Business Tip: Signs of a dysfunctional company

"The hallmark of a dysfunctional organization is a gap between reality and rhetoric," says Ben Dattner, a New York organizational psychologist. When resources are not used effectively or fairly, when plans are heavy on talk but weak on action or when barriers to communication cripple performance, you're dealing with a dysfunctional company.

Once diagnosed, the corrosive effects of such problems can be corrected. But make no mistake: It's neither easy nor immediate. You need to be tough-minded about identifying the source, particularly because it often starts at the top, where the power resides.

Here are three telltale signs that your company is unhealthy and some possible ways to get it well again.

1. You've got leaders who fake it.

The discrepancy between what leaders say they want and what they really want often causes company dysfunction. You can't ask employees to do anything you're not willing to do yourself.

2. You've got bosses who like to point fingers.

No company can flourish in an environment that penalizes experimentation or trust. While that sounds obvious, on a day-to-day basis the nature of risk-taking inevitably means a great number of dead ends before any breakthrough. Very few managers remain calm after hitting the wall.

But how you handle those crashes — and how you encourage employees to pick up the pieces and start anew — makes all the difference between a company that encourages innovation and one that stagnates.

"When you see a pattern of blaming and people trying to protect themselves and their particular turf, something is wrong," says Russ Moserowitz of Franchise Insights, a Bedminster, N.J., consulting company.

The remedy is to put your trust in the people you hire and give every employee sincere responsibility. Hands-on, my-way-or-the-highway entrepreneurs won't find this easy. But that's how the business gets better.

3. You've got a CEO who doesn't set priorities.

Fast-growing companies are often so intensely focused on moving to the next level that no one is actually in charge. That's how dysfunction creeps in and takes hold.

Company leaders must set

the mission and the agenda. A hands-off policy can only go so far.



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