4 Sources of Organizational Callus and How to Avoid Them

I recently taught a masterclass on Building a Culture of Accountability for?The Growth Faculty , Australia’s leading live leadership events production company. During the Q&A session, a participant asked how to make matrixed organizations more accountable.

My answer was short and to the point: “You don’t,” which is why I’m not a fan of?matrixed structures .

But the question got me thinking about why matrixed organizations exist in the first place, so I continued my response with a discussion of my belief that they are an avoidance mechanism; an organizational callus created around some irritation that leaders are not willing or able to change or remove.?

In humans, a callus is formed when repeated irritation causes our bodies to create a hardened outer layer. A callus doesn’t eliminate the irritation; rather, it protects us from further harm and allows us to continue the activity that caused it to form in the first place. The downside of a callus is that it can interfere with flexibility and sensation. Although we typically think of calluses on our hands and feet, they will form anywhere there’s a repetitive irritation.

It turns out, just like our bodies, we create calluses in our organizations to avoid or work around pain points. Think about the processes in your firm that are designed to operate around or despite certain members of your team. Think about certain clients or suppliers whose shortcomings or demands require you to expend unreasonable resources to compensate. Think about the person on your team who might be singlehandedly “preventing” you from raising your expectations on everyone across the board.

It turns out, just like our bodies, we create calluses in our organizations to avoid or workaround pain points.

These are just a few of the sources of organizational callus. It’s not scalable, it’s costly to maintain, it’s exhausting for your team, and it’s likely to cause your top performers to seek greener pastures for their careers.??Worst of all, organizational callus sneaks up on you as it forms—starting slowly and stealthily with a simple-seeming workaround, then building to something that “all of a sudden” becomes both debilitating and growth-preventing.

There are four sources of organizational callus that growth-minded leaders should minimize and prevent: people, processes, customers, and suppliers.?

People

The head of operations wasn’t comfortable with the idea of change and seemed to find all the reasons why any attempt to improve the business wouldn’t work. She was highly intelligent though, and created logical, compelling arguments to support her status quo positions. The CEO and his leadership team, on the other hand, knew that change was essential for the business to continue to grow.

Because the CEO wasn’t ready or able to address the issue head-on with his head of operations, the leadership team began maneuvering around her during meetings and to get things done, unknowingly building organizational callus and slowing their progress. The team couldn’t accurately assess the price they were paying for this until about a year later when the CEO finally decided to exit her from the business. Leadership team meetings improved dramatically, change initiatives accelerated significantly, and the organization breathed a collective sigh of relief.

Pay particular attention to underperformers, cultural misfits, and the “right” people in the “wrong” seats. Each of these employee archetypes predictably fuels the formation of organizational callus. I’ve maintained for years that the most important question in business is and will forever be: Who? When leaders tolerate the individuals in these categories, they effectively normalize the behaviors and guarantee that organizational inefficiencies will result.

Pay particular attention to underperformers, cultural misfits, and the “right” people in the “wrong” seats.

Here’s how to prevent people-related organizational callus:

• Implement rigorous Right People, Right Seats (RPRS) standards for both performance and culture fit and assess every employee quarterly as I do with my coaching clients.
• Build a?Culture of Accountability .
• Mind what you tolerate as a Leader. All eyes are on you, all the time—including not just your own behaviors, but also the behaviors you tolerate in others.

Whose attitudes and/or behaviors are causing organizational callus to form within your firm?

Processes

My wife Keri and I do our best to clean out the closets in our home every Spring. I’m sure you know the pattern: Impressively neat and tidy closets on day one, then a slow, inevitable descent to mess and disorganization by day 365. Like you may have learned in high school physics, all systems move toward entropy (disorder) in the absence of energy to maintain order, which is why you need to spend the better part of a day cleaning your closet (energy) and then, over time, it becomes a mess again (entropy).

The same laws of entropy and energy (and your bedroom closet!) apply to the processes in your business. And this is how process-based calluses are born.

Inputs, outputs, approvals, rules, and standards related to any process change over time because your firm’s operating environment is in a constant state of evolution and change. The most common response is to add a new check box here, to convene another meeting there, and so on. The irritant is the conflict between reality and the current process; callus springs from the myriad workarounds, adaptations, and inefficiencies that arise in your team’s best efforts to make it all work.

The most significant source of messy, inefficient processes is a lack of process accountability. Each of the core processes in your firm should have a single point of accountability for their operation, maintenance, and enhancement over time. Common core processes include customer acquisition, service delivery, manufacturing, billing & collections, and talent acquisition.

