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Cultural Toxicity (Part 1): Superstars and High Performers - Same Same but Different

Consider this. You are a football head honcho and have a blank cheque to go out there and hire the best players you can find. It is your once-in-a-lifetime opportunity to create this unbelievable team that will win more trophies than anyone else. How would you go about it? 

Florentino Perez, former President of Real Madrid, believed he had the answer. Between 2000 and 2006, in his first stint at the helm, Perez adopted the Galáctico strategy, filling his team with the biggest superstars in world football. He bought them at the rate of at least one (and often more) galáctico every summer, spending €273 million in the process. By the time he was done, his line up boasted Zinedine Zidane and Claude Makelele of France, Luis Figo from Portugal, Roberto Carlos, Robinho and Ronaldo from Brazil, David Beckham and Michael Owen from England, before we even get to the home grown Spanish superstars.

It was a heady period for Real Madrid fans. But financially it was draining for its owners other than from a marketing standpoint. How did the actually team do on the field? Less than ideally, as things turned out. In the first three years, the team topped the UEFA Champions League, the Intercontinental Cup and the La Liga. For the next three seasons, it won no major trophies. For six years Real Madrid would field a collection of champion players, but rarely did it appear to be a champion team

Two decades on, Roberto Carlos, one of the original Galáctico, gave a clue to this enduring mystery in an interview to Portugese channel Canal 11. He spoke about the way the team operated and the coaching philosophy: 'You don’t need rules, the player knows what he has to do. [Vicente Del Bosque, the first coach] knew us perfectly. Monday workouts and sometimes Tuesday workouts were at 17:00. He didn’t put them at 11:00 in the morning because almost nobody came.' Other than Del Bosque, who was replaced when the results stopped coming, none of the other managers lasted. And it wasn't because of what they players did in the ninety minutes, but what happened before and after.

Carlos goes on to talk about the time when there were seven of the superstars in the team and Antonio Camacho took over as manager: 'We [the Galacticos] always controlled it well and we had a good relationship, except with Camacho. He came to the dressing room and greeted everyone, very seriously and said;"I want everyone tomorrow at 7:00 in the morning." Normally we trained at 10.30. We talked to him to try to change the schedule, as we had our habits.' Camacho lasted 10 days in the job. The Galacticos won, the team didn't. 

Then there was Vanderlei Luxemburgo, the manager who lost his power struggle with the dressing room. Carlos spoke about Luxemburgo's tenure: 'We had the habit of arriving at the base, leaving our bags in the room and before dinner we had our beer and our wine. There were always two bottles of wine on the table. Ronaldo and I told him "coach, the people here have their habits so try not to change them. Don’t remove the bottles of wine and beer from the table before dinner because we are going to have problems." What did he do? He removed the beers first and then the wine bottles. The world of football is small, the news arrived to the board and ‘ciao’.' Luxemburgo lasted all of three months. The score read: Galáctico 1 - Discipline 0. 

Real Madrid's original Galáctico strategy backfired miserably, whichever way you look at it. And it was not because of a lack of Galáctico, but because of a surfeit of them, and their oversized egos. Individuals were at the forefront of the strategy, the winning team merely an afterthought. Unfortunately, that is not how high performing teams work, whether in sport or in business. Real Madrid ignored that fact at their peril.

A 2020 SHRM report on The High Cost of a Toxic Workplace Culture, cites a U.S. Bureau of Labor Statistics report estimating the financial cost of employee turnover due to workplace culture over the past five years, at a staggering $223 billion. It found, it says, 'that about 1 in 4 working Americans dread going into work, while 1 in 5 call in sick when they don’t feel like going to work.' 

Imagine the productivity loss when between 20-25% of your employees are absent on any given day. It is not difficult to put figures to this, for data exists. At U.S. companies, the cost of productivity loss due to unplanned absences comes to approximately $431 billion per year, of which $86 billion of this is estimated to be due to workers calling in sick when they don’t feel like going to work.Those are staggering numbers whichever way you spin it. 

And much of it is avoidable by managing toxicity in the workplace, a significant part of which is attributable to the the galáctico of business. 

A recent Harvard Business Review article talks about a company whose sales division had a 48% employee turnover. The CEO was perfectly aware of the single reason for the departures - the division's toxicity of culture, engineered by the biggest revenue producer, who also happened to be his head of sales. When questioned about why he did nothing, this is what the CEO said: ' I know he’s a problem, but he delivers the results our shareholders want to see. How can I fire him when we have revenue goals we need to meet?' 

That is precisely the trap many leaders fall into. Focusing exclusively on short term targets can make shareholders happy in the short term, but ignoring toxicity in a galáctico, whether on a football field or on a sales desk, can be a death wish for both the leader and the company in the long run. The focus on leaders protecting and even promoting toxic rockstars becomes even more acute in today's environment where the war for talent has become the biggest issue facing companies. 

One of the major pain points we at Two Roads are called in to address is that of helping address diversity and workplace culture related issues, and to help build a gender diverse leadership for the future. One of the 1500 'women of colour' who were interviewed by the authors of the HBR article cited above, told them: 'Our leaders coddle the toxic rock stars and leave the rest of us to suffer the consequences.' Paddy Upton, a much valued colleague, and a man not given to mincing his words on this issue, urges our clients to institute a policy that modern sports teams are adopting as a part of their cultural DNA - a 'no dickheads policy'. 

At a time when it is in any case difficult to make lateral hires of top talent, particularly from the universe of women leaders who have managed to rise through engineered obstacles, the last thing a company can afford is to lose home grown talent because of workplace toxicity by a few galáctico. 

It is good to have a superstar or two in ours ranks. They can be hugely influential in shaping the future of a sports team or a business. They can also be the reason why a team, despite short term success, fails to be a sustainably high performing one. As a leader, our job is to build teams and businesses that consistently perform at a high level. In that quest, the ability to separate the toxic superstar from a genuine high performer may well be what defines our legacy.

Next week, in Part 2 of our #OutsideInsight issue on Cultural Toxicity, we will look at some of the things that we as leaders can do to avoid falling into this chasm and instead build a better workplace culture that leads to sustainable high performance.

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