Responding to organizational decline from the inside

One issue that has remained constant over the years is that of dealing with organizational decline from the inside.

Growing frustration with the lack of accountability and poor performance by leaders has led to a significant loss of talent for organizations, often bringing into question the organization’s goals and method of achieving the desired results – not only by the consumers they are targeting, but the boards they are accountable to, and the staff who are concerned about their own job security and career path.

In Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States, Albert Hirschman argues that leaders tend to find out about the failures of their organizations in two ways—‘exit’ and ‘voice’—while arguing that loyalty is not always what it seems:[i]

1. The ‘exit’ option occurs when customers stop buying the company’s products and services, donors stop giving money, or staff begin to leave the organization. At this point, how an organization responds and the time it takes to respond, is relative to a decline towards irrelevancy and lower market share.
2. The ‘voice’ option occurs when customers, donors and staff express their dissatisfaction with management through general protest. Unfortunately for staff, when they voice their dissatisfaction in this way, ‘exit’ is sometimes the result.

Although Hirschman investigates the conditions under which the exit option prevails over the voice option, there are risks associated with both approaches and numerous variables that need to be taken into account.

One important thing to remember is that staff will rarely voice disappointments or concerns to their leaders unless they are secure in their role and have come to trust those relationships. Understandably, the need for job security often prevents them from sharing the problems they see candidly with leaders they don’t trust; in which case, the exit option often occurs.

One of LCP’s 5 Leadership Anchors™ —leveraging relational currency—focuses not only on the importance of organizations investing in its people, but appreciating the many other relationships that affect its operational capability and how it is perceived by its customers. For leaders, it is a timely reminder to be discerning and careful not to take loyalty for granted or assume that there are no problems when it is present.

What’s the bottom-line?

Consider the importance of developing a culture where staff and customers can voice ideas, concerns and challenges before they exit. Below are some questions to reflect on:

• What practical steps can I take to develop a culture that empowers and invites staff to participate in the development and evaluation of the strategy, leading to greater loyalty and less exit by talented staff?
• What is preventing me from listening to those around me?
• What positive indicators in my business might be masking problems below the surface?