How Dysfunctional Leaders Negatively Impact Your Organization

Organizations don’t often admit they employ dysfunctional leaders, but we have yet to consult in an organization that doesn’t have at least one. It can be a struggle for a business to recognize if and when to cut dysfunctional leaders loose or how to help them improve — especially when that leader brings success and valuable expertise to the table that is difficult to replace.

While this likely goes without saying, dysfunctional leaders can do much more harm than good. In our experience, their leadership styles tend to be authoritarian, narcissistic, inconsistent, and even abusive in nature, which can lead to conflict, and ultimately costly turnover, in the workplace.

Let’s take a closer look at four ways that toxic leadership can negatively impact your organization and why you should consider addressing the issue early on.

Dysfunctional Leaders...

1. Prevent Positive Change and Growth

Continuous improvement is one of the ways that a business will ensure success, no matter the industry. But, this can be nearly impossible to achieve if the leadership isn’t up to par. Negativity and self-seeking behaviors can hinder workplace growth and employee success. Often, leaders are afraid of upsetting a results-oriented manager who is creating chaos. However, ignoring a dysfunctional leader will quickly have a detrimental impact on the company’s culture and performance.  Leaders must lead by making it clear that these behaviors will not be tolerated and that failure to change will result in replacement.

One way to combat this detrimental behavior is to hold toxic leaders responsible for their actions. Someone within the company, whether it be their boss, human resources, or even a consultant, has to be direct and clear about what leadership behaviors are being observed. For many toxic leaders, it can be very difficult to see how they can be part of the problem and to recognize their self-deception.

If possible, it is best to invest in leadership development and coaching for all levels of leadership. This can help create unity around values and goals and help ensure a more positive culture within your company.

2. Alter the Culture Within the Organization

Workplace culture plays a vital role in the success of the business, as it is the identity that unifies the employees against all external forces. Dysfunctional leadership has the ability to quickly alter the culture within the organization given their inherent influence, power, and success as members of upper management.

Unfortunately, when an organization works to accommodate a dysfunctional leader, let alone promote them, that inadvertently can send a loud and clear message to employees that dysfunctional behavior is accepted, and in some instances even rewarded! Wall plaques, mission statements, or corporate values statements are meaningless and even counterproductive when they are not embodied in an organization’s leaders.

Holding leaders accountable for working and leading in a manner that is consistent with your organization’s cultural values is vital to your success. Proactive measures such as delivering honest and candid feedback, investing in coaching where needed, and being decisive about necessary corrective actions will help you attract, motivate, and retain top talent within all levels of your organization.

3. Hinder Team Efficiency

By definition, dysfunction is “an abnormality or impairment in the function of a system”.

When you have toxic leadership overseeing many moving parts of an organization, it can lead to reduced efficiency and productivity from the employees. When employees do not feel valued or respected, they will have lower rates of engagement and job satisfaction.

Oftentimes, these dysfunctional leaders are impulsive and unreliable, making it problematic for others to work with them. Statistical figures held toxic leadership responsible for a 48% decrease in work effort and 38% in work quality. Over time, this lack of leadership will take a toll on the effectiveness of the team they oversee, and may even affect the performance of the organization as a whole.

4. Reduce Employee Commitment

Within an organization, there are typically three main groups of employees: A, B, and C. What organizations often fail to realize is that “A” players are their greatest retention risk. They are the best and brightest and they know it. The best and brightest always have options –– in any economy and in any business. They are the first to leave if they work for, or are otherwise dependent on, a dysfunctional leader.

On the other hand, “B” players are frequently less mobile and often wait for economic conditions to be favorable, but they too will explore their options eventually. Your “C” and below players know they will have a hard time finding a better job. They are more willing to tolerate dysfunctional leaders (particularly a controlling boss) because they don’t believe they have options. A controlling boss likely means they aren’t really making any decisions anyway, so it actually helps them hide their marginal value.

A dysfunctional leader can effectively drive away top talent and actually increase the likelihood that you will retain marginal and low performing talent as a natural result of the leader’s dysfunction. Therefore, it’s important to recognize dysfunctional leadership early in an organization to prevent discontent from spreading and impacting top talent.

Hiring Top-Talent Leaders

When looking for new leadership for your firm, you want exceptional candidates that are a direct fit within the work culture. The process of identifying, screening, and developing a final list of those few special people can be extremely daunting. This is where a partnership with a firm that specializes in executive search adds significant value to the process. One such example was Kinsley Sarn’s work with Elevate Ventures on an extensive national search to find their next CEO that would bring the critical business strategy, policy, and management experience.

We sourced experience from multiple industries, all the while keeping in mind that Elevate Ventures was looking for a leader who is passionate about strengthening Indiana’s economic vigor. “It’s crucial that we have an entrepreneur cut from the same cloth leading operations at Elevate — and that leader is Chris LaMothe,” stated Victor Smith, Indiana Secretary of Commerce. Chris was formerly the President of the Indiana Chamber of Commerce and Sherry Laboratories, one of the largest independent materials testing businesses in the United States.

Since becoming CEO, LaMothe has led the company to tremendous success. According to their 2018 and 2019 annual reports:

• Elevate ranked 13th most active among venture capital firms investing in early-stage companies.
• Elevate Ventures ranked as the #1 most active venture capital firm in the Great Lakes Region in 2018.
• Co-investments with Elevate Ventures increased from $558.9M to 724.7M, or about 30% from 2018 to 2019.
• Elevate's 2019 portfolio employs 2,651 people and boasts an average annual income of $70.6K.
  

As you can see, the power of a strong leader — and the right placement — is hard to deny. At Kinsley Sarn, we are proud to have played an integral role in Elevate’s growth and success, and are anxious to see what the future has in store for LaMothe and his team. To see more of our success stories, click here.

Positive Growth with Kinsley Sarn

If your company is suffering from dysfunctional leadership, Kinsley Sarn can help. Our top executive search firm specializes in retained search as well as transition and assimilation services.

Professional credentials, combined with senior executive experience, distinguish Kinsley Sarn’s search practices and have led to its track record of success across a broad spectrum of positions and industries. With search methodologies designed to add real value for clients, we guarantee client satisfaction. If you have any questions about our services or the industries we specialize in, please do not hesitate to contact our team by clicking the button below.

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