Classic: Corporate Inefficiency, Office Politics

Originally published August 15, 2011

I'm going to disagree with the author of the original article that inspired this series (“The Biggest Groups are Ill with Inefficiency” by Luke Johnson, which was published in the Financial Times in April of 2011, and can be reached by clicking this link.)  Johnson describes "office politics" as the subversion of organizational priorities in favor of those belonging to other constituencies.  The definition offered up by Johnson overlaps substantially with the idea of Institutional Capture, a topic I recently covered.  In my experience, office politics is much smaller.  It is all about the struggle for superiority among individual employees, and the various tactics they use and the havoc they cause in the process.

From that perspective, I believe office politics is far down the severity list of corporate diseases, doing nowhere close to the damage of some of the other maladies (Institutional Capture, for example.)  Since most political action consists of one employee attempting to outdo another, the lost efficiency doesn’t approach that of systematic problems or biases.  And often office politics involves trying to gain attention for things that the employee has actually done well.  To the degree the underlying achievements are driven by political ambition, the company actually benefits.

Office politics seem to do the most damage when they drift into blame-gaming and the undermining of other (often innocent) employees.  In this mode, the practice often involves dirty and destructive tricks that ultimately hurt the company – including the driving off of valuable, contributing employees.

I know such toxic environments exist, but in my experience they are the exception rather than the rule.

Does “big” equal political?

Generally, the larger the organization, the more political it becomes.  The door opens for office politics as the number of employees exceeds the ability of a single manager to know specifically what they are up to.

In one small company I know quite well, the firm recently acquired a new facility in a geographic location far from corporate headquarters.  Prior to the acquisition, the general manager of the company was on top of everything that happened with his twenty-odd employees.  In fact, he was so involved on a daily basis that literally nothing escaped his awareness.  Office politics lives in an environment which presents opportunities to mislead, deceive, or manipulate, and in this small company such things were virtually impossible.

Once the new location was purchased, however, a manager was put in charge there.  It was impossible for the general manager at company headquarters to know the details of what was happening at the new location.  The manager there could misrepresent the performance of any of her subordinates, and the GM would be unlikely to ever be the wiser.  Similarly, employees at the site could undermine the manager by bringing comments and complaints directly to the GM.  The GM was now in a position that made it difficult to know the truth of what was happening at the remote site, creating a fertile ground for office politics.

Sorting out the arising messes can become a huge waste of managerial time and capacity, which is where the corporate inefficiency impact comes from – plus any direct fallout like resignations, lawsuits, and the like.

In larger companies, the division of labor is greater, the number of levels multiplies, and the ladder becomes filled with ambitious and unprincipled sharks.  Opportunities to deceive, misrepresent, or manipulate grow exponentially.

But does that mean office politics happens more in the larger company?  And are the resulting inefficiencies worse than in a small firm?

In reality, larger political opportunity doesn’t necessarily translate into a shark-infested environment.  That depends on the people.  Specifically, it depends on the political orientation of the managerial employees (are they power players with a thirst to advance by any means available, or are they political avoiders that find the office politics environment to be distasteful in the extreme) and the tone at the top.  These, in turn are largely driven by the personal characteristics of the most senior manager (usually a CEO in a large company) and the firm’s hiring practices.

If the CEO is a deceptive manipulator (and a surprising number are,) odds are good that the organization will be infested with politicians.  Political CEOs understand other ambitious, politically-oriented managers and tend to tolerate their antics if not outright encouraging them.  Only a CEO who hates politics and does everything in her power to stamp them out within the company is likely to have less-than-typical political activity.

Political orientation can often be spotted during the hiring process, and while I’ve never heard of a company that uses the presence of a political predisposition as a tool to deselect certain candidates, this effect appears to happen anyway in certain organizations.  Perhaps this is because of the correlation between extreme office politics and dishonesty – I’m not sure.  I am, however, familiar with a few organizations where the ranks of the company through lower management seem to be peculiarly a-political, this despite the presence (or absence) of office politics at a higher level.

How bad can it get?

One of my employers was laden with all kinds of crazy office politics.  This resulted in lots of lost effort as executives and managers plotted against one another, attempting coups and trying to pin blame for disasters on opponents.  In this environment, it was tough for an employee to pull themselves up the ladder without pulling people down in the process.

Yet, people didn’t the company leave voluntarily.  And overall the company performed quite well.  Office politics was a distraction.  A time waster.  A destroyer of a few, high profile careers.  But it was hardly the financial disaster some people might anticipate.

The most destructive element of office politics – and it happened frequently at this firm -- is that good employees were tossed out of the organization (a few voluntarily, and most involuntarily).  Yes, there are droves of potential back-ups out there salivating over available jobs, but in many cases the replacements of political maneuvering losses were not a trade up.  And employee churn costs money, by itself.

In small scale

As I mentioned earlier, small companies aren't immune from the foibles of office politics -- although the degree of destructiveness rarely approaches that of an average large corporation.

A small company, however, is often subject to something larger corporations mostly escape -- the personal prejudices of their supreme leaders.  The owner’s odd opinions about how to run the business MIGHT be the cause of their success, but I’ve found that to rarely be the case.  If the boss at a small company thinks being unerringly polite in all business dealings (and consequently firing those who aren't polite) is a requirement for success -- which it is not -- then there will be unnecessary turnover and expense at the small company as well.  I have seen this exact scenario at one small company I investigated.

And some small company owners can be quite eccentric, insisting that all manner of weird and wonderful rituals be followed to “insure success.”


Are office politics a contributor to the anergies of large organizations?  Generally yes, and the largest source of political damage is the loss of good employees.  Compared to other, more insidious corporate inefficiencies, however, Office Politics are down the list in terms of their severity.

Posts in the “Corporate Inefficiency” Series (Chronological Order)

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This is the cover of one of my latest novels, PURSUING OTHER OPPORTUNITIES, released in April, 2014.  This story marks the return of LEVERAGE characters Mark Carson and Cathy Chin, now going by the name of Matt and Sandy Lively and on the run from the FBI.  The pair are working for a remote British Columbia lodge specializing in Corporate adventure/retreats for senior executives.  When the Redhouse Consulting retreat goes horribly wrong, Matt finds himself pursuing kidnappers through the wilderness, while Sandy simultaneously tries to fend off an inquisitive police detective and an aggressive lodge owner.

My novels are based on extensions of 27 years of personal experience as a senior manager in public corporations.