Three stages of economic decline within an organization/network (3 C’s)

iStock_000006191862XSmallAs we have progressed through the deterioration in the economic climate I observed a trend in how people and stakeholders in different organisations and networks respond.  My comments here are principally based on observations from the media, in particular business newspapers such as the Financial Times and the Handelsblatt (a German newspaper) and discussions with friends about what they were seeing in their businesses and through their contacts.

The stages of economic decline could be summarised into three ‘C’s: Cooperation, Competition, and Corruption.

The three stages:

  1. Cooperation – Cooperation probably describes the status quo during strong economic times, where everyone works together to “grow the pie” (everyone realizes that if we work together to achieve more, everyone wins).  In the initial stages of economic decline this attitude prevails, with everyone observing the same bleak outlook, and continuing to act as a well formed team to tackle the challenge together. The danger with cooperation that it can create a ‘too cosy’ atmosphere unless effective measures are put in place.  Measurement is typically focused on rewarding success of all.
  2. Competition – As economic decline continues, an awareness sets in that some individuals might suffer (greater pressure/challenge to meet targets, reduced bonuses, increased risk of redundancy, etc.). People begin to see a need to compete against their colleagues, since only those in the upper quartiles will be ‘safe’. Such competition might be healthy for an organization, since it ensures that everyone is focused on maximizing performance, however it can potentially limit effective teaming. Measurement is typically focused on rewarding the success of ‘upper quartile’ individuals.
  3. Corruption – As economic decline continues even further, and as the risks become more apparent (possibly with evidence of some reactive measures having been taken already), employees and stakeholders become more desperate in their actions – a ‘fight to the death’ can ensue, with individuals breaking rules to ensure that others, and not themselves, suffer the worst consequences of the economic decline. Politeness, norms, standardized procedures, ethics, and workplace rules/laws might be passed over in order to move up the food chain.  At this stage measurement can tend to focus heavily on negatives and underperformance than on success, opportunity and development points.

The stage that I refer to as ‘corruption’ (a title which allows me to use the handy acronym, 3 C’s) might not represent what is often referred to as corruption (fraud, bribery, etc.), although I don’t rule it out that this could happen, but could often take the place of rather rather more low key actions, such as engaging in office ‘politics’, or underhand social manoeuvres as described above.

During a period of economic decline, different people and stakeholders move through these stages at different times, and typically act differently with different colleagues (interaction between friends, long-term aquaintances, and colleagues considered ‘low risk’ to an individual’s own status will likely remain in the higher stages for longer).  As such, progression is not ‘black and white’ and therefore often difficult to detect.  This is compounded by the fact that cooperation is considered a valuable trait, while corruption is not – as such, people often try to give the impression that they are cooperating, even when they have moved into the ‘corruption’ phase already.

These developments can happen between colleagues who work on the same team, between leaders and subordinates, and internal service functions, as well as between customer/supply relationships.  The interactions can be in the form of communication (or lack of it), participation/exclusion, energy and enthusiasm for other people’s initiatives (or lack of it), flexibility and cooperation in pricing discussions (internal and external), etc.

One could of course become paranoid that others are engaging in such practices (which itself might be a cause of moving down the scale of the three C’s) however it is also likely that in most cases very few people are engaging in anything other than mostly harmless cases of competition or corruption. Nevertheless, awareness of the three C’s, and where your peers, subordinates, and leaders are in the cycle, is important to maintaining harmony, and maximising the performance of both the individual and the organisation, especially if one is able to capture the benefit of increased competition, while limiting corruption, and still gaining the benefit of cooperation.

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One Response

  1. Interestingly, I just came across an article today (which I hadn’t seen when I wrote the article above), called “The three Cs of Simplicity”, by Ron Ashkenas (referring to “Collaboration, Coordination and Communication”). It has a slightly different perspective to my post, but, I think, complements it well also.

    http://blogs.harvardbusiness.org/cs/2009/09/three_cs_of_simplicity_collabo.html?cm_mmc=npv-_-MANAGEMENT_TIP-_-DEC_2009-_-MTOD1216

    I came across it today, because it was tweeted by @HarvardBiz as Harvard Business Review’s “Management Tip of the Day”:

    http://web.hbr.org/email/archive/managementtip.php?date=121609

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