employees – , are likely to be driven out of the company by bad leadership.
Summarizing, incompetent leadership has numerous negative effects on the company’s performance. Besides the direct influences on the effectiveness, bad leaders negatively affect employees mood, behavior and thereby performance, which not only reduces the overall company effectiveness further, but also drives organizations out of the market in the long run, due to brain drain.