Have you heard of Gresham’s Law? Gresham’s Law is a monetary principle in economics. It states that—’bad money drives out good (money).‘
For example, if in an economy or a market both high quality and low quality currency notes exist—counterfeit or debased by inflation or money printing—then the high quality currency notes will be hoarded by the public and low quality currency notes will be used for the day to day transactions.
The same principle can be applied to debased metal coin money (gold, silver, nickel or copper). Metal coins can also be debased by the issuing authority by reducing the amount of precious metal in those coins or by the using public by scraping off small amount of precious metals from the coins.
You can see Gresham’s law ‘in action‘ during periods of hyperinflation. In other words, during hyperinflation, the local currency loses its value precipitously. Consequently, people exchange the local currency for a more stable currency, say the US Dollar, the Euro or the British Pound. Basically, bad money driving out good money. This is exactly what happened and continues to happen in Zimbabwe. People hoarded US Dollar while the debased currency flooded the market.
Well, enough about economics, money, finance, inflation and hyperinflation. Back to the topic at hand.
Now, you will note that with a slight change in verbiage you can apply Gresham’s Law to management, too—’bad managers/bosses drive out good managers/employees.‘
Now, in my opinion, the above principle does not need any further explanation. However, some may ask the obvious question, ‘How?‘ Please allow me to explain.
First, let me list to you some of the traits of bad managers or bad bosses.
Bad managers are:
- Boastful, not humble
- Always angry. They have an anger management problem.
- Extremely toxic
- Caustic in their behavior. They will always make sarcastic or snide remarks at their employees.
- Famous for not showing any empathy. They are cold inside.
- Known for hearing but not listening.
- Impatient with almost everything and everyone.
- Unreliable. Not available when you need them the most.
- Unhappy at their job, at themselves, and with everyone around them
Morals and Ethics
In addition, bad managers:
- Have no integrity or values
- Play power politics
- Play favorites
- Take all the credit and pass the blame
- Cannibalize team’s success for his/her growth
- Practice blame game
- Have no qualms to throw the team under the bus
- Are unfair or shifty in their dealings
- Scuttle all initiatives unless it is beneficial to them
- Are sycophants themselves and surrounds themselves with sycophants, too
Finally, bad managers:
- Believe in micromanagement
- Are very controlling
- Use fear as a weapon
- Have no clear vision; lack of focus
- Have horrible people management skills.
- Follow ‘my way or the highway’ kind of approach to everything
- Aren’t goal-oriented
- Do not lead by examples
- Encourage an echo chamber; no dissenting opinions allowed
- Reward mediocrity
- Surround himself/herself with people who are good at saying “Yassa, boss”
- Provide feedback in public to humiliate people
- Have no respect for employees
- Avoid difficult conversations
- Are not approachable
- Are very inflexible in their approach towards everything
- Do not take interest in employees’ career aspiration or well being
- Do not encourage independent thoughts
- Can’t take decisions; will dilly-dally around
- Take feedback very poorly
- Do not believe in empowerment
- Do not believe in reward and recognition
Manager from hell
So, how many of you would like to work for a manager with most, if not all, of the character attributes listed above? I wouldn’t, that’s for sure. I would put as much distance as possible between such a boss and me.
Now, don’t be surprised if I told you that there are hundreds and thousands of organizations, big or small, multinational or otherwise, that are full of such bad managers and bosses. Heck, I worked for a few of them myself, before ‘dropping out‘ of the corporate world. By the way, they didn’t drive me out, but I ‘dropped out‘ on my own terms for personal reasons.
Most importantly, these types of bad managers are a type of cancer and they generally metastasize throughout the organization. In a way, they feed off each other and proliferate. As a result, the bad managers are successful in pushing out the good managers, the true leaders, and replacing them with their cohorts. Eventually, the organization is full of such pernicious characters. That’s when the downward slide for the organization begins.
Now, if we were to imagine a team led by such a bad manager, where, firstly, talents and achievements are not recognized. Secondly, where hard work and innovation are not encouraged, where integrity and values are not appreciated. Thirdly, where good employees are treated as dirt, and toadies, sycophants, brown-nosers get their way. In other words, a totally dysfunctional team. I can go out in a limb and say that there is no way a good employee stays with that team.
Bad drives out good
In such a team, the bad employees will sideline the good employees and make their lives miserable. Therefore, the good employees will have no other option but to either quit the organization or find another team in that organization, where (s)he can flourish. It is a distinct possibility that a good manager in that organization will ‘hoard’ all the good employees and the bad employees will run amok across most of the other departments of the organization.
Furthermore, when organizations stumble in their ‘journey‘, it is generally because of these bad managers. Their way of functioning drives out all the good employees. Therefore, what is left behind, will obviously be bad employees—the apple polisher, the lickspittles, the slackers, the stooges—who should have been fired or let go years ago.
Basically, it becomes a vicious circle and the situation goes from bad to worse to worst. A few teams with the best employees cannot keep an organization afloat. The organization will slowly but surely run aground.
If you were to look at some of the biggest business collapses in the recent past, you will surely find individuals leading those enterprises who systematically drove out good employees and only kept the bad ones around. Furthermore, those dealers probably had most of the traits, listed above, that define a bad manager.
Allow me to provide a few examples.
Bernie Ebbers, CEO, Worldcom
(L)Bernard Ebbers was the ex-CEO of Worldcom, a telecommunication company. He was convicted of accounting fraud to the tune of $11 billion and sentenced to 25 years in prison. In 2002, the company collapsed and went into bankruptcy. It is said that the top honchos of the company pressured the underlings to fudge financial data to show inflated profits.
If the top executives of a company support their CEO in fudging numbers, then it can only happen when the bad have driven away the good. Basically, Bernie Ebbers surrounded himself with bad managers, who did what he asked them to do. If there was a single good employee in that team, (s)he would have raised an alarm to stop the fraud. This would have prevented the shareholders from getting obliterated, especially those invested via retirement plans.
Markus Braun, CEO, Wirecard
Let’s take a more recent example of Wirecard. Wirecard is an insolvent German payment processing company. On June 25 2020, the CEO of the company Markus Braun was arrested when the company filed for insolvency after revealing that close to €2 billion was missing or are unaccounted for. The company was part of the DAX index, and at its peak Wirecard’s market cap was €24bn.
Wikipedia lists the company’s downfall to ‘Accounting irregularities, Opaque acquisitions and corporate structure, Artificial inflation of profit, Third-party acquirers, Aggressive attacks on critics, Auditing and regulatory failures.‘
Should we all believe that Markus Braun did all this on his own? How many bad managers did he surround himself with? How many good managers/employees got shown the door over the years? A rhetorical question, by the way.
PMC Bank scam
Closer to home, let’s talk about Punjab and Maharashtra co-operative bank scam of 2019. Investigation into the scam revealed that it took six senior officials of the bank to perpetrate this fraud. Those six senior officials—bad bosses—created 21,049 fake accounts to misreport their exposure to HDIL. The scam was only reported to RBI because a whistleblower—a good employee and an insider—threatened to commit suicide over this scam. Another example of bad driving out the good, well almost.
In life, generally, it takes a whole lot of bad to drive out the good. However, it just takes one or a few good to right the ship. Such is the power of goodness!
Application of Gresham’s Law in other aspects of life
Bad neighbors drive out good neighbors
Bad protesters drive out good protesters
Cheap or poor quality products (bad products) drive out expensive or high quality products (good products)
Bad behavior drives out good behavior
Bad workmanship drives out good.
Dealers (bad leaders) drives out good leaders.
Can you think of more?