Why Does Bad Management Thrive So Much?

post # 428 — September 6, 2007 — a Managing post

One of the things that puzzles me and fascinates me is that, according to the economics and competitive strategy I was taught, companies that do things well, are efficient and achieve high standards should (in theory) drive out their competitors who are managing poorly, fail to use resources effectively, etc.

The source of all these reflections is an email I just received from a young professional describing how his firm operates. My question is: why hasn’t this egregiously bad management been driven out competitively? How do firms like this stay in business?

Here’s the story as it was relayed to me in my correspondent’s email:

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Over the last few weeks situations at my workplace have sent me down and interesting journey of thought. Specifically, I have noticed how distorted our perception can be in the accounting industry.

There was a particular engagement in my sector which was new to us this year. We had one staff member with less than a year experience, one supervisor who has been at our firm for less than 6 months, and a principal who has been with our firm for 3 years but has extensive public accounting and private industry experience. As the engagement went on it became very clear that work was not progressing at a satisfactory rate but nothing was adjusted to compensate for it.

Finally, last week, the young staff member stressed once again that he did not believe they would be able to finish the work on time. At this point the sugar hit the fan! The principal came down very hard on the staff and supervisor and stated she was “disappointed” in their inability to get the job done. For the rest of the week, the principal and another manager from our department stepped in and worked close to 20 hour days to complete the project. I should also mention that both the staff and supervisor had put in 60 hour weeks over the last 2 months attempting to meet the deadline.

I first became upset when the principal threw the staff member under the bus and failed to take any responsibility for the engagement herself. But what bothers me even more is that from the outside, the principal (and the additional manager who stepped in to help out) looks like she saved the day when in reality the engagement “failed” due to poor management throughout. Part of me realizes that my youth may cause me to overlook many aspects of the situation but I also know that this has solidified in my mind the up-hill battle that many individuals in my generation will have in public accounting.

Unfortunately, this industry will continue to reward those who sacrifice their time, their family and their lives over those who find ways to manage effectively, and become more efficient. The end result is that current senior management will label my generation as lazy and arrogant (both are partially true). If you tell me that I can achieve success, as my superiors have, by working 3,000 hours a year I would see it as a failure. If I have to work as much as someone else did 20 years ago to accomplish the same results have we really progressed at all?

I always thought that a fun experiment would be to tell someone that they only had 45 hours this week to accomplish their work. I bet we would all be surprised by the efficiencies and innovation that would come out of it. The fact that this profession will permit, and even worse, reward those who work such ridiculous hours exposes a fundamental flaw in the collective thinking of the industry. After all, we are not teaching our young staff to find better, more effective ways to do anything. But rather, we are simply showing them how to put their career before their family and personal life. We do not encourage that people take risks, try something new, or go out on a limb. We take the easy, safe route…we just work more. In the process we are rewarding many who are poor managers, poor developers and are stagnant in their own development.

Thank you for your time, I look forward to hearing your thoughts.

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I’d like to hear everyone else’s thoughts: How do firms that manage this way survive? Is it simple that EVERYONE is equally bad, so there’s no penalty?