Posted on Nov 17, 2016

Unhealthy Tolerance Can Lead to Bad Companies

A number of years ago, a friend of mine, an experienced business consultant, asked an insightful question: “How big does a company have to get before it becomes bad?” He saw a correlation between company size and the failure of certain morals. The bigger they get, the more likely they’ll experience a serious lapse in moral judgment.

But I don’t believe size alone explains how good companies turn bad.

In a recent post by Seth Godin, I read something that really grabbed my attention:

“The attitudes you put up with will become the attitudes of your entire organization. Over time, every organization becomes what is tolerated.”

Wow! Let me repeat that last part:

Over time, every organization becomes what is tolerated.

This explains so much more than size alone. For me, this is like finally resolving an unsolved mystery. Godin’s statement gets at the heart of the problem that causes a good culture to turn into a bad one.

Consider for a moment the thousands of good people that worked at Enron and WorldCom in the 1990s, prior to the demise of these massive companies. While there were a few “bad” people that worked there, the majority were good, solid citizens working in a company with a culture that had turned bad.

Consider also the many good people working away today at Wells Fargo and Volkswagen, in spite of the serious unethical actions that have occurred inside these companies. Lots of good, solid people are working inside these companies every day, trying to do their jobs in a culture that once was considered good. But then something happened. Slowly. Over time.

An unhealthy form of tolerance settled in.

Healthy vs. Unhealthy Tolerance

Most of the time, tolerance is viewed as a positive attribute, particularly in business.

The tolerance of others who speak and act different from us is healthy.
The tolerance of others who make different life choices than us is healthy.
The tolerance of others who think different than us is healthy.

Such tolerance is commonly referred to as respect for others. This is not only a healthy attribute in business but has proven to increase productivity and job satisfaction.

Then there’s the unhealthy side of tolerance that negatively impacts the culture of an organization, as Godin referred to.

When leaders tolerate decisions that are incongruent with stated values, the culture is negatively impacted.
When leaders tolerate actions that clash with stated values, the culture is negatively impacted.
When leaders tolerate behavior that conflicts with stated values, the culture is negatively impacted.

It’s important to recognize that unhealthy tolerance always starts – and ends – with the leaders. It can’t be simply blamed on employees (i.e. the way Wells Fargo leadership blamed 5,300 employees that they fired).

So what can be done to protect against unhealthy tolerance from creeping in?

As I wrote in a previous article, companies must invest in and protect their core values. This starts with the company leaders, but can also extend to the board in order to hold the leaders accountable.

Here too Godin provides some sound advice (from the same post highlighted above):

People are watching you. They’re not listening to your words as much as they’re seeking to understand where the boundaries and the guard rails lie, because they’ve learned from experience that people who do what gets rewarded, get rewarded.

This maps well to an analogy I often use: Values are like rumble strips along the edge of the road that alert drivers when they wander off the road. In business, a breach of stated values should alert everyone of potential danger – especially the leaders.

Bottom line: If more leaders would guard against and prevent unhealthy tolerance we would experience fewer bad companies.

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