A recent article in strategy+business notes how poor management effectively imposes a “dysfunction tax” on the company (read it here). Adam Bryant contends that “For every dollar of revenue that your company brings in, figure out how many cents are being frittered away to cover the cost of dysfunction — the self-inflicted wounds of bad strategy, poor execution, and ineffective communication, among other things, within your organization.”
Bryant is realistic enough to recognise that every company is paying some form of dysfunction tax, the issue is just how much – “How much time and energy are spent on internal matters that have little to do with creating value for customers and clients?”
To help stimulate thinking regarding how to measure the dysfunction tax, Bryant proposes that there are 3 main drivers of a dysfunction tax. These are listed in summary form below, but the full article expands on these and is well worth reading.
1. Lack of clarity around strategy. That is, the strategy may be clear in their own head, but it is murky to everyone else in the company.
2. Life in the matrix. Complicated frameworks often add complexity rather than reduce it. To check, just ask yourself whether the number of meetings rise markedly after the restructuring, undermining the promise of a more structured approach and thereby raising the dysfunction tax?
3. The wrong people in the wrong chairs. Under performers are kept around too long in senior teams, or they are put in jobs that are misaligned with their skill set. It’s the Peter Principle in action.
There are also a number of additional dysfunctions that Bryant discusses that could be added to the dysfunction tax, but I’ll leave that to you to read. He concludes the article by challenging business to focus attention on the underlying problems as if there were dollar signs attached to them.