The most significant source of messy, inefficient processes is a lack of process accountability.

Single point accountability can be challenging for leaders, as most core processes run horizontally across organizational silos—sales, operations, customer service, human resources, and accounting to name a few—rather than within them. That said, it is crucial to create crystal clear accountability for the actual?operation?of your business in addition to the functional silos within it.

Here’s how to prevent process-related organizational callus:

• Create clear accountability for each of your firm’s core processes.
• Build the imperative for change into your culture. When you normalize disruption of the status quo and change, your firm is far less likely to suffer from messy, outdated processes.
• Establish rhythms for “Spring cleaning” to assess and update your core processes. I recommend every 12-18 months, depending on the velocity of your business.

Which processes in your business need “Spring cleaning” and single point accountability?

Customers

I recently coached the CEO and executive team running a sizable contracting firm whose customers were general contractors building or renovating large-scale commercial projects. I was amazed to discover that their “best” customer owed them more than USD $4 million and was over 6 months in arrears. Even worse, they continued to accommodate this customer despite their unwillingness to meet their commitments.

Cash flow is a big deal for building contractors, so my clients spent an inordinate amount of time figuring out how to “borrow from Peter to pay Paul” as their largest customer strung them along with millions in receivables. Predictably their issue with this client started small and grew over time. As it did, this distracting and non-productive financial maneuvering was the organizational callus they built to compensate.

Beware of customers with unreasonable demands, those who are slow to pay you, and those who treat your staff poorly. These characters tend to increase organizational callus as you and your staff compensate for their shortcomings. Further, if you do the math, you’ll likely realize you’ve been accommodating your least profitable customers, which is hardly the path to sustainable, profitable growth.

Beware of customers with unreasonable demands, those who are slow to pay you, and those who treat your staff poorly.

Here’s how to prevent customer-related organizational callus:

• Identify your Core Customer and focus your resources to attract more of them. Core Customers value your products/services, are willing to pay a fair price, and tend to tell others about you.
• Hold your customers accountable to treat your people well and don’t tolerate bad behavior.
• Stop treating all customers equally and be willing to say goodbye to low profit / high hassle relationships.

Which of your customers are contributing to the formation of organizational callus within your firm?

Suppliers

Many years ago, I coached two partners running a major dress manufacturer. Design, sales, and distribution were handled out of their New York offices, and all manufacturing was completed via contract in China.

At the time, their manufacturer was struggling with quality control. To compensate, my client hired a firm in China to spot check dresses in the factory prior to shipping. In addition, because a significant number of dresses were still shipped with quality problems, they also established a quality check and a repair facility in their New York warehouse. Despite these issues and the massive organizational callus they built in response, the two partners refused to consider adding another factory to their manufacturing stable.??In addition to the expensive, work-intensive quality checks, their retail store clients who sold the dresses to the public slowly lost confidence in the brand’s ability to deliver on its promises.

Each firm that names you as one of their customers should contribute to the efficiency and value of your operation. If they don’t, find a replacement who will.

Monitor your suppliers, contractors, and vendors for the following callus-inducing symptoms: infrequent and/or non-transparent communications, unreasonable demands, and a lack of “good partner” behaviors. Just like a top performing employee, each firm that names you as one of their customers should contribute to the efficiency and value of your operation. If they don’t, find a replacement who will.

Here’s how to prevent supplier-related organizational callus:

• Create accountability to expected standards of behavior and performance for each of your vendors.
• Establish both normal and exception-based communication rhythms and, if applicable, reporting.
• Create relationships with potential backup and secondary suppliers. You’ll be empowered and able to switch vendors if warranted.

Which of your suppliers, contractors, or vendors are contributing to the formation of organizational callus in your business?

Conclusion

“An ounce of prevention is worth a pound of cure.” – Benjamin Franklin

Any minor irritation in your firm has the potential to induce costly, growth-slowing organizational callus. Leaders can prevent this by tuning into the symptoms, establishing clear behavioral norms, and acting aggressively to remedy exceptions.

Here’s the common denominator: Mind what you tolerate as a leader and adopt a bias to act. This posture not only sends clear message to your employees, to your customers, and to your suppliers, but also helps attract and retain top tier talent (who typically have a low tolerance for passive leadership).?

Which callus-inducing conditions are you tolerating in your firm? An honest answer combined with focused action could be one of the most valuable things you do for the business this year.

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