Chetan Dhruve continues with his series looking at issues with leadership, this time concluding that bosses, in the final analysis, are victims of the system too.
Imagine you’re in hospital undergoing treatment for something serious. Understandably, you’re anxious. Above all else, you don’t want someone to make a mistake. And you have good reason to be anxious: medical errors kill thousands of people every year. The odds of dying in a hospital in the developed world because of mistakes are a horrifying 33,000 times higher than the odds of dying in an air crash, according to this Guardian article.
But if a health professional knows a medical error is being made, you’d assume that at the very least, the individual would speak up. Does this happen? Let’s look at research by Harvard professor Amy Edmonson, who studied how leadership and co-worker relationships affected drug-treatment errors in nursing units. Understandably, Edmonson assumed that better leadership would mean fewer mistakes.
Stanford professor Bob Sutton quotes the study in his book, the ‘No Asshole Rule’. The study’s results were astonishing – Sutton writes: “Units with the best leaders reported making as many as ten times more errors than the units with the worst leaders.” In short, better leadership seemed to produce far more mistakes. What on earth was going on?
Edmonson realised that, in fact, the nurses in the best led units reported more errors because they felt safe enough to admit mistakes. The nurses said: “You are never afraid to tell the nurse manager”, and that the manager created a psychologically safe atmosphere in which to work.
In sharp contrast, fear was rampant in units that rarely reported mistakes. Nurses said: “The environment is unforgiving; heads will roll”, or “you get put on trial”. Naturally, in this intimidating atmosphere, people worry about their own jobs rather than bring trouble upon themselves.
The larger point is, while patients and their families suffer, this ultimately impacts the doctors and the hospitals themselves. Bosses and other staff may not even realise mistakes are being made and everyone loses in the end – the patients, the nurses, the doctors, and the hospitals.
On a less frightening note, let’s take the health of the economy – because there’s a lesson for us there too.
The economy takes a beating
If you own a home, chances are that its price is dropping. If you want to own a home, it’s going to get tougher to get a mortgage. For this situation, blame the downward trend in the real estate market, in turn triggered off by the sub-prime crisis in the US.
How did this come to pass? Sub-prime mortgages – mortgages sold to people who couldn’t really afford them – resulted in an inflated housing market. Ergo, house prices went up. When payback time came, the borrowers couldn’t pay. Ergo, the market went down. And now that there’s a crisis, the banks are getting tougher about whom to lend to.
The firms hit by the sub-prime crisis include some of the biggest and best-known names in the business – Northern Rock, Barclays, Citigroup, HSBC, Morgan Stanley and Merrill Lynch. The financial services sector is taking a terrible beating, in the region of perhaps hundreds of billions of dollars. This is no picnic.
Many of the CEOs have lost their jobs, including Adam Applegarth (Northern Rock), Charles ‘Chuck’ Prince (Citigroup), and Stan O’Neal (Merrill Lynch).
Now, these organisations employ thousands of smart people. Surely, surely, several among those many thousands knew something was badly wrong? So why didn’t they speak up?
Consider the attitude Northern Rock’s CEO, Adam Applegarth. According to an article in the Daily Telegraph, an observer said: “He [Applegarth] had a habit of asking people who their top five fast bowlers were. And when they gave their opinion he would fire back that they were wrong and the real answer was X, Y and Z. Those who disagreed with Applegarth or questioned his decisions were brushed aside.”
The Telegraph article added: “A banker once questioned Adam on his business model. Applegarth retorted that he clearly didn’t understand the model or the business. That banker was ever after a persona non grata.”
When a top ‘leader’ has an attitude like that, is it surprising that the truth never gets revealed? Moreover, subordinates have much to gain by keeping quiet.
Here’s what a banker friend of mine had to say, when I asked him about the crisis: “Everyone colludes in this because they are all motivated by profit maximisation – their own. Trying to have stock that vests over three to five years does not really solve the [short-term mentality] problem because often the bull run [the good times] will last that long. This means even if they leave after a while, they have made more than they would in a lifetime in another job. There is very little downside risk and people are not stupid (or they choose to be so!).”
Indeed, there is very little downside risk for those who are lucky in getting out at the right time. But in the longer term, everyone – the CEOs, the banks, the employees and the bosses themselves – suffers when everything turns into a giant shipwreck, taking the economy down with them.
It’s all down to the system
Let’s look at all this in ‘systems’ terms. Which system is great at shutting up people? You guessed it: a dictatorship system. HealthGrades, an American healthcare ratings organisation, stated that 195,000 people die per year in the US because of in-hospital medical errors. One of the reasons for this is that “our culture has typically viewed medical errors as a failure of people rather than systems, which prevents reporting and consequent analysis and solutions to prevent it from recurring”.
What’s the one thing, by far, that would prevent the reporting of errors? In a word, fear. In contrast, what system would enable the reporting of errors? A free system. You may think this is far too simplistic, but there’s nothing simplistic about freedom. Think about it the next time you or a loved one (heaven forbid) have to undergo a stint in hospital, or someone’s trying to sell you a dubious mortgage.
Chetan Dhruve is the author of ‘Why your boss is programmed to be a dictator’ (published by Cyan/Marshall Cavendish). You can contact him at: [email protected] or visit his website at www.cvdhruve.com.