How do you respond to organizational decline from the inside?

One issue that has emerged rather frequently in recent years—perhaps brought about by the fallout of the global financial crisis—is that of dealing with organizational decline from the inside.

Growing frustration with the lack of accountability and poor performance by leaders has led to a significant loss of talent for organizations, further exacerbating existing problems.

This brings the organization’s objectives and results into greater focus and under closer scrutiny – not only by the consumers they are targeting, but the Boards they are accountable to, the leaders responsible for their success, and the staff who are concerned about their own job security and career path.

In Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States, Albert Hirschman argues that leaders tend to find out about the failures of their organizations in two ways—exit and voice—while arguing that loyalty is not always what it seems:[i]

  1. When customers stop buying the company’s products and services, donors stop giving money, or where staff begin to leave the organization: this is the exitoption.  At this point, how an organization responds and the time it takes to respond, is relative to a decline towards irrelevancy and lower market share.
  2. When customers, donors, and staff express their dissatisfaction with management through general protest: this is the voiceoption. Unfortunately, when some staff respond this way, exit sometimes becomes the result for the person voicing dissatisfaction.

Although Hirschman investigates under what conditions the exit option will prevail over the voice option, for the sake of brevity I will merely acknowledge that different conditions do exist that need to be carefully weighed.  Risks are associated with both approaches, and there are numerous variables that need to be taken into account.

One important thing to remember: staff will rarely express disappointments or concerns (voice) unless they are comfortable in their role and the relationships they have come to trust. However, the degree of loyalty, they feel towards the organization, may also prevent them from sharing candidly with leadership about the problems they see. Not does this always stem from an altruistic motive, but rather the desire to keep their jobs.

Most of us are grateful for loyalty; we see it as an asset, not a liability. Nonetheless, leaders need to be discerning and careful not to take loyalty for granted or assume that there are no problems when it is present.

What’s the bottom-line?

How can I be different or produce leaders that are different to those whose insecurities and arrogance prevent them from listening to those who give voice to things that may need to change?  Below are some questions to reflect on:

  • What practical steps can I take to develop a culture that empowers and invites staff to participate in the development and evaluation of the strategy, leading to greater loyaltyand less exit by talented staff?
  • What is preventing me from listening to those around me?
  • What positive indicators in my business might be masking problems below the surface?

[i] Albert, O., Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, London: Harvard University Press, 1970).

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