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One of the more high profile bad management decisions is playing out as I write this … a professional rugby league team here in Australia has been found to have systematically abused and violated the league’s salary cap rules for the past 5 years. During that time, they won 2 premierships. The fallout has been “interesting”, but the collateral damage is what I would like to discuss. This bad management decision appears to have done the following:

Damage the reputation of the players (at the time of this writing, it is not clear if they were or were not willing participants in the salary cap scandal)
Damage the reputation of the current and past employees of the club
Damage the reputation of club sponsors
Damage the reputation of the sport
Jeopardise deals for stadium usage and broadcast rights
Alienate fans, supporters, and club members
Reduced attendance at games, with reduction in income for venue catering personnel
Reduce demand for team apparel, with the follow on effect of less apparel being made, and subsequent potential job losses in the apparel sector
Disenfranchise the young, causing them to participate in a different sport, (and I admit this is a stretch) jeopardizing the future of the league due to a lack of players.
And … the people and organizations on the list are collateral damage – they did nothing wrong, but are suffering the consequences of bad management.

Industry and government are both littered with examples where bad management has resulted in significant collateral damage. While I am not going to give names or specific examples, let’s look at some general examples.

Outsourcing. Outsourcing is a market based decision, and can provide short term gain. However, once something is outsourced, control is lost. Loss of control equates to loss of vision, loss of long term goals, and loss of the ability to use something for benefit. When government outsources infrastructure, history shows us it works as good or better less than half the time – meaning most of the time it works worse. Industry outsourcing departments has not had the same lack of success, but the failures have been more spectacular. Outsourcing human resources and IT departments has resulted in the occasional breach of a sensitive database, or a lack of accountability of staff compared to long-term contractors. Governments tend to follow guidelines, where private enterprise looks for ways to not follow these guidelines as a way of improving profit. Large corporations (with a reputation to protect) have established corporate policies which are followed, while smaller corporations (which are often on the receiving end of outsourcing) do not have these policies in effect. One of the best examples of “bad outsourcing” happened within the past few years when a large police force outsourced management of human resources. The outsourced company followed all specifications, but did not secure the database – it was not identified as a requirement. The database was hacked, and all personal details of every police officer entered the public domain. Bad management caused collateral damage.

A secondary effect of outsourcing is the ability to divide the responsibility so there is no single point of contact for anything but the most trivial issue. A few years ago, a new stadium was built here in Australia. It was “state of the art” with a “high tech” ticketing system. Because it was a new stadium, the existing transport infrastructure could not cope with the demand. There were software issues with the new ticketing system. I do not remember all of the other issues, but the result was about half of the crowd did not get into the new stadium until after halftime. One thing I do remember is the media discussing the problems with the pertinent companies. The result was the CEO of the stadium saying “not my fault”, the CEO of the transport company saying “not my fault”, the CEO of the ticket management company saying “not my fault”, etc. Bad management caused ill-will – another form of collateral damage. Deferral of key maintenance. Delaying maintenance is always tempting – as individuals we probably do it with our homes and automobiles – but statistically it is a form of gambling. If we defer maintenance and nothing happes, we win. If we defer maintenance and something happens, the downside can be significant. if there is an incident involving a system where scheduled maintenance was deferred, the public outcry could be extremely loud – potentially to the point where politicians will change the law.

Bad management can cause collateral damage in a variety of forms. There are other examples, but I am sure you can see the issue. In summary, good management can strive for years to create something good. It can be goodwill between a factory and a village, an industry and government, or government and citizens. Bad management can destroy the good work very quickly, and the collateral damage will affect those outside of the “guilty group”.