Mushroom Management

Dick Fuld by Geoffrey Raymond

Mushroom management also known as ‘Pseudo-Analysis’ or ‘Blind Development,’ is the running of a company where the communication channels between the managers and the employees do not work traditionally. The term alludes to the stereotypical (and somewhat inaccurate) view of mushroom cultivation: kept in the dark and fed bullshit.

Mushroom management is a style of management in which the personnel are not familiar with the ideas or the general state of the company, and are given work without knowing the purpose of this work, in contrast with open-book management. Mushroom management means that workers’ curiosity and self-expression are not supported.

The employees often have no idea what the company’s overall situation is, because the leaders tend to make all the decisions on their own, without asking anyone else to give their opinion. This problem can occur when the manager does not understand the employees’ work (in a software company, for example) and therefore cannot communicate effectively with the employees.

Mushroom management can also be found in environments that are unrelated to business. It can sometimes be found within schools, when students working in a group decide not to share information with the other students in the group. This means that they will appear more intelligent and hardworking during assessments.

Mushroom management often develops when managers see themselves as the sole decision-makers within the company, rather than the people who lead all the employees towards a shared success. This can often take place unintentionally: managers fear that their employees will discover important new ideas instead of them, which drives the managers to make bad decisions and prevent employees from taking an active role in their work. As a result, the employees end up doing this work in a mechanical, repeated fashion, without contributing in a more productive or active way.

The key feature of mushroom management is that the employees have limited responsibility over the company. The importance of the decisions they have to make is minimal, which can often reduce workplace-related stress.

The consequences of mushroom management can be extremely detrimental for everyone involved in the company. If the flow of information within a company is insufficient, the people involved often have a limited understanding of how to react in situations that require quick assessment and prompt decision making. For example, a company that makes and sells shoes might research their customers’ preferences and discover that these preferences have changed. However, if this piece of information is not passed on to the sales manager of an individual shop, then the shop will still display the ‘old’ shoes and will not attract the customers’ attention effectively. At the end of this process, the blame is sometimes even attributed to the shop assistants, because they are the employees in a direct contact with the customers.

During the bankruptcy of Lehman Brothers in 2008, considerable information about the bank’s management was revealed, including the way Richard S. Fuld, Jr., the former CEO, organized the bank. The bank had started to concentrate more and more on excessively risky mortgages; however, neither the employees nor the public were aware. Fuld, together with other managers, had kept a significant amount of essential information secret, as well as lying to the investors and to all other involved parties. Everybody else had thought that Lehman Brothers were involved with a variety of investments, including both safe and risky investments; in reality, though, they had been working with a much more risky portfolio than was appropriate. After the bank became bankrupt, Fuld refused to take the blame for any of these events, even though he was responsible for the concealment of the information.

Mushroom management can also occur during the handling of one-off, individual situations. When the Titanic hit an iceberg, only a few members of the crew were aware that the ship was going to sink. Most of the crewmen were not informed about the seriousness of the situation by the captain, which resulted in chaos and disorganization. The captain attempted to act on his own, without incorporating the officers into his decisions.

The best way to avoid mushroom management is transparency. Sharing information with co-workers and employees is often unavoidable; however, one of the most important tasks for a manager is to differentiate between information that can be shared with others and information that cannot be shared. Managers should learn how to distribute information and how to communicate with the people they are responsible for.

If handled carefully, mushroom management can be very helpful. This method involves the company’s employees being divided into various groups, each of which has all the information which it specifically needs but nothing more, similar to a need to know approach taken in the military to control access to sensitive material. Meanwhile, the manager is in charge of giving each group the required information. This kind of management is extremely difficult, though, and requires considerable skill.

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